Inflation and Interest Rates

How much unit you have consumed ?

It will be related to individual only MICRO Economics 

What is the consumption of national economy ?

It will be MACRO Economics 

Why as a wealth manager important to look at Macro economics factor ?

-> As a whole economy what factors to be considered as macro economics.

Im micro economics 

small , individual outlook is there and Factors like taxes , demand and supply prevail.

Macro economics like national economy at bigger aspects 

Factors like interest rate , inflations , yield and return.

Now if we talk about Inflation - Inflation means rate of increase in prices . 

We feel that market has inflated means inflation will ensure money less within people . We don’t have much spending left because items which we are purchasing for daily consumption has shoot up .

Purchasing Power - Impact of inflation reduces the purchasing power . 

If I am investing in FD for 8% and market giving  negative returns then as wealth manager you will see , whatever amount left as saving should consider the impact of inflation on investment returns . 

If we see that in market we are paying money but we expect return also, so loss of real money should not be there . 

Therefore Inflation must be considered . 

Many times investor do not consider these factors we just go with news coming up .

Therefore they are unable to create wealth which is why wealth manger come up who offer based on tech related services .

Recently , There are Fin influencers who provide information about finance through social media. They are not SEBI registered whom we can trust otherwise they can fraud us also. So common man has also come up with ideas without any qualifications.

Inflation definition - Inflation refers to general increase in prices of goods and services in an economy over time . Inflation erodes the Purchasing Power of money , meaning that the same amount of money can buy fewer goods and services . In wealth management , investors need to consider the impact on their investment returns . Investments do not keep pace with inflation can result in a loss of real value.

Interest Rate - Is it borrowing rate or lending interest rate , when you borrowing loan , you will consider how much interest rate I am currently getting at ?

If you lend money to somebody at that time also you consider interest rate at which you want to give the money. For them its business and investment . 

Nowadays many apps and start ups come up to provide easy loans.

Now consider Loan we cannot do it on larger scale , because RBI comes into the picture , Because RBI will ask you for documentation which is needed to set up a financial institution . Like Bajaj Finserv is doing . 

If you are borrowing the Loan , Interest rates must be less . 

If you are lending the loan , Interest rates must be higher .

Interest rates-  are the cost of borrowing money or the return on investment . They can have a significant influence on various aspects of wealth manager . Lower Interest rates can encourage borrowing and spending , which may stimulate economic growth . However , low interest rates can also lead to lower returns on Fixed Income investments such as bonds .Higher Interest rates , on the other hand can make borrowing more expensive but may offer higher returns on Fixed Income investments .