When prices for goods and services rise, the same amount of money buys less. The Bank of Thailand explains this in its article on inflation and real returns. Start planning with your expenses and when you will need the money rather than guessing which asset will certainly beat inflation.
Calculate Returns After Inflation
A simple estimate is: real return ≈ investment return − inflation. A more precise formula is (1 + investment return) ÷ (1 + inflation) − 1. If the assumed return is 5% and assumed inflation is 3%, the real return is about 1.94% before fees and taxes. This example explains the math; it is not a forecast of future returns.
Change the assumptions with the compound-interest calculator and read more about setting assumptions in financial calculators. Remember that a calculator uses the figures entered and does not predict market movements.
Review Your Plan Using Actual Information
- Check how essential expenses such as housing, food, transport, and healthcare have changed since last year.
- Separate goals that require money in the short term from longer-term goals.
- Keep an accessible reserve for obligations that are coming due soon.
- Consider fees, taxes, and volatility when comparing returns.
- Review whether your asset allocation still fits your time horizon and ability to tolerate risk.
The Thai Securities and Exchange Commission (SEC) investor-education framework covers inflation, the relationship between risk and return, diversification, and evaluating real returns. Read the SEC investor-education framework. These principles do not recommend any particular product.
Points to Keep in Mind
Assets with higher potential returns may also have volatility or specific risks. No product guarantees that it will beat inflation every year. Use inflation and return figures as planning assumptions, then adjust when actual information or goals change. The Finnomena video retained on this page is about dividend funds; it does not explain the formula or a plan for responding to inflation.