Did we really need an Einstein to explain India about Inflation ??

Did we really need an Einstein to explain India about Inflation ??

Inflation – RBI – Monetary Policies – Finance Minster – Newspaper – Demand supply – Liquidity – and the recent inevitable Modi .

This inflation is such a complicated issue in India u know ; that we leave it for the television experts to discuss about it and our only conclusion about inflation after reading the front page news about it is that – “ Mahengai badhte ja rahi hai , sarkar kuch nahi kar rahi “

 

Keeps me wondering whether we needed an Indian Einstein who could explain Inflation to our people , just as he explained relativity. Most of our people would be super rich by now had that happened , just as how successful our scientists are after using his other theories.

 

 

Lets do it for ourselves:

 

 

Well now that its not the case to be , lets try to find out for ourselves how this inflation works and how it deflates our inflating pockets.

 

It was back in 2007 ,when i paid my college Rs 30,000 as the annual fee. Later I realised I had better options with the 30,000 Rs though , but anyway ! The other day when i asked a guy about his fees studying in the same college , he handsomely replied its 1.2 Lakhs now.

 

His stern reply made me feel that – had my fees been a penny more than 1.2 lakhs there, I would have walked away from that conversation being the richer guy. Grrrrrrr !

 

An increase to 120,000 Rs from 30,000 Rs in 11 years (2007 to 2018) is a compounded growth rate of 13.5% per year. (Source: Compound interest formula in your Niece or Nephew’s Maths book)

 

Well , if you feel relieved that you don’t need to go far as you can find it in your son’s or daughter’s book itself ; you better not be !! Time has already escaped you.

…….. because when I asked my elder brother about his son’s fancy and sporty bicycle ,he told me it cost him 20000Rs . I remember my father getting one of its kind for me at Rs 2000 in the year 1999. An increase to 20000 Rs from 2000Rs in 19 years(1999 to 2018) is a compounded growth rate of 13 %.

 

 

Remember your days:

 

 

I remember buying a kg of sugar at 4 Rs 20 years ago for which I pay 50 Rs now(growth rate- 13.2%.) After buying the sugar i could even buy myself candies from the change left (4 for a rupee) , but now even if i don’t want to spend , the shopkeeper gives me a candy worth Rs 2 to balance out the exchange. Yeah ! ( a growth rate of 11 %)

 

Atleast till now we required no Einstein to derive the inflation figures for us . But then why don’t we calculate this rise in prices with the same zeal as we count our money , our salaries, our hikes.

 

Start comparing your marriage ,travel,dining,tution,groceries,fuel expense inflation with the inflation of your investments i.e. the growth rate of your investments . This will in turn give you an idea of how much growth you should expect while you are investing your money to have a positive real gain which in turn will increase the purchasing value of your money (not only the mathematical value)(Refer earlier blog on what decides the value of money). You might end up discovering a lot about your personal finance and the days to come.

 

If arriving at such whopping inflation figures is a bit scary for you , which infact it is , catch hold of me at www.finbull.in and we can do such great discoveries together . We will have to do it all together , because my guess is that the Einstein we all are waiting for is imprisoned by the banks of our country , in one of the locker facilities that they run .

 

Yeah, its these banks and the other government fixed return schemes that don’t allow the investors money to grow above inflation. And that’s my topic for the next blog .

“ Though I never understood E=mc2 having studied Science most of my academic years , I can save a lot of my energy even if i understand the Inflation Vs Investment relation by working less for more money “

 

 

Aniket Choudhari,Co Founder, Finbull

8975616391
Finbull,2nd Floor,RK Business Centre,Cement Road,Shankar Nagar,Nagpur-440010

www.finbull.in

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