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‍5 Tips To Build an Inflation Proof Portfolio

April 21, 2023

Table of Contents

    Table of Contents

      To know why inflation serves as half the reason for all of your financial worries and how you can tackle it, check out this article!

      Controlling your finances can be taxing, especially when you get intimidated too easily by all the inflation surrounding you. You must have heard about creating a inflation proof financial portfolio to manage your money and save it for uncertain times. But how do you actually do it?

      The crux of any good financial portfolio is a strong investment background. It is equally important to save profoundly and create an emergency fund for an extra cushion in your finances. 

      You might have heard many financial influencers pointing out the need to create additional sources of income and not just blindly rely on one. 

      The latter statement is relevant mainly for two reasons: 

      1) The jobs in current times have become too demanding and unstable. 

      2) Your money is losing its value at a much faster rate- you can blame globalisation for it since financial turmoils in one country affect the whole world economy- specifically due to inflation. 

      Inflation is nothing but a rise in prices. It basically leads to a shrinkage in your purchasing power- directly impacting your budget! 

      However, inflation of around 2% to 5% may not necessarily be bad for the economy- it is generally expected to happen over time- but anything above it is considered to be a bad sign. 

      As a customer, inflation may not be something for you to celebrate. We usually blame it for most of our financial difficulties- which is true up to an extent. 

      Whenever you do any investment you should consider the Inflation effect as well on your Investments.

      5 Ways to stay Financially Sound during times of Inflation:

      In case you too are worried about inflation eating up all your savings and investments, let’s take a look at ways to create an inflation-proof portfolio!  

      1. Begin with planning your expenses- for a good saving strategy

      The first step to an inflation-proof portfolio is precise planning of your expenses. Remember, in order to have a portfolio in the first place, you will need to invest somewhere. 

      And since what you save is generally what you invest, you can’t afford to be mentally lured to spend whatever amount you wish. 

      A proper system of checks and balances is what you will need to keep proper track of your budget.

      Especially for a newbie, money management is a difficult task- therefore, focus initially on polishing this skill. 

      Tip: Always plan your expenses keeping in mind the possibilities of financially challenging times.

      When you do so, you will find it easy not just to cut down on your expenses but also keep saving and investing for uncertain times like those of inflationary tendencies. 

      2. Never forget to Invest in Stable and Secured Investment Plans

      Saved enough? Time to invest it! 

      In order to tackle inflation, you need to catch up with time. Saving alone won’t save you in the long run, but investing can.

      This can be done through smart investment plans that yield you high profits. 

      A simple rule of investment markets is that the longer you spend there, the greater the chances of your earning high returns. 

      Take, for instance, the example of fixed deposits (FDs) and recurring deposits (RDs).

      They all generally have long maturity periods and give you stable and predictable returns. 

      If you wish to smoothen out any type of major risk in your portfolio, these investments can be considered a good option. 

      However, if you wish to earn higher returns, compounding is the way to go!

      Being perhaps the 8th wonder of the world, compounding can multiply your returns by manyfolds. 

      You must look for an Investment Plan that offers you Compound Interest- this will help you grow your money faster!

      Hence, looking at your Short Term & Long Term Investment is crucial so that you can find the right balance in your Portfolio.

      3. Carefully plan an Investment in Consumer Products Stocks

      Since we are trying to tackle  the evil of inflation here, it is a good option to invest in areas that gain from inflation itself. 

      You know that consumer goods like food and energy generally face little to no fall in demand even during inflation- all thanks to their being a necessity for all of us! 

      This partially explains why stocks of companies that indulge in these businesses are generally profitable even during inflation. 

      Therefore, if you have the option to invest in them, you better do so. However, stock prices depend on various other factors too.

      Do consider them before investing in order to refrain from any unnecessary risk. 

      4. Turn your attention to Savings Accounts with high yields

      As mentioned even before, savings alone might fail to help you get an edge over inflation. But it is only with smart investment that they can do so. 

      Even if you decide not to indulge in too many risky investment plans, the least you must do is to keep your savings in a high yielding savings account.

      Don't just let your money sit in any random account or locker and lose its value. 

      Even though the interest that you may earn will not suffice to meet the needs of your difficult times, it can still be considered an effortless addition to your savings. 

      Some financial institutions may even consider offering you a higher interest rate for a high sum of money that is to be kept for a longer duration of time.

      Do try to look for such offers.

      5. Traditional Investments like Gold are a must to be included! 

      No doubt, when it comes to traditional problems, the old-age solutions are the best! 

      For your inflation-proof portfolio, you must consider traditional investment options like Gold. Whether you invest in gold in its physical form or through digital gold, both ways will earn you stable returns as well as bring you family’s heirloom! 

      Gold and silver have been, and will continue to be every Indian family’s first choice- when it comes to making an actual investment. Not just for prestige but also as a cultural symbol, these precious metals hold an important place in Indian society. 

      Also, even though silver may lose some of its value due to various reasons, gold is herculean and never lets you down! Therefore, do switch to your traditional metters for the right cushion and stability for your financial portfolio.

      Inflation is disliked by every consumer in general. But this doesn't change the fact that still comes uninvited and can take down the whole world’s economy! 

      As an individual, the least you can do is to prepare a preventive portfolio that serves to be profitable even during inflation. To create such a financial backup, follow the above strategies! 

      Download the Jar App and unlock the door to financial stability! With Jar, you can invest in digital gold starting at just Rs.10!