The sorry tale of the Indian rupee has become the matter of the moment, being covered across every news channel and social media forum. But how does the falling worth of the rupee affect your net worth? What changes between the INR 500 note in your pocket a year ago and the one you have now? And, more importantly, how to save your money from taking a nosedive in the deadly pool of inflation? Read further as we decipher the intricacies of the falling rupee.
India is an import-oriented country. This results in a trade deficit, where the value of imports outnumbers the exports, leading to a major trade deficit. Now, what happens when the imports increase? There will be more outflow of dollars, and the foreign currency will strengthen at the cost of the Indian Rupee. Aftermath? Government has to pay more rupees for the same amount of dollars to repay the debt. The debt burden shifts on the common public reflected in the form of inflation and we, the commoners have to pay more for fuelling up our car tanks.
How to shield your net worth from the Falling-Rupee crisis?
You cannot stop the situational behemoth from taking a toll on the nation’s economy. But you can take your personal finance matters into your own hands to armour your hard-earned savings from the depleting currency. Here are a few dos and don’ts to keep in mind.
1. Keep your distance from high cash.
First things first, you must avoid sitting on high cash. As per the concept of ‘Time value of money’, the sum of money you have today is worth more than the same sum you’ll have in the future. However, it is possible to defy this concept by keeping your cash to work and multiplying by itself. But where to put all the high cash? This brings us to another hack.
2. Go global with investments.
In times of domestic currency decline, one must always consider going global with their investments. International investments serve as a buffer against the declining rupee. Besides, they’re a win-win for you since you enjoy the benefits of asset appreciation and also welcome a decent foreign exchange return.
3. Say hello to hard currencies.
Another way is to try earning in hard currency. Hard currencies are fiats of economically and politically stable countries. They’re widely accepted as methods of payment all over the world. Hard currencies are a safe haven in times of national currency decline. These include the U.S. dollar, British Pound, European Euro, Swiss Franc, and Japanese yen, amongst many other currencies. If you try to create an income stream that pays you in hard currency, you attract a good amount of foreign exchange and your net worth is retained.
What are your ways to future-proof your money? Let us know in the comments below.
Leave a Reply