With retail inflation spiking to around 7.59% in the month of January, 2020, the prices of goods in the Indian subcontinent have seen a dramatic rise. High levels of inflation tend to decrease the purchasing power of money. This, in turn, puts a dent in your savings and investments. However, there are several strategies that you can use to inflation-proof your savings.

This way, the value of the investment options you’ve chosen can continue to grow despite the invasive inflation. Here are some things that you can do to inflation-proof your savings.  

Invest in a mutual fund

Mutual funds are one of the best investment options that you can use to guard your savings against inflation. Investment in equity-based mutual funds and index funds can help you create wealth, especially when you hold the investments for the long term. They are also very versatile in nature, allowing you to invest your money in either as a lump-sum or via a Systematic Investment Plan (SIP).

The Moneyfy app from Tata Capital can help you invest in mutual funds seamlessly. You can start an SIP for as low as Rs. 500 per month. This way, you can take advantage of rupee cost averaging. Alternatively, if you wish to inflation-proof a larger portion of your savings right away, you can make a lump sum investment in mutual funds using the Moneyfy app. With the current bear market trend owing to the Coronavirus, it may just be the right time to invest low and sell high.

Mutual funds can also be highly liquid investment options. The high liquidity makes it easy to buy and sell the units of a mutual fund at any point in time, making them the perfect choice in case you want to keep your funds accessible for any financial emergencies. With Moneyfy, you can invest in the top-rated liquid mutual funds with just a few easy clicks.

Invest in real estate

Investment in real estate is another great tool that can be used to hedge against inflation. Real estate gives you multiple avenues to create wealth. In addition to being able to earn rental income, you could also sell your real estate assets to mobilize funds. Another advantage is that the value of investments like land and property appreciates over time, since they are considered to be appreciating assets.

Also, with a rise in the retail inflation rates, your rental income as well as the value of your real estate assets will increase considerably. This instills a sense of financial security since you can actually gain from the rising inflation rates.

However, bear in mind that maintaining your real estate property can be cumbersome. It can also be tough to sell your asset at a later point in time. So, plan for these roadblocks before you invest.

Invest in gold

In India, gold has always been a popular investment choice. New and seasoned investors consider it to be a great investment option, with a high potential for appreciation. Wealth management experts too agree that investing in gold is an ideal way to inflation-proof your savings. Since the supply of this precious metal is limited, the price of gold tends to rise in tandem with the general inflation peaks in an economy.

Therefore, investing in gold can give you higher inflation-adjusted returns than most other investment options. However, keep in mind that investment in gold is a long-term option and should be treated as such. Also, it is a wise idea to diversify your portfolio and not invest a huge portion of your capital in gold.

With Moneyfy from Tata Capital, you can even combine the advantage of mutual funds and gold by investing in top-rated gold funds.

Additional Read: Smart Long-Term Investment Options for 2020

Invest in long-term investment options

Long-term investment options such as fixed-income assets are another great way to inflation-proof your savings. Although the rates of interest offered by these options are slightly lower when compared to most other options, they are usually backed by a very powerful phenomenon, namely compounding.

Compounding can dramatically increase the value of your investment over a long period of time. In the process of compounding, your investment is reinvested along with the accumulated interest. This helps you generate additional income. To put it plainly, you get to earn interest on interest. However, to fully appreciate the power of compounding, you need to stay invested for a long time. By utilizing the power of compound interest, you can effectively negate the adverse effects of retail inflation on your savings.

Additional Read: What Is The Power of Compounding & How Can You Use It?


This list of inflation-proof investment options are not exhaustive. There are also plenty of other options that you can use to safeguard your savings even in the face of rising retail inflation. And in case you are unsure of how to manage your money in an inflation-based economic scenario, you could always seek professional advice.

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