It is therefore essential that investors assume a higher inflation rate when they start saving for long-term goals. “Most people assume 0% inflation. They simply don’t factor in any rise in price when they plan for their goals,” says Taresh Bhatia, Partner in Advantage Financial Planners Bhatia prefers to err on the side of caution so that his clients are safe rather than sorry. “We assume education inflation at 10% and healthcare inflation at 12-15% when we formulate a financial plan,” he says.
