top of page

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.)

Guns or Gravitas: Trump’s Nigeria Gamble

Washington’s threat of military action over Nigeria’s spiralling violence reveals as much about American power as it does about Africa’s most turbulent giant.

ree

Nigeria is reeling. Schoolgirls are vanishing from dormitories in the dead of night; worshippers singing hymns are being dragged into forests while entire communities brace for the next set of gunmen to arrive. Into this turmoil barrels an extraordinary threat from Washington with President Donald Trump declaring that the United States may enter Nigeria “guns-a-blazing” if Abuja fails to stop what he calls the “killing of Christians.” For Africa’s most populous nation and one of America’s closest partners on the continent, the warning lands like a thunderclap.


Trump’s declaration dramatizes a larger dilemma: should the world’s most powerful country should deal with Nigeria’s security meltdown through quiet diplomacy and capacity-building, or through muscular intervention that could reorder West Africa’s geopolitical balance? What looks at first glance like another Trumpian outburst is in fact a test of how the United States will wield power in a region increasingly contested by China, courted by Russia and convulsed by domestic insecurity.


The violence in Nigeria is neither new nor singular. It is the product of overlapping crises that stretch from the humid Atlantic coasts to the dusty edges of the Sahel. Three attacks within the span of a week, including the kidnapping of schoolgirls in Kebbi, the abduction of worshippers in Kwara and the assault on a Catholic school in the west are simply the latest jolts in a country that has recorded hundreds of kidnappings this year. In the first half of 2025 alone, nearly 900 people were abducted. Schoolchildren and worshippers have become favoured targets as they guarantee maximum outrage and a lucratively panicked ransom market.


Under siege

In the north-east, jihadist insurgents, chiefly Boko Haram and its ISWAP offshoot, continue their grinding campaign. In the north-west, heavily armed criminal syndicates, better organised and better armed than many paramilitary units, roam through forested corridors, treating rural communities as extraction zones. In the central belt, old land disputes between herders and farmers have metastasised into cycles of revenge killings. In the south-east, separatist agitation bubbles. While their motives differ, the results are the same - shattered families, displaced communities and a security architecture stretched to breaking point.


President Bola Tinubu, facing the gravest security challenge of his tenure, postponed his trip to the G20 summit in South Africa and ordered security forces onto their highest alert. He convened emergency meetings, promised rescues, and vowed that Nigeria would not be intimidated into paralysis. Yet Abuja knows it is losing the battle for perception. The symbolism of schoolgirls carried into forests and churches invaded mid-prayer plays poorly with global audiences. It gives easy ammunition to those abroad who prefer moral clarity over messy context.


Enter Trump, airborne aboard Air Force One, absorbing a Fox News segment claiming that Christians are being massacred in Nigeria. The broadcast distilled the sprawling national crisis into a single narrative of Islamist radicals killing Christians. It ignored the fact that extremist groups in Nigeria have killed more Muslims than Christians. But for a President skilled at converting televised outrage into policy, nuance was never a problem. Within hours, Trump had warned that the United States could launch a strike “fast, vicious and sweet” unless Nigeria “gets the killing of Christians under control.”


The warning came mere hours after painful Republican defeats in New Jersey, Virginia and New York - losses that left the President simmering. Trump has long fused foreign crises with domestic frustration, reaching for hard power abroad when political winds blow cold at home. A show of resolve on a distant continent is always thought as a tonic for electoral embarrassment.


The insult landed awkwardly in Abuja. Nigerian officials expressed shock that a close ally would issue such an ultimatum. Behind closed doors, senior Nigerian diplomats warned the State Department that public bluster could embolden militants and erode cooperation.


At first blush, Trump’s threat sounds like another demonstration of America’s unique reach. But Nigeria is not a fragile, isolated state that can be pushed about. It is Africa’s largest democracy, a G20 member, a regional economic engine and a vital American partner. Washington invests billions in energy, mining, technology and agriculture. It provides humanitarian aid and counter-terrorism assistance. It relies on Nigeria to stabilise West Africa, mediate with the Sahel and balance Chinese commercial expansion.


A unilateral American strike would rupture that relationship and likely achieve little militarily. The United States has neither the appetite nor the legal basis for a prolonged occupation or counter-insurgency campaign in Nigeria’s forests and savannahs.


American theatrics

The risks are broader still. An American intervention would hand jihadist groups a propaganda gift, enabling them to rally recruits with the charge that ‘Christian America’ is attacking Muslims. It would inflame anti-Western sentiment across the Sahel, where American and French forces have already been expelled by juntas in Mali, Burkina Faso and Niger. It would intensify Russian and Chinese courtship of African governments eager to hedge against Western pressure. Moscow, already supplying arms to Sahelian regimes, would seize on the chaos to expand its footprint. Beijing, Nigeria’s largest bilateral lender, would likely step up quiet diplomacy to present itself as a steadier, less intrusive partner.


Nigeria sits at the hinge of West Africa and the Sahel - regions currently undergoing seismic shifts. Coups in Mali, Burkina Faso and Niger have collapsed the Western security architecture painstakingly built over two decades.


Jihadist groups roam more freely than before. Climate change shrinks arable land and fuels migration. New maritime routes in the Gulf of Guinea offer opportunities for energy expansion but also tempt criminal syndicates.


In this volatile landscape, Nigeria remains the anchor. It leads ECOWAS, bankrolls regional peacekeeping and influences continental diplomacy. A destabilised Nigeria is not a Nigerian problem but an African one.


Great-power competition is now baked into this reality. Russia, through its paramilitary networks and arms sales, positions itself as a friend to embattled governments. China invests in roads, rail, ports and power, betting on Nigeria’s long-term economic potential. Europe sees Nigeria as a buffer against migration pressures.


This is what makes Trump’s threat so consequential. It sends alarming signals to allies and rivals alike that America is ready to act on impulse rather than strategy.


The most effective path is predictably old-fashioned diplomatic engagement anchored in security reform. That would mean the United States expanding training programmes for Nigeria’s counter-insurgency units, helping Abuja modernise policing, sharing satellite and drone intelligence to track militants and tightening sanctions on arms smugglers and financiers. It would also mean supporting Nigeria’s judiciary and local governments, which remain the weak links in the chain of accountability.


Developmental aid is another pillar. Many kidnappers are not ideologues but young men pushed into criminality by joblessness, collapsing agriculture, and failing schools. Crucially, any American engagement should operate through multilateral frameworks. Acting through ECOWAS or the African Union spreads regional ownership and reduces accusations of neo-imperialism. It also ensures that Nigeria’s sovereignty is respected.


Nigeria will judge Washington by its willingness to work through the patient, often unglamorous business of security cooperation and institutional support. If Trump means what he says, a precipitous strike would then risk compounding the volatility already spreading across West Africa.


For all the noise surrounding his remarks, the underlying priorities for the US are straightforward: reducing the frequency of kidnappings in Nigeria, improving local security responses and restoring public confidence in the state’s basic capacity to protect its citizens. Nigeria has much to do, but so does the United States, whose choices in the coming months will signal whether it intends to engage Africa with deliberation or with impulse.

Comments


bottom of page