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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.)

Joy Turns Tragic

Man dies of heart attack while celebrating daughter’s UPSC success


Mohini Khandare
Mohini Khandare

Yavatmal: In a heart-wrenching turn of events, a moment of pride and joy turned into a lifetime of sorrow for the Khandare family from Vagad (Ijara) village in Mahagaon Taluka. Pralhad Khandare, a retired extension officer from the Pusad Panchayat Samiti, suffered a fatal heart attack while distributing sweets to villagers to celebrate his daughter Mohini Khandare’s success in the prestigious UPSC examination. The tragic incident occurred just moments after it was confirmed that Mohini had secured an All India Rank of 884.

 

Pralhad Khandare
Pralhad Khandare

The celebration, which began with immense pride over Mohini’s remarkable achievement, ended in deep mourning as her father collapsed amid the villagers. Despite immediate efforts, he could not be revived. The sudden demise of Pralhad Khandare has cast a shadow of grief not only over the Khandare family but also over the entire village and state, which had joined in celebrating the young woman’s accomplishment.

 

Mohini Khandare had been preparing for the Union Public Service Commission from Pune, attending coaching classes and dedicating herself wholeheartedly to her goal. She had earlier cleared the MPSC examination in 2021. Her success brought immense joy to her family, which includes her mother Pramila Khandare, a principal at a government school, and her elder brother Vikrant Khandare, a District Judge. Her sister-in-law is also a judge.

 

While Speaking to ‘The Perfect Voice’, Vikrant Khandare said, “Mohini’s UPSC result brought immense happiness to our family. Our father was overwhelmed with joy and began sharing sweets with the villagers. It was during this celebration that he suffered a sudden heart attack. We are devastated. From celebration to mourning, everything changed in an instant.”

 

The untimely death of Pralhad Khandare during a moment of immense family pride has left a deep emotional scar on the family and the local community. What was supposed to be a day of triumph and festivity turned into a day of profound loss.

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