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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 Martyr to the Second Amendment

Charlie Kirk’s death by gunfire is unlikely to settle America’s endless quarrel over firearms.

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Charlie Kirk built his career on the idea that guns were not a threat to American freedom but its guarantor. Ironically, he would die by one. Kirk was answering a question about mass shootings at Utah Valley University earlier this month when a bullet struck his neck.


Kirk, one of America’s fiercest defenders of gun rights, was just 31. Raised in suburban Chicago, he dropped out of college to co-found Turning Point USA at 18. In little more than a decade, the group grew into the largest conservative youth organisation in the country, a pipeline of young activists who often found their way into Donald Trump’s campaign and administration. Kirk was much more than just another conservative talker; he was an operator, organiser and recruiter for the Republicans. His podcast ‘The Charlie Kirk Show’ commanded millions of listeners. On social media he mixed denunciations of immigration and abortion with pandemic scepticism and climate-change conspiracy theories. Love him or loathe him, it was difficult to ignore him.


Trump relied on him to mobilise younger voters. It was Kirk who helped turn Arizona ‘red’ again and even boosted figures such as Vice-President J.D. Vance. Small wonder that when he was killed, Trump called it a “dark day.”


Yet even in mourning, a familiar script played out. Trump blamed left-wing rhetoric, not the gun as responsible for the activist’s death. Kirk himself had long mocked calls for gun restrictions. To him, the Second Amendment, which is the right to bear arms, ratified in 1791 was far more than a clause in the Constitution. It was liberty itself.


The amendment’s original purpose was to enable citizens to muster militias at a time when standing armies were mistrusted. Courts have since reinterpreted it to affirm personal gun ownership, most notably in the Supreme Court’s Heller decision of 2008. In practice, it has given cover to a uniquely American arsenal resulting in nearly 400 million firearms in civilian hands today, more than one per person.


The consequences are grim. Firearms now cause around 40,000 deaths each year, which amounts to a shocking 109 every day. They are the leading cause of death among children and teenagers, far eclipsing car accidents. By July this year nearly 19,000 people have died from gun violence and over 2,000 mass shootings had been recorded.


American schools and varsities have become familiar sites of carnage. Columbine in 1999, Sandy Hook in 2012, Parkland in 2018 have all shocked the nation (some enshrined in memorable documentaries) but have ultimately changed little.


While Australia, Canada and much of Europe, after tightening their gun laws, recorded sharp falls in shootings, America stands apart in this. America’s firearm death rate of 12.2 per 100,000 is several times higher than that of its peers. Yet, efforts to regulate guns remain stuck. The gun lobby, led by the National Rifle Association, continues to wield clout.


In fact, Congress hobbled research for decades with the 1996 Dickey Amendment barring federal agencies from studying gun violence as a public-health issue. Though partially reversed in 2019, its chilling effect still lingers. The violence from firearms has political echoes. The killings of John F. Kennedy, Robert F. Kennedy and Martin Luther King Jr shook the world in the 1960s. More recently, Donald Trump himself survived an attempt on his life. Kirk’s assassination adds another name to the roll of America’s martyrs. But unlike presidents or civil-rights leaders, his significance lies in the paradox he embodied. He insisted that guns were safeguards, not dangers. His end suggests otherwise.


Still, it is unlikely to change minds because America’s gun debate is not a clash over evidence but of identity. For many conservatives, gun ownership is entwined with patriotism and distrust of government. For reformers, the daily toll of shootings is proof of systemic failure. Both sides have grown more entrenched. Each fresh tragedy becomes not a moment of consensus but another cudgel in the culture war.


Kirk’s death will be mourned by his followers and scorned by his detractors. But will it alter the trajectory of American politics? Almost certainly not. The gun that killed him was not merely a weapon but a symbol of the very freedoms he preached. His fate is cruelly symbolic. His death, like those of thousands each year, will be absorbed into the endless cycle of outrage, mourning and stalemate. In America, even irony seems powerless against the gun lobby.

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