Presentation on Investors Hedge Against Inflations

Presentation on Inflations Hedge Against Investors

Presented By-:NITISH KUMARHIMASNHIVAIBHAVMANIKASUNNYSYNOPSIS Definition Types of Inflation Effects of Inflation Inflation Hedging Investment Products Gold & Precious Metal Real Estate Crude oil

INFLATION Inflation is an increase in prices for goods and services of an economy over a certain period. A general increase in prices and fall in the purchasing value of money Example-:Youbuy a candy bar for Rs 50. A month later, you go to buy the same candy bar and it's Rs 55 . You still have only Rs 55, but the price of the candy bar has gone up. We can say that inflationis at work. The price of that bar has been inflated.

Types of Inflations(a) DEMAND - PULL INFLATION: In this type of inflation prices increase results from an excess of demand over supply for the economy as a whole. Demand inflation occurs when supply cannot expand any more to meet demand; that is, when critical production factors are being fully utilized, also called Demand inflation.(b) COST - PUSH INFLATION:In this type of inflation occurs when general price levels rise owing to rising input costs. In general, there are three factors that could contribute to Cost-Push inflation: rising wages, increases in corporate taxes, and imported inflation. [imported raw or partly-finished goods may become expensive due to rise in international costs or as a result of depreciation of local currency]

EFFECTS OF INFLATIONThey add inefficiencies in the market, and make it difficult for companies to budget or plan long-term.Uncertainty about the future purchasing power of money discourages investment and saving.There can also be negative impacts to trade from an increased instability in currency exchange prices caused by unpredictable inflation. Higher income tax rates. Inflation rate in the economy is higher than rates in other countries; this will increase imports and reduce exports, leading to a deficit in the balance of trade.

An investment that is considered to provide protection against the decreased value of a currency. An inflation hedge typically involves investing in an asset that is expected to maintain or increase its value over a specified period of time. Alternatively, the hedge could involve taking a higher position in assets which may decrease in value less rapidly than the value of the currency.

Inflation Hedging

Following types of investment product-:1.Gold & Precious Metals2. Real Estate.3. Crude oil.4. Mutual Fund5. Fixed Deposits

Investments Product

Gold is widely viewed as aninflationhedge - a reliable measure of protection againstpurchasing powerrisk.While precious metals in general are a solid bet, gold in particular is seen as a hedge against uncertainty and a store of value.

GOLD AS INFLATION HEDGE