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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

How wealth creation is beyond chasing returns

When we talk about personal finance and investing, most conversations revolve around returns. How much did an investment make last year? Which asset is performing best right now? But seasoned investors know that wealth creation is not just about chasing returns. It is equally about understanding risks, especially the ones that quietly derail long-term financial goals. Whenever you invest in any product or asset class, there are three important risks you must analyse before committing your...

How wealth creation is beyond chasing returns

When we talk about personal finance and investing, most conversations revolve around returns. How much did an investment make last year? Which asset is performing best right now? But seasoned investors know that wealth creation is not just about chasing returns. It is equally about understanding risks, especially the ones that quietly derail long-term financial goals. Whenever you invest in any product or asset class, there are three important risks you must analyse before committing your money. The Risk of Temporary Volatility The first and most visible risk is temporary volatility. This refers to short-term fluctuations in the value of an investment. Assets like equities, equity mutual funds, gold, and real estate can move up and down over short periods. Prices may rise, fall, recover, and remain volatile for some time. This volatility often creates anxiety because losses appear on paper, even though nothing permanent has happened. Importantly, temporary volatility does not mean the investment is bad. It simply reflects market cycles or short-term sentiment. What investors must understand is that temporary volatility is largely outside their control. Reacting emotionally to these movements often leads to poor decisions, such as exiting good investments at the wrong time or losing out completely on eventual opportunity gains. The Risk of Permanent Loss of Capital The second risk is far more serious - the risk of permanent loss of capital. This occurs when there is a possibility that you may lose a part of your capital or, in extreme cases, the entire amount permanently. Examples include speculative options buying, investing in junk stocks based on tips, or investing in real estate with questionable legal titles or assets that eventually find no buyers and become highly illiquid. In such cases, the money does not recover with time. Once lost, it is lost for good. Before investing, it is critical to ask a simple question. Is there a scenario where my capital can be permanently destroyed? If the answer is yes, that investment demands far higher scrutiny and strong risk control. The Risk of Not Beating Inflation The third risk is extremely critical and most ignored - the risk of not beating inflation. Inflation quietly erodes purchasing power over time. If your investments do not grow faster than inflation, your wealth may increase in numbers but decline in real value. Many so-called safe investments fail this test. While they may protect capital, they may not help you achieve long-term goals such as retirement, children's education, or financial freedom. This risk is often ignored because it does not show up immediately. But over long periods, it can significantly reduce your probability of achieving financial goals. Where Should Investors Focus? Temporary volatility will always exist and should not be the primary concern. Instead, investors should focus on avoiding permanent loss of capital and ensuring their investments beat inflation over the long term. Successful wealth creation is not about eliminating risk completely. It is about choosing the right risks and avoiding the wrong ones. (The author is a Chartered Accountant and CFA (USA). Financial Advisor.  Views personal. He could be reached on 9833133605.)

Knives out in legislature

Updated: Mar 21, 2025

Disha Salian

Mumbai: Death of celebrity manager Disha Salian in 2020 once again rocked the Maharashtra legislature on Thursday. While cabinet ministers Nitesh Rane and Shambhuraj Desai demanded that Shiv Sena (UBT) leader Aditya Thackeray be arrested in the case, BJP MLA Amit Satam in the assembly and another BJP member Chitra Wagh in the council demanded that the report of SIT to probe Salian’s death be made public.


Incidentally, amidst repeated disruptions in both the houses, some members from the treasury benches were seen speaking in favour of Aditya Thackeray, while Shiv Sena (UBT) members like Adv Anil Parab were seen supporting the BJP members’ demand that the report of the SIT probe be made public. In addition, there were allegations and counter allegations and personal accusations among members from the treasury and opposition benches which led to heated debate on occasions.


The opposition termed the attempts from the treasury benches to link Shiv Sena (UBT) leader Aditya Thackeray’s name in the case, as a ‘conspiracy’.


“I think this matter has gone to the court. We have no idea what he (Disha’s father) has said, but Aaditya Thackeray is a mature leader, a young leader. The Bharatiya Janata Party is conspiring to defame him by putting pressure on him. We don’t need to answer to this conspiracy. The court will answer,” Ambadas Danve said.


Earlier in the day, when the house gathered for the business, Minister of State for Home appraised the assembly of the status in this case. “SIT has been formed to probe in the case. Their report has not been received as yet. However, the government shall act according to directives from the court,” the minister told the house.


Another BJP minister Nitesh Rane, however, said that since Satish Salian has levelled allegations against an MVA minister, that leader be treated like a common person and that everybody should be treated equally before the law. Shiv Sena minister Shambhuraj Desai too supported the demand. “Since the allegations are grave, the person in question should be immediately arrested and the case be investigated,” he said.


Later, while speaking to media in the legislature premises, Rane asked Uddhav Thackeray to come clean on the issue. “If they say that we are politicizing the issue, Uddhav Thackeray should also tell the people why he had called, not just once but twice, to the then union minister Narayan Rane urging him to save his son?” Rane said.


He also accused the opposition of shying away from coming clean on the issue. “If they feel that we are not telling the truth, they should say so in the house. But they are shying away from doing so. Bhaskar Jadhav, who is always aggressive, was nowhere to be seen when this issue came up in the house. Sunil Prabhu too escaped the house under the pretext of a phone call. I challenge them to say that whatever I said on the issue is wrong,” Rane said.


He also said that Aditya Thackeray should resign on moral grounds till his name is cleared in the case.


BJP MLA Amit Satam demanded that the details of the SIT probe be made public so that the people would know if the probe is headed in right direction.


Interestingly, while the ruling parties were targeting the opposition in the case, senior BJP leader Sudhir Mungantiwar surprised all with his unexpected support to Thackerays. “I do not have any evidences in the case. But if her father has made any fresh allegations that needs to be investigated thoroughly. The assembly can discuss the issue at length tomorrow. In the meanwhile, members like Rane, who seem to have some evidences in the case should hand them over to the investigating agencies and help the probe,” he told the house.


Shiv Sena’s Sanjay Gaikwad and Sheetal Mhatre too toed the line and demanded that more and more evidences should come forth.


Similarly, when members of treasury benches were pushing for revealing the details of the probe till date to the public, Shiv Sena (UBT) member Anil Parab supported the demand. “Doing that shall conclusively prove the innocence of Aditya Thackeray,” he said.

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