Assets to avoid during Inflation

There are some Assets which you should avoid during the time of high inflation. Because owning these Assets during the time of inflation will ultimately reduce your wealth.

The following Assets you should avoid during the time of high inflation -

Well, the logic behind not owning the following assets is that, during the time of high inflation, the following assets will give negative actual return. Real Return = Return by Asset – Inflation. So if the Bank Fixed deposit is giving you 10% per annum return and the inflation is 12% than it means that your actual return is – 2%. (Negative).

01) Savings Account – Because they just offer 3-4% per annum return. So during the time of high inflation, they will turn in to negative return giving assets.

02) Bank Fixed Deposits – they offer anywhere between 6-10% per annum return so if the inflation is above 10% than you should avoid this Asset class

03) Government Bonds – offer fixed 8% return per annum so if the inflation is more than 8% than it will turn into negative return producing asset. So you should avoid it.

In short, during the time of high inflation, you should avoid All the Fixed Return Giving Assets which includes, NSCs, KVPs, Bonds, FDs, PPF, Postal Savings and any other fixed income giving asset. Because the actual return from these Assets will turn into negative during the time of High Inflation and make you poor….!!!!