The rate at which the cost of living increases is termed as inflation. It is simply the costs to buy the goods and services you need to live. Inflation causes money to lose value as the same amount of money will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if the average inflation rate is 7% for the next 20 years, goods or serviced that are priced at Rs. 1000 today would cost Rs. 3617 in 20 years. This makes it all the more important to consider inflation as a factor in any long-term investment strategy. One should look at an investment’s ‘actual’ rate of return, which is the return after inflation. One should aim to invest to get a return above the inflation rate ensuring that the investment does not decrease in value.