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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.)

Born of Three: A New Frontier in Fertility

Scientists have achieved a breakthrough in IVF by using DNA from three individuals—a step that could eliminate certain inherited disorders.

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In a major leap for reproductive medicine, researchers have successfully used DNA from three individuals to create healthy babies through In Vitro Fertilisation (IVF), opening up new possibilities for preventing inherited genetic disorders. Eight babies have been born in the UK using this technique, which remains in its early stages but is already being hailed as a potential game-changer in the field of fertility treatment.


This cutting-edge process—medically known as Mitochondrial Donation Treatment (MDT)—works by replacing faulty mitochondria in a mother’s egg with healthy ones from a female donor. It’s a highly targeted intervention that still allows the baby to inherit the nuclear DNA from its biological parents, while receiving only the mitochondrial DNA (a tiny fraction of genetic material) from the donor.


Until now, IVF procedures typically involved just the egg and sperm of the intending parents. However, this new approach enables scientists to eliminate serious mitochondrial defects, often responsible for life-threatening genetic diseases passed from mother to child.


How the Procedure Works

There are two primary forms of MDT:

1. Maternal Spindle Transfer (MST): The mother's genetic material is extracted and inserted into a donor egg containing healthy mitochondria but no nuclear DNA. The resulting egg is then fertilised with the father's sperm.


2. Pronuclear Transfer (PNT): The mother's and the donor's eggs are fertilised with the father's sperm. Then, the nuclear material from the donor's fertilised egg is removed and replaced with the nuclear material from the mother’s fertilised egg.


In both methods, the baby effectively has DNA from three people—mother, father, and the female donor—but the donor contributes only the mitochondrial DNA, which makes up less than 1% of total genetic material.


Why This Matters

Mitochondrial diseases are often passed down maternally and can lead to severe neurological and muscular disorders in children. Such illnesses occur in roughly one out of every 5,000–6,000 births and currently have no cure. With MDT, doctors may now be able to prevent such disorders at the embryonic stage, offering new hope to families with a history of genetic illnesses.


The UK’s Human Fertilisation and Embryology Authority (HFEA)—a leading regulatory body in Europe—has officially confirmed the success of these births. Experts believe the technology could be a beacon of hope for high-risk families, going far beyond traditional IVF by actively preventing inherited conditions.

 

Despite its promise, mitochondrial donation raises several ethical and legal questions. Since it involves direct genetic intervention in human embryos, some critics caution that the long-term effects are still unknown. The eight babies born so far are under medical observation to study any possible future implications.


Moreover, while the UK has established a legal framework for this technique, many countries—including India—still lack clear regulatory guidelines. The procedure is also considered highly expensive and remains inaccessible to most people.


What are mitochondria?

Mitochondria are tiny organelles within human cells responsible for generating energy. Defects in mitochondrial DNA can lead to serious health conditions, particularly affecting the brain, heart, and muscles.


Though still at an experimental stage, the successful use of three-person DNA IVF marks a new chapter in the field of reproductive science. As research progresses and ethical frameworks evolve, the technique may pave the way for a future where hereditary diseases no longer determine the fate of generations.

(The writer is a senior journalist based in Kolhapur.)

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