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Why Fixed Deposit May Not be a Correct Option?

Indians have a saving habit and they consider that fixed deposits is the best bet but in this bargain they cooly forget that inflation eats into their profit. The investment is uncertain as inflation is high and volatile. You can imagine the impact of inflation that Dearness Allowance or so called DA is as high as 10% and this trend is going to be see in forthcoming 6 months as DA for central govt employees is going to become 100% which means that post implementation of Sixth pay commission, the DA has been increased by 100%.

This is worth mentioning here that the real return is defined as the nominal return minus the inflation rate. It reflects the gain in real spending terms. For example, if you invest in a fixed deposit paying a 9% return, your real return is uncertain because it depends on inflation. If inflation ends up at 9% like it has been happening for past few qtrs, you make a 0% real return. But if inflation ends up at 10%, you make a 1% real loss! So, you see your money losing value by locking in fixed deposits.

Check out the below Youtube video on the subject which will let you learn all about the inflation monster.

Thus make sure that before you sign on that dotted line for a fixed instrument; you must check out the effect of inflation on your real return as effectively the value of Rupee is going down with each passing day as inflation is eating into your profit and govt of India is also finding it difficult to tame this monster. Thus the ideal way to beat inflation is to go the equity way and a way to make daily sure profit is to trade with intraday tips and make money like professionals and achieve your financial dreams.

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