Inflation rate drops to 0.48% despite costly food items in India. This is the first time when the inflation rate cool downs to ground zero level. In September 2008, the inflation was 12.50%.
Fruits, Vegetables, pulses and cereals became costlier over the week. But analysts suggest with normal monsoon in offing, inflation in food items will remain soft.
According to Economists, The Indian Economy may experience the short period of deflation (Negative Inflation) that may go to 3-4% below Zero level up to December 2009.
Inflation is record low and it is the major silent wealth killer along with Tax. So I think this is the right time to invest in Bonds. The Government of India Bonds offer 8.5% per Annum return and the inflation is just 0.48% so the real return will be 8%. This best. When the inflation is 6% the real return on the bonds will be just 2%. But this time inflation is ground zero level and may go below zero level.
So there is an old saying that, “it is wiser to be lender rather than borrower during the time of Deflation.”
So Invest in Bonds. This is the best time to invest in Bonds.
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