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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.)

Embracing a Healthier Life with Yoga

Health is our first wealth—without it, material success feels hollow. Yoga is the key to balance, strength, and true well-being in today’s chaotic world.

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International Yoga Day is celebrated on June 21st, an initiative started by our Prime Minister, Shri Narendra Modi. The reserved theme this year is 'Yoga for one Earth, one health'. The word 'yoga' comes from the Sanskrit 'yuj', meaning 'to join' or 'to unite'. "Maharshi Patanjali, known as the Father of Yoga, was the first to outline its core teachings and true purpose. Ancient texts also refer to Lord Shiva as Adi Yogi, the first yogi.


We often hear the phrase ‘Health is Wealth’, but are we doing enough to convert our health into ultimate wealth? Here are a few handy tips to achieve a healthy body and mind.


Scientific studies have shown that practicing yoga offers numerous physical and mental benefits, including stress relief, better sleep, pain reduction, increased stamina, and overall well-being.


A healthy body and mind are as valuable as money. True luxury and happiness lie in having a healthy life, not in accumulating wealth or materialistic possessions. Both go hand in hand; one without the other seems completely incomplete. Material success appears to be hollow without good health. You can only make good use of wealth when you are physically and mentally fit, as health is undoubtedly our greatest asset.


In today’s fast-paced world, maintaining good health calls for conscious effort and a commitment to a healthy lifestyle. Challenges like hectic schedules, stress, and constant distractions are real and cannot be ignored. But it’s essential to address them by making time for regular exercise, balanced eating, quality sleep, and effective stress management. Prioritising these habits greatly enhances overall well-being.


To make yoga part of your daily routine, start with small, manageable steps. Consistency is key—simple poses and breathing techniques can make a lasting difference.


Key tips to begin yoga

Set a regular time and place: Choose a time and place that suits you best and stick to the schedule without distraction and disruption.


Take small steps, but be consistent: Even a few minutes of yoga are beneficial. Consistency is more important than duration. Progress gradually helps build up the duration and complexity slowly as you become more confident and tenacious. Setting overly ambitious goals at the start may lead to setbacks.


Learn basic pose: To begin with, learn basic poses rather than going for complex ones, as they demand enormous flexibility, which would be possible only after a certain time. Choose poses that resonate with you and that you enjoy doing.


Breathing techniques: Incorporating breathing techniques like pranayama is highly beneficial.


Make it a habit: As part of your daily habit, include yoga to energise your body and mind.


Embrace mindfulness: Practice self-awareness and meditation for your overall well-being. Meditation is a form of mental exercise. End your day with a few minutes of meditation before sleep.


Importance of Yoga: To truly reap its benefits, it is essential to adopt and practice yoga daily. In today’s stressful world, it is highly recommended for people of all ages to maintain physical, mental, and emotional well-being. A key aspect of yoga is its ability to train the mind, helping individuals harness their full potential and manage emotional imbalances effectively.


Benefits of Yoga

Over the years, life has become more stressful and chaotic because of economic pressures, societal expectations, constant social media, negativity, changing family dynamics, poor work-life balance, and technology overuse.


Yoga offers a holistic approach with clear physical benefits—better flexibility, balance, strength, stamina, energy, improved breathing, and support for pain and weight management.


Emotionally, it eases stress and anxiety, improves sleep, sharpens focus, and boosts self-awareness, memory, and overall mental health.


Its power and benefits are vast, cutting across all age groups. Yoga is a timeless gift for well-being—a tool to live fully and freely.


Health is our greatest asset, often appreciated only after it’s lost. So this International Yoga Day, make an unbreakable commitment to adopt, practice, and prioritise your health.


Stay healthy and well.


Happy International Yoga Day!


(The writer is an educator based in Thane.)

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