BQ Big Decisions: How To View RBI’s Floating Rate Bond As Real Interest Rates Fall
BloombergQuint’s Big Decisions podcast gets you the insights you need to make big money decisions with confidence.
When you’re saving for a financial goal, do you decide how much to save based on current prices?
The obvious answer is, no. If you’re saving for your child’s education, you assume that school fees are going to rise. If you’re saving for a foreign trip, you account for the possibility that travel will get costlier. And if you’re saving for retirement, you know that many of your expenses, particularly healthcare, will rise exponentially.
Inflation, according to Arvind Rao, certified financial planner and founder of Arvind Rao & Associates, is often called the "silent killer" in an individual’s financial life. Often, investors in fixed income instruments don’t think about real interest rates, that is the rate of return after adjusting for inflation.
On this podcast, BloombergQuint spoke with Rao about the pros and cons of the Reserve Bank of India's floating rate bond, currently priced at 7.15%, in the context of falling interest rates and rising inflation.