Inflation is a silent wealth eroder. Even if you have a substantial sum of money today, its purchasing power diminishes over time. Consider this: ₹1 crore today may seem like a significant amount, but in the next 10 years, its value could depreciate to ₹50 lakhs, in 15 years to ₹36 lakhs, and in 20 years to a mere ₹25 lakhs. Without investing wisely, you'll find it challenging to keep up with the rising cost of living.
Let's look into a practical scenario involving two individuals, Person A and Person B, both starting with ₹10 lakhs:
Person A opts to keep his ₹10 lakhs in a savings account for the next decade. Assuming an interest rate of 3% and an inflation rate of 7% annually, Person A would witness a negative return of 4%, resulting in his ₹10 lakhs dwindling to ₹5.4 lakhs over the next 10 years.
On the other hand, Person B decides to invest his ₹10 lakhs in a mutual fund that yields a 15% annual return. Despite the same 7% inflation rate, Person B ends up with ₹21 lakhs after a decade.
The disparity between Person A and Person B's outcomes underscores the critical importance of investing. However, this doesn't imply that you should funnel all your savings into financial markets. Diversification is key. Allocating a portion of your savings to stocks, real estate, mutual funds, gold, bonds, or even starting a business can create passive income streams and capital gains.
Relying solely on savings constraints your income potential, making it arduous to amass sufficient capital for retirement. By harnessing the power of investment, you not only combat inflation but also pave the way for financial growth and security in the long run.
Consider these staggering statistics: over the past 20 years, the Indian stock market has yielded an average annual return of approximately 12%, outpacing inflation and delivering substantial wealth accumulation opportunities for investors. Moreover, real estate investments have historically appreciated over time, serving as a hedge against inflation and a source of rental income.
To conclude, investing is not merely a prudent financial decision; it's a strategic move towards securing your financial future and realising your long-term goals. So, take charge of your financial well-being today by exploring diverse investment avenues and unlocking the potential for wealth creation and prosperity tomorrow.
