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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.)

Intra-alliance battles catch attention

Mumbai: Mahayuti and Maharashtra Vikas Aghadi (MVA) are going head-to-head in the Assembly Elections making the battle chaotic. Despite official candidates being declared by both the alliances, there is a huge difference of opinions within the alliances even after the date of withdrawal of nomination has surpassed. In several constituencies, the allies have fielded their candidates against each other. Reasons behind this kind of infighting within the alliance could be multiple ranging from independent political aspirations, ego clashes, ideological differences, no will to let go hold over a particular region, political rivalry, so on and so forth. Bottomline is that close to two weeks ahead of the Assembly battle, MVA and Mahayuti have multiple official contenders within their respective alliances.

Here are a few key constituencies that form classic examples explaining the tricky situation.


Intra-alliance battles

Mankhurd-Shivajinagar, Mumbai

Nawab Malik (NCP) vs Suresh Patil (Shiv Sena)

Suresh ‘Bullet’ Patil was the first to bag the ticket. The NCP breached the alliance dharma by fielding Nawab Malik. This constituency also sees three-term incumbent MLA Abu Asim Azmi as a Samajwadi Party candidate supported by the MVA.



Intra-alliance battles

Anushaktinagar, Mumbai

Sana Malik (NCP) vs Tukaram Kate (Shiv Sena)

Sana, daughter of Nawab Malik, was the official Mahayuti candidate. Chief Minister Eknath Shinde fielded Tukaram Kate breaching the alliance’s understanding. Kate had won from this constituency in 2014 but lost to Nawab Malik in 2019.



Intra-alliance battles

Deolali, Nashik

Saroj Ahire (NCP) vs Rajshree Ahirrao (Shiv Sena)

There is a fierce battle between two Mahayuti candidates here. Both are claiming that they deserved the candidature.




Intra-alliance battles

Morshi, Amaravati

Devendra Bhuyar (NCP) vs Umesh Yawalkar (BJP)

An Independent Devendra Bhuyar had clinched victory in 2019 from Morshi. This time, Bhuyar is an official candidate of the NCP. Since the BJP has been traditionally fighting from this seat the party has fielded Umesh Yawalkar against the alliance’s understanding.



Intra-alliance battles

Aashti, Beed

Suresh Dhas (BJP) vs Balasaheb Ajbe (NCP)

The BJP and NCP both are fighting elections from this constituency traditionally. None of them was willing to withdraw. Hence, they are pitted against each other.


Intra-alliance battles

Purandar, Pune

Vijay Shivtare (Shiv Sena) vs Sambhaji Jhende (NCP)

The NCP’s candidature in this constituency is an outcome of its arch rivalry against Vijay Shivtare. Both of them want to settle personal scores in this constituency. In 2019, Congress’ Sanjay Jagtap had won this seat by defeating Purandare.



Sangola, Solapur

Deepak Salunkhe (Shiv Sena, UBT) vs Babasaheb Deshmukh (PWP)

The PWP has been traditionally contesting from this constituency. Babasaheb Deshmukh’s grandfather the late Ganpatrao Deshmukh represented Sangola for record 11 times. His grandson staked his claim but Shiv Sena (UBT) has a different plan.

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