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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.)

Diwali: The Festival of Lights, Sweets, and Blockbusters

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Diwali, the festival of lights, is celebrated across India with immense enthusiasm, signifying the triumph of light over darkness and good over evil. Streets and homes are decorated with diyas (earthen lamps) and vibrant rangolis, creating an atmosphere brimming with positivity. Families come together, exchanging sweets, wearing new clothes, and performing rituals to welcome prosperity. Diwali is also a time for people to unwind and enjoy, embracing joy and togetherness. For many, this festive season isn’t complete without one more essential element: Bollywood blockbusters.


Over the decades, Bollywood has become an integral part of Diwali celebrations. Big production houses often reserve their biggest releases for the Diwali weekend, drawing moviegoers in droves. This trend began in the era of single-screen theatres, where crowds would queue up hours in advance to watch their favourite stars on the big screen. For Bollywood fans, a Diwali release has traditionally been a must-watch, with films echoing the season’s spirit of joy, love, and hope.


Since the 1990s, Shah Rukh Khan, popularly known as the “King of Bollywood,” has dominated Diwali releases. His movies have become synonymous with the festival. In 1993, Baazigar launched him into superstardom, cementing Diwali as a lucky time for his releases. This was followed by an incredible streak with Dilwale Dulhania Le Jayenge (1995), Dil To Pagal Hai (1997), Kuch Kuch Hota Hai (1998), Mohabbatein (2000), Veer-Zaara (2004), Kabhi Khushi Kabhie Gham (2001), Don (2006), Om Shanti Om (2007), Jab Tak Hai Jaan (2012), and Happy New Year (2014) – all of which were embraced by audiences with open arms. These films became monumental Diwali hits, offering audiences the perfect blend of romance, drama, and music.


But Shah Rukh was not alone in owning the Diwali box office.. comedy franchises like Golmaal and Housefull became consistent Diwali favourites, promising laughter and light-hearted entertainment. The appeal of these Diwali releases lay in their ‘masala’ formula—a mix of romance, action, comedy, and music. Families flocked to theatres, making these films part of their celebrations, and movie houses saw packed halls, with the joyous sounds of clapping and cheering filling the air. Bollywood became an extension of the Diwali festivities, bringing people together for an immersive experience that complemented the festival’s vibrancy.


However, with the rise of streaming platforms, the trend has shifted. Since 2021, Diwali releases have struggled to draw audiences to theatres as strongly as before. Many people now prefer to enjoy the festival from the comfort of their homes, tuning into OTT platforms for entertainment. Despite this shift, filmmakers continue to bet big on Diwali releases, hoping to recreate the magic of past blockbusters. This Diwali, audiences can look forward to Singham Again, a highly anticipated action-packed addition to the successful Singham franchise. Directed by Rohit Shetty, Singham Again boasts a star-studded cast, including Ajay Devgn, Deepika Padukone, Ranveer Singh, Akshay Kumar, Tiger Shroff, and Jackie Shroff. Known for its unique mix of action and comedy, the Singham series is expected to bring the excitement back to theatres, and it’s set to be one of the most-watched films this Diwali.


Another big release this year is Bhool Bhulaiyaa 3, the latest in the horror-comedy franchise that first captured audiences in 2007. With Bhool Bhulaiyaa 2 being a resounding success in 2022, there’s significant buzz around this instalment, with audiences eagerly awaiting its spine-chilling and humorous antics. Other releases include Lucky Bhaskar, starring Dulquer Salmaan, which explores the mysterious journey of a banker in the 1980s, and Amaran, a Tamil biopic based on the life of Major Mukund Varadarajan, an Indian Army hero.


As Diwali draws near, moviegoers are eagerly looking forward to this lineup, especially Singham Again and Bhool Bhulaiyaa 3. While the cinema-going experience has evolved, the excitement around Bollywood’s Diwali offerings remains a testament to the festival's spirit—a time to celebrate, revel, and share happiness. Diwali, the festival of lights, continues to illuminate the lives of millions, whether through traditional diyas or the glitz and glamour of Bollywood.


(The author is a communication professional. Views personal.)

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