Money and Inflation

Money is what we need all. It should be supplied consistently then only we can meet our needs timely and fully. But the demand for money to satisfy those same needs increases. Why? Why we need more money to buy the same article? Does the value of money deteriorate over the time?

The answer is yes. The value of money decreases over time that is the reason why we need more money to buy the same article with same utility. So why does the value of money deteriorate over time while value of any investment strategy. 

The answer is inflation. It is the inflation that brings the value of money down over a period of time.

In language if finance it is called time value of money. With time the value of money changes. We cannot buy the same quantity of article for the same amount of money. Every trader needs some incentive to continue his trading activity so need over time increases the price of his articles or services to satisfy his increasing needs or something else. When all the traders so this, the price level of all the articles and services go up. This phenomenon of price increase is called inflation in general.

It is very much important for one to keep the value of his money at least intact if cannot surpass the inflation. To achieve this target one needs to keep increasing the value of his money. Only by increasing the value of money one can fight with the devil of inflation. This is achieved by investing the money in interest yielding investments. This investment should be able return more money than invested. This extra money should be more or at least equal to rise in prices. Then only money is safe.

Financial Planning, Money Mantra