Most of us were advised in our childhood to save money in the piggy bank and we used to be very excited to put money into that box and count when the box got filled. The reason behind this process was too teach us about the saving habits from our childhood.
I too got the same advice from an early age and I kept on saving money in the Piggy Bank for many games and childhood desires. One thing always kept me wondering that whenever I saved enough money for any game/toys, the prices escalated most of the time. My happiness use to shatter in pieces when I was unable to buy the desired item from my patient savings or I have to borrow money from my mother to buy the same.
Later on, I realized that my parents guided me about how to save from an early age but one important ingredient was missing from the story and it was the most important ingredient in the Curry – Inflation. Anything which I was saving in that piggy bank was losing its value over the time because there was no increased return I was getting from the money kept. Then I got the lesson of a life time that if my money is not growing with Inflation rate then it is actually not saving, rather the value of money is depreciating.
If it comes to investment then anything that gives return over the inflation is considered as an investment product. Most of us keep our hard-earned money in the Financial Product where the returns are lesser than the inflation rate still they consider it as their Investments for the future.
Inflation is something which can never be ignored when it comes to money management whether it is childhood savings or adulthood investment. Mr. Warren Buffet got this knowledge when he was only 11 year old and instead of putting money into any piggy bank, he started investing it in the companies that can give him returns above than the saving requirements, now we all know the result of applying the formula in such a early age. Keeping ideal money in saving bank also not a kind of saving instead you can always choose Liquid funds or short term FDs to beat the inflation & generate returns at par to inflation rates.
All the views are personally unbiased & this has nothing to deal with promotion or demotion or any financial products. Investments in Mutual funds are subject to Market risk, please read the offer documents carefully before investing.