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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 Living Classroom for Environmental Learning

Once barren and debris-filled, the land was transformed into a thriving theme park for environmental education.

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In my earlier article, I traced how our biomedical waste facility in Thane grew from modest beginnings into a robust service network spanning multiple districts. What started as a daunting challenge—convincing hospitals, acquiring vehicles, and gaining regulatory trust—eventually matured into a recognised and certified operation. Along the way, we expanded our outreach, launched awareness campaigns, and even organised an international conference on biomedical waste management. In doing so, it proved that persistence and partnerships can transform an idea into an institution.


While setting up the biomedical waste treatment facility, we also began transforming the debris-filled land around us into a green space. This area, later known as Ankur Theme Park, became a hands-on learning environment for schoolchildren, college students, and the general public.


As we installed the machines, we decided to green the barren, debris-strewn land given to us.


We cleared the land and began tilling it to make the soil suitable for vegetation. Around the same time, we had already started our biocompost unit, followed by vermicompost units. To condition the soil, we used our own naturally made biocompost.


Gradually, this effort grew into a theme park. We intended to invite school and college students to step outside the classroom and learn directly from nature.


We created demonstration units—a biogas plant, a plant nursery, a butterfly garden, plantations of economically important plants, medicinal plants, flowering and ornamental plants, and more. We also constructed large ponds for aquaculture. Soon, guided tours were being organised not just for students but also for common citizens. Our aim was to develop this space into a true Centre of Excellence for environmental education.


We were privileged to have many eminent individuals visit our centre.


As mentioned in one of my earlier articles, Shri Ram Naik, then Petroleum Minister of the Government of India, inaugurated the facility.


Later, our spirits soared when the late Shri Manohar Parrikar, then Chief Minister of Goa, visited. It was truly a memorable event for us.


Dr Dilip Biswas, Chairman of the Central Pollution Control Board, also came all the way from New Delhi after learning that an environmental NGO had set up a common biomedical waste treatment facility. After his visit, he remarked that this facility was a role model and the first of its kind in India.


We were equally honoured by the visit of Dr Anil Kakodkar, an eminent nuclear scientist and former Chairman of the Atomic Energy Commission of India. He, too, was very impressed with the work being done at our facility.


The story is nearing its end. I will share the final chapter in the next article. Until then, wishing you a pleasant weekend!


(The writer is an environmentalist.)

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