Is inflation your enemy? Anybody and everybody can answer this question by giving an affirmative response,” Yes”. Inflation is indeed our enemy as far as consumables is concerned. So as far as food prices, cost of education, cost of medical services etc. are concerned, inflation is indeed bad. After all, rising prices indeed hit our pockets and make purchasing power of money go down. But is this logic of inflation hitting us hard applicable in all aspects of life? The answer is no. In case of investment assets, the logic works just opposite way in many scenarios. This is what investors need to understand and capitalize on. There are some asset classes which respond positively to inflation and in fact help us build wealth as the price of these assets appreciate because of inflation. Let us look at some of the investment assets that we hold in order to understand the other impact of inflation which is surprisingly positive and helps us actually build wealth. Real estate and inflation: All those who own real estate, especially residential premises in cities, should thank inflation for making them wealthier even though it is notional wealth. With cost of construction going up, the price of new houses has gone up making old houses costlier as well. Though housing prices have gone up for other reasons as well, inflation has definitely been a major contributor. For those, who don’t own a house the act of owning a house has become tougher with passage of time
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