l nflation isn't in your control,

(Cprices are rising quickly, your investments

Khoulclcompensate [or the trend; but that
docs not Incan changingyour
so worry not allocati( strategy

have the risk appctitc for your Rol Is 5% and infla- levant for you i.e. your portfolio based on a var)a- e.g. from debt
IOO€S equity in your port. tion is 6%, your principal consumption basket? Un- ble that may not apply to to a more vola-
a lot of opi folio, it should have been is worth less than earlier fortunately,in a country you. Whatdoes it all boil tile asset class or
are xxficedon '00% even when inflation In such a situation, what of 138crorc people, it is down to? The issue at high-yielding debt,
ho• high inflalion is eat- was low. It is generally should you do? Nothing you are reacting to so-
not possible to measure as hand is negative real re-
into yotv returns on agreed that for retired se- much. If you increase the many unique inflation turns in debt investments. mething not in your
vand how Dior citizens, equity a]Jo- equity allocation in your rates. Inflation is high, but does control. Inflation
-Uffation return. cation should bc on the portfolio just to beat infla- What does the consum- not typically remain as and its mea-
particularly c.iclq in- lower side, If that is dis- tion, it may not suit your er price inflation basket in high forever. In 2020, CPI surement
is negative have thc risk profile. If you take India comprise? Almost inflation averaged 6.6%. via a gener-
nose argumene, have lower-credit-rated, high- half the basket constitutes The forecast for FY22 ic basket of
merit- them 0 appetite for er+'teldjng debt, it would food and food products. from the RBI,in the last goods is not
•motet to tbat. too, '0090 equity in your raise the credit risk in While food is the major policy review on June 4, in your con-
The fact that you have a POTIfoIjo.it should have your portfolio and that al- chunk of expenses for ma- was 5.1%.The projection trol. Market
disease and medicines am been even when so may not be suitable. ny people, it is not so for can go wrong as there are movement,
does not mean inflation Iou everybody, particularly in certain pressures on infla- i.e. equity price
you take the medicine - Pace of rising prices upper-income brackets. tion such as high crude oil levels or inter-
thcv be appro- torted when Inflation is Inflation is the pace of ris- Services are missing in prices, high metal prices, est rate levels are
priate tor symptoms high, it means going ing prices. Of what? Jfyou the CPI basket, except for money circulation in the not in your con-
and suitable lor you. agatnst the grain. are basingthe allocation house rent and certain as- economy being higher trol. What is, is
How do you determine When inflation rate is in your investment portfo- pects of transport / com- than earlier or lockdown- your investment
what IS appropriate or lugil, the relevance for lio on inflation, it should munication. We consume induced supply con- portfolio. That
suitable? you is that prices orgoods be on the basket of goods services such as doctor straints. These pres- should be based on
and servicesyouconsume and services you con- consultation, dining at sures could mean proper, logical cri-
objectives are rising and that should sume. But that is not the restaurants, haircuts at sa- that even if infla- teria about which
The primary aspects be compensaledfor by case. The inflation data Ions, app-based cab ser- tion is higher than you must be clear.
which your anvesonent your investments. If the we see monthly, an- vices, data/wi-fi, educa- 5.1%,it could be (The writer is a
pcM1101i0
should be based return on investments nounced by the Centre, is tion/coaching, driver and lower than 6.6%. corpotute trainer
are your investmem ob- (Rot) is lower than infla- the inflatjon for a given domestic help. Net-net, if If you change and author)
yectjves, financial goals, tion, then at the end or the basket of goods across the the headline inflation data your allocation,
ome horzzon» appe• penod. the worth of your country. But every indivi- for the month, as we
tire and the risk-reurn pnncipal will be Jess than dual's lifestyle is different. see in the media, is
profile of the investments. earlier as it can help buy Consumption baskets say, 5%, then the in-
While your net-of-infla- fewer goods and services vary across profession, nation for your unique in-
non real return ought to than it could before, if age, location, gender, dividual consumption
be positive, your portfolio your returns are higher taste. preference and the basket may be, say 7%
allocation should not than inflation, then i! en- like. Hence, the inflation or even which is
distorted when Infiaoon is hances value. number is at best an ap- not evident to us, So, it
lugh. As an iljustrauon, if For example, if infla- proximation of trends in may not be appropriate to
your appropriate pcmfcr uon is 5% and your Rol is the economy bujJd your invest,
lio allocation is equi- 10%, you well off. If Then how would you ment
ry and debt, if should your Rol is 5%,your in- know what part of the jn-
not be 100%equity when vesunent js not making tlation number is re,
inflation is high If you you any better off. Now, if