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If the returns on your investment is less than the inflation rate then effectively the value of your money is going down.
Lets say you invest Rs. 10000/- which returns you 6% per annum which means at the end of the year it would be worth 10600/
Assuming the national inflation rate is 8% then whatever was worth 10000 rupees last year is worth 10800 this year which means your money has effectively gone down in value by Rs. 200
Wiki User
∙ 15y ago
Wiki User
∙ 14y agoIf inflation goes up, the company's costs go up. So they raise their prices and their nominal earnings rise. This translates into a higher stock price, but the real price (P/E) remains unchanged, as it is a real value and is not subjected to any effect of inflation.
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What assets should you own in high inflation periods?
We are heading into a period of high inflation due to the impact of oil costs. What are stocks that will survive this - other than the obvoius - Oil stocks! fgfgfgf
What effect would inflation have on a company's cost of capital?
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What is the effect of inflation on Output?
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Effect of inflation on silver coins?
Check out coinflation.com
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