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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 That Lights Up Hearts and Homes

Diwali whispers softly, ‘Slow down, light a lamp and let your soul shine a little brighter.’

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Diwali, one of the most popular Hindu festivals, is celebrated with great enthusiasm and fervour across India. The festival, also known as Deepavali, is a five-day celebration that honours the triumph of light over darkness, good over evil, and knowledge over ignorance.


Story behind Diwali

The story behind Diwali is associated with the Hindu epic, Ramayana. According to the epic, Diwali commemorates the return of Lord Rama, the king of Ayodhya, after a 14-year exile.


After defeating the demon king Ravana, Lord Rama returned to Ayodhya with his wife, Sita, and brother, Lakshmana. The people of Ayodhya welcomed their king by lighting diyas (earthen lamps) and decorating their homes with flowers and rangoli. This joyous occasion is celebrated as Diwali, symbolising the victory of good over evil and light over darkness.


Significance of Diwali

Diwali is a celebration of the triumph of good over evil and light over darkness. The festival has significant spiritual and cultural importance, and its significance can be understood in various ways:


Victory of Good over Evil: Diwali symbolises the victory of good over evil, as Lord Rama defeated the demon king Ravana.


Light over Darkness: The festival celebrates the triumph of light over darkness, symbolising the victory of knowledge and wisdom over ignorance.


New Beginnings: Diwali marks the beginning of a new year in many parts of India, and it is considered an auspicious time for new ventures and endeavours.


Rituals and Traditions: Diwali is celebrated with great enthusiasm and fervour, and the rituals and traditions vary across different regions and cultures. Some of the common practices include:

  • Cleaning and Decorating Homes: Homes are thoroughly cleaned and decorated with diyas, rangoli, and flowers to welcome the goddess Lakshmi.

  • Lighting Diyas: Diyas are lit to dispel darkness and bring light and prosperity into the home.

  • Worshipping Goddess Lakshmi: Goddess Lakshmi is worshipped for wealth, prosperity, and good fortune.

  • Fireworks and Illuminations: Fireworks and illuminations are an integral part of Diwali celebrations, symbolising the triumph of light over darkness.

  • Family Gatherings: Diwali is a time for family gatherings and celebrations, and people come together to share sweets, gifts, and love.


Celebrations across India

Diwali, the festival of lights, celebrates the triumph of good over evil, light over darkness, and knowledge over ignorance. Beyond its rituals and revelry, the festival holds deep spiritual and cultural significance.


But Diwali’s glow isn’t just from lamps and lights — it shines from within. As homes are cleaned and decorated, the act of decluttering becomes symbolic, reflecting a desire to clear not just physical spaces but also mental clutter. Clean surroundings, after all, inspire clean energy and a lighter mind.


Kindness and forgiveness, too, are at the heart of Diwali’s message. Letting go of grudges and old hurts brings a sense of peace that no lamp can match — it is this inner glow that truly lights up lives.


Gratitude and prayer also find a special place during the festival. A thankful heart radiates positive energy, and that quiet joy reflects in one’s face and presence. Even simple self-care rituals — a warm oil bath, an ubtan scrub, the scent of sandalwood, or the comfort of bright festive clothes — help uplift the mood and spirit. Because the real glow of Diwali does not come from makeup or lights but from a heart that feels light.


In a world that often rushes and forgets to pause, Diwali whispers softly, ‘Slow down, light a lamp and let your soul shine a little brighter.’ This Diwali let us not just illuminate our homes but also our thoughts, our words and our actions – so that wherever we go, we leave a little trail of light behind.


Happy Diwali to you!


(The writer is a tutor based in Thane.)

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