Invest your money intelligently. If you leave your cash untouched in savings deposits are in fact taking a big risk by not protecting yourself against inflation.The continued rise in the cost of goods and services is a clear indication that inflation is moving up on everyonece life and eating the value of their money. For example, a movie ticket cost Rs.10 in the early 1970s. Fast forward to today and a weekend movie outing will set you back by Rs.100.If you are one of those risk-averse investors whose money is mainly in bank deposits and you think you are playing safe think again.In the long run, your savings will actually shrink and you could become poorer, not richer, because of inflation meaning Rs. purchasing power is reduced.If your money is sitting idle in a bank and earning interest that is lower than the rate of inflation, you are not making it work hard enough for you.Over time, your nest egg will be eroded by inflation. For example, if the inflation rate is 8 per cent and your fixed deposit is earning 4 per cent, you are looking at a shortfall of 2 per cent. In just 20 years, inflation of 2 per cent a year would reduce Rs10000 to Rs6300 in terms of purchasing power, which translates into a loss of 33 per cent in monetary value. If inflation reaches 5 per cent, it will reduce Rs10,000 to RS3,585, a loss of 64 per cent in value.
