Investment v/s inflation – Invest in these assets to withstand inflation

We all know that money doesn’t grow on trees, but it can multiply over time without much of your effort if you invest them. Although when compared with the face value, all investments provide more than what you invest but in the case of most financial instruments the intrinsic value of returns might be the same or lower than what you had invested. This is because inflation is rising at an ever-increasing pace and hence the value of money is diminishing with each passing day. So choosing an investment that provides a higher rate of returns than inflation is essential.

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We have found a few financial instruments investing in which will help you fight inflation and help you actually grow your money.

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      1. Short term bonds

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A gilt mutual fund or short-term bond fund is a debt mutual fund of maturity between 1 to 3yrs that invest in government securities, certificate of deposit, commercial papers, etc. Kotak short-term bond fund, tata short-term bond fund are some examples of short-term bond funds. Even corporates issue short-term bonds. Bonds generally offer interest rates ranging from 7% to 12%. You can decide whether or not you want to invest in a bond with the help of ratings provided by rating agencies like CRISIL such as the CRISIL bond fund index.

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      2. Stock market

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Investing in stock can secure your money against inflation. But make sure you take investment decisions only after carefully analyzing all the aspects. As always said 'investments in stock market are subject to market risk.' Technical approach can be useful in making investment decisions during inflation. Technical analysis is based on the principle that ' history repeats itself.' It involves plotting the price movements of stocks and conclusions are derived based on the available data. Various indicators like RSI and MACD as well as charts of past prices especially those which have predictive patterns like the morning star, hammer, etc are quite useful in technical analysis

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      3. Gold

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Gold is not just an investment tool but also a precious metal which is why the demand for it often tends to be high and so is its price. And during inflation, the prices reach sky-high that's why investment in gold will be one of the best investments. Buying gold jewelry, coins, etc. are some ways to invest in physical gold.

If you don't have enough money for such a wealthy investment you can even invest in digital gold through Sovereign Gold Bonds (SGBs), Gold Exchange-Traded Funds (ETFs) or MCX Gold Contracts, etc. Through various phone wallets high Paytm Phone pe, Google pay, etc. that let you invest in digital gold, you can start by investing as low as ₹1.

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      4. Real Estate

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Buying or investing in land, property, or infrastructure is known as real estate investment. Because of the high migration of the rural population into urban areas, there is an increasing need and demand for real estate properties in urban areas. If you don't want to invest in real estate directly you can also invest in real estate through REITs - Real Estate Investment Trust. A REIT is basically a company that owns and operates real estate to generate income.

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      5. Cryptocurrency

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A cryptocurrency is a form of digital currency. Security and transparency of transactions are ensured with the help of blockchain. Cryptocurrency is not a popular investment option in India but has gained immense popularity all over the world and is considered one of the investment options

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      6. Commodities market

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The commodities market consists of agriculture products, metals, natural gas, crude oil, etc. With increasing inflation, prices of these commodities increase hence they can be a highly profitable

investment during inflation. Option trading can be a hedge against inflation. Option trading is a contract between buyer & seller whereby the buyer and seller can buy and sell the commodity at a pre-determined price and date but both the parties have right to deny buying or selling the product on or before the set date.

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Top 5 Exchanges in India

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        i.           National Stock Exchange (NSE)

        ii.          Bombay Stock Exchange (BSE)

        iii.         Multi Commodity Exchange of India (MCX)

        iv.          National Commodity and Derivative Exchange (NCDEX)

         v.          National Multi Commodity Exchange India (NMCE)

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​With inflation and increasing price, you may want to earn more and more but don't get driven away by your emotions and take decisions rationally and make sure you are ready to ride the market risk