The biggest threat to your money is inflation, as it not only impacts the current value of your money but also diminishes the worth of your future savings across various asset classes. What inflation does is when you eventually realize or redeem your savings across assets years later, you find that their value is significantly less than it is today. So even if you save a lot for your retirement, inflation will keep lowering the value of your savings over the years.
However, if you plan your retirement wisely and take steps to safeguard your savings from inflation, there are several strategies you can use to help shield your finances from rising prices and protect your savings to some extent.
Retirement is a phase in one’s life that many look forward to, and there are systems in place that help such people make strategic financial decisions in order to achieve an enjoyable post retirement life, says Rohit Garg, CEO & Co, Founder of Olyv. All these factors, however, make one sad as they struggle to preserve the little savings they have from the terrible vice of inflation that belittles the purchasing power of money over time, he adds.
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For the safety of any retirement corpus, four simple recommendations should be considered, says Garg as he discusses ways to safeguard savings from inflation.
“First, investment should be made in different types of assets – equities, fixed income and property in order to provide protection against risk. Second, Investments with forms of return which are limited to certain levels of indexation, such as TIPS, should be made. Third, some amount of money out of savings should be set aside for certain categories of expenditures lasting 1 or 2 years, as a precaution against trouble. Fourth, Monitor, assess and make changes to your retirement portfolio on a regular basis,
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