Presentation on Inflations Hedge

Against Investors

Presented By-:
NITISH KUMAR
HIMASNHI
VAIBHAV
MANIKA
SUNNY

SYNOPSIS
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-:
You buy 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 inflation is 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 INFLATION

They 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.

Inflation Hedging
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 .

Investments Product
Following types of investment product-:
1.Gold & Precious Metals
2. Real Estate.
3. Crude oil.
4. Mutual Fund
5. Fixed Deposits

GOLD AS INFLATION HEDGE

Gold is widely viewed as an inflation hedge - a reliable

measure of protection against purchasing power risk.
While precious metals in general are a solid bet, gold in
particular is seen as a hedge against uncertainty and a
store of value.