Dhanteras & Diwali Special Offer
Hi,
Wishing you & your loved ones a very happy Dhanteras and Diwali. 🪔
Want to know an interesting stat ?
Since September 2024, gold in rupees is up about 81%, while the Nifty 500 is still down 8.7%. This Dhanteras, we looked at what a fixed 25% allocation to gold does to a portfolio, and the 27-year numbers are hard to ignore.
To mark the festival, take 35% off our asset-allocation strategies (Mi EverGreen, Mi Allcap GOLD & All Seasons) with code DIWALI26, valid till 8 November 2026.
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1. The Hidden Loss in the Value of Money
A euro saved in 2001 has lost a large part of its buying power over the years. Based on official inflation data, the euro has lost around 41.6% of its purchasing power since then. This means that something worth €1 in 2001 would now cost much more. In simple words, the same amount of money can buy far fewer things today. While this change may not look very big from one year to the next, its impact becomes huge over a period of 20 or 25 years.
2. Gold Shows a Bigger Picture of Inflation
The picture becomes even more surprising when money is compared with gold instead of official inflation numbers. One euro worth of gold in 2001 would now have a value of only around 8 to 9 cents in terms of the same buying power. This shows how much the value of money has fallen over the long term. Gold offers a different way to look at inflation because it helps us understand how much real value our money has lost over the years. Official inflation numbers may show one side of the story, but comparing money with gold can reveal a much bigger change.
3. Why Keeping Money in Cash Can Be Risky
The biggest problem with inflation is that it works slowly. We do not notice the loss in our savings every day because prices do not rise sharply all at once. But over many years, the impact becomes difficult to ignore. If you keep all your savings in cash or a bank deposit, your money may continue to lose purchasing power. Even if your bank deposit earns interest, it may only be enough to match inflation. As a result, the actual value of your savings may not grow much. This is how inflation slowly reduces the wealth you have built over time.
4. A Costlier House Does Not Always Mean More Wealth
Consider a simple example. If a house was worth ₹10 lakh many years ago and is now worth ₹1 crore, it may look like its value has increased ten times. But has the house really become ten times more valuable? Not necessarily. A large part of this increase could be because the purchasing power of the rupee has fallen over the years. In other words, it takes more rupees today to buy the same things. This is why it is important to look beyond the price of an asset and understand how much its real value has changed. Inflation is like a silent tax that keeps reducing the value of your money without you noticing it.
5. Gold Can Be a Benchmark for Your Investments
Gold can help investors understand whether their money is actually growing in value. Instead of looking only at returns in rupees, compare how much gold your money could buy at the start of an investment and how much it can buy today. For example, if your investment has grown by 10% but gold prices have increased by 15%, your money has lost value when measured against gold. This makes gold a useful long-term benchmark for checking the real performance of your investments. It does not mean that every investment must beat gold every year, but it is worth keeping this comparison in mind.
6. Protect Your Savings with the Right Asset Allocation
Keeping some cash for daily expenses and emergencies is important. It gives you the liquidity needed to manage your regular needs. However, keeping all your long-term savings in cash or bank deposits can be harmful to your wealth. Over time, inflation can slowly eat away at your savings. This is why investing in real assets and other suitable investments becomes important. Historical data gives us a clear lesson: money that is not invested properly can lose a large part of its value over the years. The goal should not just be to have more money in your bank account, but to make sure that your money can buy at least as much in the future as it can today.
