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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

Silent Money Killer: Loss of Buying Power

In personal finance, we often worry about losing money in the stock market, dislike the volatility associated with equities or mutual funds, or feel anxious about missing out on a hot investment tip. Yet the biggest threat to our wealth is far quieter and far more dangerous: loss of buying power. It is the invisible erosion of your money caused by inflation - a force that operates every single day, without pause, without headlines, and often without being noticed until it is too late....

Silent Money Killer: Loss of Buying Power

In personal finance, we often worry about losing money in the stock market, dislike the volatility associated with equities or mutual funds, or feel anxious about missing out on a hot investment tip. Yet the biggest threat to our wealth is far quieter and far more dangerous: loss of buying power. It is the invisible erosion of your money caused by inflation - a force that operates every single day, without pause, without headlines, and often without being noticed until it is too late.
Inflation does not take away your capital visibly. It does not reduce the number in your bank account. Instead, it reduces what that number can buy. A Rs 100 note today buys far less than what it did ten years ago. This gradual and relentless decline is what truly destroys long-term financial security. The real damage happens when people invest in financial products that earn less than 10 per cent returns, especially over long periods. India’s long-term inflation averages around 6 to 7 per cent. When you add lifestyle inflation - the rising cost of healthcare, education, housing, travel, and personal aspirations - your effective inflation rate is often much higher. So, if you are earning 5 to 8 per cent on your money, you are not growing your wealth. You are moving backward. This is why low-yield products, despite feeling safe, often end up becoming wealth destroyers. Your money appears protected, but its strength - its ability to buy goods, services, experiences, and opportunities - is weakening year after year. Fixed-income products like bank fixed deposits and recurring deposits are essential, but only for short-term goals within the next three years. Beyond that period, the returns simply do not keep pace with inflation. A few products are a financial mess - they are locked in for the long term with poor liquidity and still give less than 8 per cent returns, which creates major problems in your financial goals journey. To genuinely grow wealth, your investments must consistently outperform inflation and achieve more than 10 per cent returns. For long-term financial goals - whether 5, 10, or 20 years away - only a few asset classes have historically achieved this: Direct stocks Equities represent ownership in businesses. As companies grow their revenues and profits, shareholders participate in that growth. Over long horizons, equities remain one of the most reliable inflation-beating asset classes. Equity and hybrid mutual funds These funds offer equity-debt-gold diversification, professional management, and disciplined investment structures that are essential for long-term compounding. Gold Gold has been a time-tested hedge against inflation and periods of economic uncertainty. Ultimately, financial planning is not about protecting your principal. It is about protecting and enhancing your purchasing power. That is what funds your child’s education, your child’s marriage, your retirement lifestyle, and your long-term dreams. Inflation does not announce its arrival. It works silently. The only defense is intelligent asset allocation and a long-term investment mindset. Your money is supposed to work for you. Make sure it continues to do so - not just in numbers, but in real value. (The author is a Chartered Accountant and CFA (USA). Financial Advisor.Views personal. He could be reached on 9833133605.)

A Democratic Betrayal

Updated: Mar 12


Brussels
Calin Georgescu

Few things are more dangerous than unelected bureaucrats who claim moral superiority while trampling on democratic principles. That is precisely what is happening in Romania where Calin Georgescu, a nationalist and staunch critic of Brussels, has been barred from running in May’s presidential election. The decision by the country’s central election authority and backed by European Union elites has exposed European liberalism which celebrates democracy only when the results are convenient.


At the heart of this crisis is the annulment of Romania’s December 6 election, a move so brazenly anti-democratic that it would have been condemned had it taken place in Hungary or Poland. Georgescu, a pro-sovereignty candidate, had been leading the race when, just two days before the final round, Romania’s highest court scrapped the entire process. The official reason? Allegations of Russian interference - allegations that remain unproven and which Moscow has denied.


This decision alone was troubling. But the outright ban on Georgescu’s candidacy reveals the real agenda at play. The election authority argues that “it is inadmissible” for a previously disqualified candidate to run again. But who made this rule? Romania’s Constitution does not explicitly prevent disqualified candidates from standing in re-run elections. The ban reeks of political calculation rather than legal necessity.


The response from Romania’s electorate has been telling. Protests erupted outside the election bureau as furious supporters of Georgescu, many of them ordinary Romanians disillusioned with Brussels, clashed with security forces. The anger is not simply about a single election but about the broader feeling that their country is being treated as a vassal state of the European Union, its sovereignty undermined by foreign elites who have no stake in the daily struggles of Romanian citizens.


The EU’s condescending attitude towards Romania has been evident for years. Since its accession to the bloc in 2007, Romania has been treated as an inferior member state, constantly scolded for its governance while Brussels extracts cheap labour and resources. Romanians have grown weary of lectures from Germany and France about the rule of law when those same countries ignore their own democratic failings.


The reason Georgescu gained such a strong following in the first place is that Romanians are rejecting the EU’s empty promises. Two decades of membership were supposed to bring prosperity, yet wages remain low, young people are fleeing to Western Europe for work, and local industries have been hollowed out by foreign corporations. Romania now finds itself reduced to a periphery state in the European economic hierarchy, useful only as a cheap manufacturing hub and buffer against Russia.


The growing Euroscepticism in Romania is part of a broader trend across Eastern Europe. From Hungary’s Viktor Orbán to Slovakia’s Robert Fico, nationalist leaders are winning because they speak for voters who feel abandoned by the European project. Brussels brands them as ‘populists’ and ‘authoritarians,’ but the truth is simpler: they are responding to the democratic will of their people.


The same European elites who lecture Eastern Europeans about democracy had no issue overturning Brexit votes in the UK Parliament, ignoring Dutch and French referendums on the EU Constitution, or interfering in Italy’s elections when Giorgia Meloni’s government came to power.


Georgescu’s exclusion from Romania’s presidential race is yet another example of this double standard. European diplomats, including those from Germany, France, the Netherlands, and Spain, have rushed to defend Romania’s courts, claiming that the ban is necessary to safeguard democracy. But what democracy are they referring to? A democracy where ‘Russian interference’ is selectively invoked to silence critics of the EU while pro-Brussels candidates are given a free pass?


For all its talk of democratic values, the European Union has shown once again that it prefers control over consent. If democracy is to mean anything, it must include the right of people to make their own choices - however inconvenient they may be to the ruling elites in Brussels.

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