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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.)

India’s Toxic Work Culture: A Silent Mental Health Crisis

Updated: Oct 21, 2024

India’s Toxic Work Culture: A Silent Mental Health Crisis

In the middle of a particularly busy workday, earlier this week, a friend sent me a WhatsApp forward which I grudgingly opened. It was a news report announcing that a 26-year-old chartered accountant working with a leading consultancy firm in India had died. Her mother accused the organisation of “stress” over the past six months that could have led to her daughter’s death. Can mental stress cause death? I am not sure. But then, I do not have the medical credentials to attest or dispute that claim. What I am convinced about is that prolonged stress can—and does—lead to various ailments and as we know by now, most diseases originate in the mind!

I have seen the impact of ‘toxic workplaces’ on my colleagues in a different organization: a young lifestyle writer developed stomach ulcers after suffering ‘intense mental stress’ for three years at the hands of a very difficult, demanding and nasty boss. A young photographer had a mental breakdown after having a raise pulse rate each morning as she walked in through the office door and into the newsroom. What did they do? Complaints to the management were brushed aside because the question was “how could long stressful hours lead to hospital visits?”

Work pressures have, indeed, increased over the years with greater competition to keep the top job, or rather, the job you have in hand. It is only in recent years that people have started recognising the impact of workplace stress on mental health.

There are studies that corroborate this. And conversations revolving around mental health are more open and prevalent. A survey done by Deloitte this year revealed that a staggering 80 per cent of the Indian workforce reported experienced mental health issues in the past year. Another study by the National Sample Survey Office found that over 60 percent of Indian employees grapple with stress at work. The World Health Organization’s data shows how pervasive the concern is - it says that nearly one in four employees in India suffer from work-related stress.

The notorious ‘burnout’ is happening much sooner. High achieving professionals in their early 30s grapple with exhaustion and fatigue. The nature of the stress differs across geographic and demographic variations. If corporate offices exert pressure to meet deadlines, job insecurity is a factor in low paying, less skilled jobs. No matter what you do, you cannot escape stress if you work in India.

On a visit to Vienna a few years ago, I was fascinated by their 35-hours-per-week work rules. At 6 p.m., it was common to see people sauntering into cafes with their dogs to have coffee with friends; the parks were bustling at 5 p.m. And these were not retired seniors, they were all working professionals who knew when to cut off from work. India does not appreciate a work-life balance. Long hours at the desk have been glorified and hailed as ‘professionalism.’ Working weekends add to the scores during appraisals and going incommunicado post work for a family dinner or movie is a mark of ‘not being serious enough.’

This cultural shift began two decades ago, as multinationals brought with them an American work culture of rushed breakfasts, heart-pounding deadlines and the belief that longer hours equal greater achievement and therefore, fatter paychecks. What has been overlooked is that a burnt-out workforce cannot deliver results.

India’s burgeoning population means there are several contenders for the same skilled jobs leading to cut throat competition at various levels of the workforce. People in ‘private companies’—or non-government organisations—are dispensable. A hospitalised employee can very well find his job changing hands; a new mother raises her infant while worrying about keeping her job.

Round-the-clock connectivity comes at a huge personal and mental health price. Late night discussions on WhatsApp chats and dreaded emails at 4 A.M. disrupt sleep and peace. The pandemic and the work from home culture it started also has its share of blame. A senior manager at an OTT major complained that there is no cut off time when he works from home. Mornings and nights are the same as mid-day. Mental health experts tell you that disconnecting and focussing on other activities helps the mind de-stress.

Rising stress, often silent and unspoken, is a looming crisis. Few seek help, assuming it is temporary, but the toll on health, families, relationships, and productivity is severe.

Organisations lose work hours to absence caused by mental ill-health; productivity suffers even if the employee is physically at-work. Family and social relationships are taking a downturn and personal mental health is the biggest sufferer.

The change lies in new policies. In 2019, Member of Parliament Supriya Sule introduced a Private Members’ Bill called the ‘Right to Disconnect’ under which employees can refuse work outside of reasonable work hours. Australia offers employees protection from professional exploitation through a similar law where people can refuse to work outside their stipulated hours.

India Inc. is gradually waking up to the new demands for mental healthcare with counselling sessions, wellness care leave, childcare facilities and flexible work arrangements. But the implementation should be in spirit and not only on paper. Government policies such as the right to disconnect will further boost people’s ability to refuse after-hours work. Mental healthcare should not remain just lip service or a one-off human care initiative. Workplaces should be turned into safe havens, both, physically and mentally.

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