What Is Inflation
Inflation is a very basic but very important idea. Most people know about direct tax like income tax. They also know about indirect tax like GST on goods and services. But there is one more type of tax that many people do not notice. This tax is called inflation. It slowly takes money from your pocket, and most people do not even feel it happening.
Inflation Works Like a Secret Tax
Inflation is often shown as something that cannot be controlled easily. But in real life, it works like a hidden tax. Even if you do nothing, inflation keeps reducing the value of your money.
You may think your money is safe, but its real value keeps going down every year.
Why Saving Cash Is Not Enough
If you had 100 rupees in 2011 and you kept it at home, it is still 100 rupees today. If you kept it in a bank, it may have grown to around 173 rupees before tax. But during the same time, prices went up much faster. Because of inflation, that 100 rupees from 2011 now needs almost 198 rupees to buy the same things. This means your buying power has gone down.
You Are Buying Less Than Before
Even after keeping money in the bank, you cannot buy the same goods or services today that you could buy in 2011. This means you have become poorer in real terms. Your money number has increased, but its power has reduced. This is how inflation slowly affects everyone.
Why Taking Some Risk Is Important
Inflation is designed in a way that people who take some risk can grow their money. People who do not take any risk slowly lose value every year. Taking a little risk is no longer a choice. It has become necessary just to stay at the same level in life.
Beating Inflation With Better Returns
Many people keep money only in fixed deposits, post office schemes, or similar plans. These give low returns like 3 to 6 percent, and tax is also cut. Every year, such savings fall behind inflation. To stop this, a part of your money must be invested where returns can beat inflation. The goal is simple: after tax, your return should be higher than inflation. Only then can your money truly grow.
