Inflation: The Silent Wealth Eroder You Underestimate

• People often underestimate inflation because its compounding effect is not intuitive; a 5-6% annual rise seems manageable but multiplies over time.
• Annual inflation numbers feel abstract and monthly increases are barely noticeable, leading to an illusion of control through minor adjustments.
• The core mistake is thinking inflation adds up; it multiplies, causing prices to double in about 10-12 years at 6-7% inflation, making current incomes insufficient.
• Inflation silently erodes savings, as fixed deposits and savings accounts lose purchasing power even if balances remain stable.
• Combating inflation requires income growth faster than inflation, regular audits of expenses for elasticity, and investing in assets that outpace inflation over the long term.

Why It Matters: Inflation's compounding nature silently erodes wealth; proactive financial planning is crucial to maintain purchasing power.