In 2000, a movie ticket in Mumbai cost ₹25. Today it costs ₹250 — a 10x increase in 24 years. That's inflation at work. Your grandfather's salary was ₹800/month; yours is ₹80,000. Inflation is why both generations felt roughly equally comfortable — and equally stretched.
At 6% annual inflation: ₹1,00,000 today = ₹74,409 in 5 years (in real purchasing power). In 10 years: ₹55,839. In 20 years: ₹31,180. Your ₹1 lakh loses 70% of its value in 20 years just sitting idle.
India's average inflation hovers around 5-7%. A savings account returns 3.5%. An FD returns 6-7%. Net of tax, these barely beat inflation — if at all. Equity mutual funds have historically returned 12-15% CAGR, generating a real (inflation-adjusted) return of 6-8%. This is wealth creation.
Equity funds (60-70%): Long-term inflation beaters. Real estate (15-20%): Hard asset that appreciates with inflation. Gold (5-10%): Historical hedge against currency devaluation. Inflation-indexed bonds: Direct hedge, excellent for conservative investors.
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