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.)

Hindus have been bleeding since 1989: Ashwani Bhat

ree

While the World is sympathizing with what has happened, and the Centre has promised that normal life will be restored in Jammu and Kashmir soon, a Mumbai based Kashmiri Pandit who fled from his house in Anantnag district of Kashmir back in 1989 thinks otherwise. Speaking exclusively to Ruddhi Phadke, the News Editor of ‘The Perfect Voice’, Ashwani Bhat, the President of the Kashmiri Pandit Association of Mumbai that also covers Thane, Raigad and Navi Mumbai and has over 1000 families as its members including popular personalities like Anupam Kher shared his valuable insights on why Kashmir is still bleeding. Bhat said, “Terror attacks will keep happening because locals are in support of these terrorists. We have failed to understand the root cause of why Pakistan has been able to keep this fire on in Kashmir.”


When did you leave Kashmir and under what circumstances?

I was born in Nai Basti located in Anantnag district of Kashmiri. I was a victim of the 1989 mass exodus. We had two huge houses having 12-15 rooms each. We had beautiful houses. The atmosphere was getting worse. We were continuously threatened through sign boards or mosque announcements that clearly said, “Convert to Islam, leave the place or get killed.” We had no option; I shifted out of Kashmir along with my parents and grandmother. I don’t have a house there, I have no relatives there. I visit Srinagar every year for emotional reasons, visit temples, stay for two days in hotels and return.


Where did you complete your schooling? Did you face any discrimination?

I did my schooling in Anantnag. Discrimination, threats were always there. I was the only Hindu boy in my class till class 10. We could see discrimination against Hindus at every step, from education opportunities to jobs and more. In fact, we were singled out to an extent that I remember I used to wipe off the red tilak that I used to put on my forehead during any pooja or function before stepping out of my house. I was always very scared.


Have you ever visited Baisaran valley where the attack happened?

Of course, it was hardly 15-17 km from my house. It was a popular spot for our school picnics. I saw the pictures that were circulated of the attack. Nothing has changed. The road is still not motorable, we still need to get there on horses or by trekking. The visuals brought back my childhood memories and what happened was beyond my imagination. Same fear! Same experience of being targeted for being Hindus! Nothing has changed. The Government keeps saying after every attack in Kashmir, that life has been restored. However, life was never really restored in Kashmir for Hindus.


What is the solution?

We haven’t really understood the root cause of the issue that has kept Kashmir bleeding. We are busy blaming Pakistan and planning to attack Pakistan. Yes, Pakistan is an enemy. However, a worse enemy lies within Kashmir. The local residents who give shelter and support to these terrorists are not allowing us to wipe off terror from the valley. We need to address the root cause. Unless locals stop supporting these Pakistan sponsored terrorists, nothing will change.


Why do you think locals are risking their source of income by supporting these terrorists?

The locals are aware that Kashmir’s economy depends on tourism, and an attack on tourists will push them towards another major setback. Luckily although they know this, and though they want people to come and boost their tourism sector, ironically some of them still continue to support these terrorists which seem like a dreadful reminder of their intolerance towards Hindus. They seem to want to keep that fire on.


Has the efforts of the Indian army or abrogation of article 370 changed anything?

At the end of the day, everyone wants peace. Peace comes only with prosperity. Prosperity comes when business opportunities come. Abrogation of article 370 has changed the face of Kashmir to a large extent. Locals are minting money due to the investments that are coming in. At the end of the day you continue to remain economically backward in isolation. You need investments coming from outside. Locals can't do much all alone. Whether they like it or not, locals are benefitting from the investments coming from outside. The locals have realized what their future lies in. Having said that, one thing is clear! Kashmir can never be prosperous unless Pandits shift back to the land that originally belonged to them. Locals will have to accept this.

Comments

bottom of page