Ashutosh Bishnoi is the Managing Director and CEO of Mahindra Asset Management Company Private Limited, India's youngest mutual fund house
People say that investments can help you to fight inflation, how?
Only economists use the fashionable term ‘inflation’! The rest of us understand it more simply as mehengai (or fall in purchasing power in Hindi), which is nothing but the rate at which your rupee loses value year after year. We all know that every year we pay more for the same things that we buy for home or for personal use, whether food, clothes, soaps or any other item of consumption. So, how do you try to keep the purchasing power of our rupee intact? Equity Investments is the best answer.
How can you say that for sure?
Let me illustrate this: In 1979, the price of sugar in Mumbai was approximately Rs.1.25 per kg, price of wheat was about Rs.1 per kg, price of rice was similarly Rs.1.25 per kg. Edible oil was at around Rs 2.50 per litre. Today, sugar is at around Rs.50 that is 40 times, wheat at round Rs. 35 that is 35 times, rice at around Rs.50 that is 40 times and oil at about Rs.100 that is 40 times.
Now to fight this mehengai you could have invested in deposits in 1979 and your 100 rupees would have been worth around Rs.2,000 by now, if you had invested in gold it would be about Rs.3,000 today, and if invested in real estate would have grown to Rs.5,000. But if you had invested in the Sensex, it would be worth Rs.28,000 by now. That’s a hefty 280 times! This is a proven fact worldwide—equity investment is the best way to fight mehengai.
But I have heard that people lose a lot of money in equity markets…
You’re right. If you don’t know which equities to buy, at what value to buy them and when to buy and sell them, you too could lose money. It is best to rely on an expert fund manager who can help you avoid the pitfalls of poor judgment, poor assessment of opportunity etc—someone like Mahindra Mutual Fund. We can help you fight mehengai!