Monthly Archives: May 2015

Can I beat inflation in the long run?

Yes, you can!

Inflation is a monster that silently eats away the real returns. Very few asset classes have the potential to grow investments well above the rate of inflation. Inflation is nothing but purchasing power of the money. In order to protect the real purchasing power, an investment has to grow substantially higher than the inflation.

Stocks & Real Estate are two such examples of growth oriented asset class that has handsomely beaten inflation over a long period of time. The key here is to hold on to these asset classes for a very long time rather than flipping it for short term gains.

Good location, reasonable pricing & an ongoing economic activity can work wonders for a real estate investment. Real Estate also provides a sense of security and emotional attachment. Several of the Government’s policy initiative is focused on real estate sector. Housing for all by 2022 is the single biggest catalyst for the entire real estate space.

Maintaining a good credit history will also help in lowering the overall cost of acquiring a property. Current benign interest rate scenario works well in favour of a property buyer.

According to a study by Cians Analytics on the returns from various asset classes in India during 1991-2013, real estate emerged as the top performer. Looking at the overall returns, the study noted that “real estate appears to have outperformed all other asset classes during the 23-year period with an annualized rate of 20%.”

“Real estate was repeatedly the best performer during the 5-year sub-periods since 1991, with the highest return being 670% during 2008-12 and the lowest 46% during 1993-97,” the study noted.