What is inflation?
Inflation can be defined as a persistent rise in the general price of goods and services of common or daily use -- such as clothing , food , fuel, transport, etc -- which results in an increase in the cost of living.
It is an increase in the prices of goods and services. for example price of box in 2023 is 1000/- but after next year price of same box is 1060/- it is 6% increased from last year. now your income should increases more than 6% . because if your income or salary increase only 6% than your expenditure would be same. your expenditure will same as compare to last year. so this is called inflation and you can't beat inflation with this increment.
How is Inflation measured?
Step 1 : First you purchased some house holds items.
Steps 2 : calculated the total cost of these items.
Steps 3 : then check the price of these items in last year.
step 4 : now calculate the increase % of these items.
Formula for finding increasing % =
[(total amount in 2024 - total amount in 2023) / total amount in 2024] * 100
Cause of inflation :
1. Increased Demand of goods
2. Rising production cost
3. Excessive money supply
4. Exchange rates
5. Government Action or Government polices
6. Expectations ( everyone expects prices to rise)
7. Printing too much money (Monetary Factors)
8. Workers want more money , so prices go up
How to beat inflation:
1. Investment
a) stocks
b) Real estate
c) Commodities
2. Diversify Your Portfolio
3. Invest in Dividend - Paying Stocks
4. Focus on Income generating assets
5. Monitor and adjust retirement planning