Indexation Benefits

Q. What is indexation? How does it help an investor? A. Inflation—constant erosion in real value of money through a rise in prices—is a fact of life. Over the last few years though inflation in India has been relatively low—in the 3-6 per cent range. In the earlier years, inflation was generally on the higher side. The compounding effect of even moderate inflation rates over many years can really depress the real gains you make on an investment. You may have made an investment that has quadrupled over the last 15 years, but the purchasing power of money is down to less than

This article was originally published on March 12, 2003.