Where you should invest
Equities
If you have the appetite for risk, then equities/stocks is a must-have in your investment portfolio if you want to successfully counter inflation.
It has been proven time and again how, over the long-term, equities can be an effective foil for inflation.
Sample this - over the last 10 years, the BSE Sensex has appreciated by 14.7 per cent CAGR (compounded annualised growth rate).
On the other hand, inflation has averaged about 5.6 per cent CAGR.
In effect, by investing in the BSE Sensex over 10 years you would have outperformed inflation by a significant margin (9.1 per cent CAGR).
Of course, investing in equities is easier said than done. More than the money, it involves 'investing' a lot of time and effort, which is beyond most lay investors.
Help is at hand, for such individuals in the form of equity funds. Investing in equity funds not only saves you time and effort, but also reduces the risk of investing in equities through superior diversification.
Your family's future depends on this. Read now
Image: A worker stacks crates of empty soft drink bottles in front of the Bombay Stock Exchange | Photograph: Sebastian D'Souza/AFP/Getty Images
Also read: India's top 10 companies
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