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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.)

Full Steam Ahead: Why Education Deserves Its Own Budget Line

If tracks were worth a budget a century ago, classrooms surely deserve one in 2025

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Back in 1924, the British Raj, not exactly known for its generosity, did something quite visionary: it carved out a separate budget for the Indian Railways. Why? Because even in the imperial brain, there was a basic understanding: if something runs the country, it probably deserves its own cheque book.


Fast forward a hundred years. We now live in a sovereign, democratic, high-GDP-boasting, space-exploring India. But education? Still playing a supporting act in the big Union Budget drama, tucked under ‘social services’ next to things like sanitation and welfare. Neatly buried, politely acknowledged, conveniently forgotten.


Let's be honest. It's time to do what we have done before: give education its own stage - a separate national education budget, with its own allocation, accountability, ambition and some actual attention.


The railway analogy is not just clever; it is correct. The British gave railways a budget because it kept the country moving. It connected people, moved goods, and enabled trade. It was physical infrastructure. Well, education is people’s infrastructure. It doesn't carry cargo; it holds potential. It doesn't move coal; it moves human capital. So why do we pretend it can be casually managed through bullet points and a slideshow on Budget Day?


Sure, the Railway Budget was merged in 2017 for ‘efficiency.’ Fine. But at least it had 92 years of spotlight before the curtains came down. Education, meanwhile, has been fighting for its rightful place at the grown-up table since independence. Every year, we pretend to be shocked that we have not hit the 6 percent GDP target for education spending. Every year, we wring our hands when learning outcomes plummet, or teachers are asked to double up as booth managers and midday meal accountants.


Here’s a thought: maybe we are not underperforming. Perhaps we are under planning. A separate education budget forces clarity, accountability, and ambition. It compels us to ask the critical questions: How much is going to teachers? How much do digital tools cost? How much is that new teacher training institute promised in 2017? It is harder to dodge these questions when the country watches a document that says ‘EDUCATION’ in big, bold letters.


Moreover, when we finally give education its own purse, we also give it the power to dream.


And no, this isn't just a symbolic move. It's structural. It changes how policy is made, funds are tracked, and performance is reviewed. Education becomes not a department but a mission.


And what will this magical budget cover? Let's start with the person most often taken for granted: the teacher. We have crores of students and lakhs of teachers, and somehow, we are still shocked that learning outcomes are below par. Many teachers are undertrained, under-supported and underpaid.


We need real investment in pre-service training that’s actually useful, continuous professional development because teaching, like medicine, evolves; digital literacy because if the kids are on screens, the teachers better know how to use them, and career paths that don’t look like a bureaucratic maze from a Kafka novel.


And that is just the teaching side. The budget must also cover infrastructure (still missing in many rural schools), curriculum updates, inclusive education, and bridging the tech divide.


And trust me, it cannot possibly be that complicated. This country figured out Aadhaar, built UPI, landed on the Moon, and sent a probe to Mars on a budget smaller than a Hollywood film. Complicated is our love language.


A separate education budget is not more complex than anything we have not already done. It just needs political will which regrettably only shows up the moment someone realizes it is good optics.


Imagine a glossy, standalone Education Budget Day. With numbers. With goals. With applause for ‘education corridors’ and ‘skill superfasts. The same treatment we give to expressways and exports.


And if you are still not convinced, let us ask the question differently: If railways got a separate budget in 1924 because they were essential to national progress, do we want to argue that education is less critical in 2025? That laying track is more important than building minds?That moving freight deserves more strategic planning than moving a child from no-school to first-gen graduate?


Because if that is the argument, we are already off the rails. We have had mission-mode programs - Swachh Bharat, Digital India, Skill India. They all got momentum because they had dedicated plans, targets and money attached.


Education has slogans. Now it needs the spreadsheet. A separate budget allows us to treat education like the nation-building project it is and not a last-minute paragraph written by a junior bureaucrat two days before the Budget speech.


Borrowing an old colonial practice might seem ironic. But let us admit it: The British got this part right. They separated what mattered.


Let us do the same. Let us take this British legacy, dress it in khadi, and make it work for modern India. If we could do it for trains in 1924, surely we can do it for teachers, students, and the future of this country in 2025. Else, the country will keep paying the price if the classroom does not get its own budget.

(The author is a learning and development professional. Views are personal)

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