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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.)

Civil Defence course to be introduced in Mumbai University curriculum

  • PTI
  • May 11
  • 2 min read

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Mumbai: The Maharashtra government has decided to introduce a civil defence course in the Mumbai University curriculum, acknowledging the key role the volunteer-based emergency response mechanism can play during emergencies amid a spotlight on the Indo-Pakistan conflict that necessitated mock drill exercises.


The government is also trying to strengthen the Directorate of Civil Defence, beset by multiple issues ranging from manpower crunch to paltry daily allowance and logistical problems, including inadequate sirens, vehicles and ambulances.


The Directorate of Civil Defence and the University of Mumbai recently signed a memorandum of Understanding (MoU), finalising the inclusion of the Civil Defence course in the academic curriculum, Director of Civil Defence Prabhat Kumar told PTI.


This course will be taught in all engineering colleges affiliated with the University of Mumbai and will carry a weightage of 25 marks.


"Students who wish to serve the nation while pursuing their education will get an opportunity through this course," Kumar said, adding that students will be trained in rescue operations and saving lives during emergencies.


They will also be prepared to work alongside government and civic agencies, such as disaster management cells, fire brigades, and hospitals, especially during emergency and war-like situations.


The spotlight on civil defence has intensified following mock drills conducted across coastal districts and Pune, Nashik, and Chhatrapati Sambhajinagar.


These drills aimed to raise awareness among volunteers and the general public.


The mock drills involved around 10,000 volunteers from Civil Defence, Home Guard, NDRF, and other emergency response agencies.


An official said the government is taking appropriate steps to strengthen civil defence, and its revival is underway.


The Directorate of Civil Defence has long struggled with shortages in manpower, vehicles (including rescue vans and ambulances), sirens, and training equipment.


However, these requirements are likely to be fulfilled soon, he said.


Although the sanctioned manpower for Civil Defence is 420 personnel, operations are being carried out with only 135 staff members across the state.


He said some units, like those in Ratnagiri and Sindhudurg, have only one full-time government employee each.


"In emergencies, Civil Defence needs its ambulances and vehicles. However, many of the existing vehicles are in poor condition, with some on the verge of being scrapped," the official noted.


Volunteers currently receive a daily allowance of Rs 150 for their service. A proposal has been submitted to the government to increase this amount to Rs 500 per day.


He added that in addition to the proposed allowance hike, proposals for increasing manpower, training equipment, and sirens have also been submitted. The government is positive about meeting these demands.

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