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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.)

Heritage Rekindled

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This year’s Diwali marks a landmark moment for Ayodhya. On this Diwali, Ayodhya glowed not just with the warmth of tradition but with a profound sense of fulfilment as over 2.5 million diyas lit up the banks of the Saryu, entering the Guinness World Records in the first ‘Deepotsav’ since the consecration of the long-awaited Ram Temple. Uttar Pradesh Chief Minister Yogi Adityanath’s ceremonial lighting of the first lamps, the laser and drone shows bringing scenes from the Ramayana to life, and cultural showcases from across Asia made the event an awe-inspiring fusion of history, faith and nationalism.


Yet, this Diwali celebration in Ayodhya is more than a grand event; it symbolizes a 500-year wait and struggle, one that tested the resilience of millions who held fast to their beliefs despite decades of legal and ideological hurdles. Amid all the bitter legal and communal wrangling since the demolition of the Bari Mosque in 1992, the historical evidence, from as early as the 16th century, indubitably points to Hindu devotion at the site where generations gathered with unwavering faith even when the Babri Masjid had stood in place of a temple. Notably, historians like Meenakshi Jain and archaeologist K.K. Muhammad have documented the sacred significance of the site to Hindus over the centuries, countering narratives that aimed to dilute the importance of the Ram Janmabhoomi.


As legal battles raged on, the case became entangled in a web of political, ideological, and scholarly contentions.


Leftist scholars in India and their counterparts in the West have sought to reframe the temple’s significance, even proposing the provocative thesis that temple destruction was a widespread “established practice” among pre-Turkic Hindus themselves. This narrative, which has drawn both criticism and controversy, has done little to weaken the Hindu resolve. Rather, it only sharpened the symbolic struggle for Ram’s birthplace — a struggle that transcended legal battles and reached into the hearts of millions.


This year, Diwali at Ayodhya reverberates not only as a religious festival but as a victory against a backdrop of scepticism and suppression. Prime Minister Modi spoke to the historical importance of this moment, celebrating it as a homecoming not after 14 years of exile, as in the Ramayana, but after five centuries of waiting. For Ayodhya, this Diwali represents an arrival, not just of Lord Ram to his home but of a powerful vindication of faith long delayed. As the diyas flicker in the evening breeze, they reflect the hopes and aspirations of a community that has long yearned for recognition and reverence.


Ayodhya’s glow this year is a testament to the perseverance of a people who fought not for power or political advantage, but for recognition of a heritage they refused to let slip into obscurity. In their eyes, this Diwali symbolizes not merely the lighting of lamps but the long-awaited dawn after a historical darkness.

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