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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.)

Kulgaon Badlapur's Abandoned Waste Vehicles Spark Outrage

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Badlapur: In a shocking revelation, the Kulgaon Badlapur Municipality has come under fire for purchasing 42 waste collection vehicles in 2018, which have now been deemed unfit for use and are set to be sold as scrap after lying unused for seven years. Despite spending approximately Rs 2.5 crore from taxpayers' money, these vehicles have remained idle, raising questions about accountability and transparency in local governance.


According to a detailed project report prepared for solid waste management, the municipality had identified the need for 42 vehicles to efficiently manage the city's waste. Each vehicle was purchased at a cost of Rs 5,86,990. However, since their arrival in October 2018, the vehicles have been left to gather dust at the municipality's sewage treatment plant, with only a few reportedly used for a short period. Some vehicles have been found abandoned in various locations, including the hills of Rameshwadi Badlapur.


Local representatives had previously opposed the allocation of these vehicles to a waste management contractor, fearing penalties for the contractor if the vehicles were put into service.


This opposition, coupled with a lack of action from the municipality, has resulted in the vehicles being neglected and ultimately rendered useless.


The municipality's history of mismanagement is not new. In a previous incident, a biogas project was reported to have cost millions without producing a single kilogram of biogas. This pattern of financial misappropriation has led to widespread public outrage.


During a recent inspection, our journalists discovered 28 of the 42 waste collection vehicles, with varying conditions.


While some were in relatively good shape, others were missing essential parts like tires and engines.


The Regional Transport Office (RTO) had conducted tests on 31 of these vehicles, yet the municipality has labeled them as "abandoned," raising questions about their future.


The municipality has now put 31 vehicles up for auction, with a fixed price of Rs 50,000 each, despite their differing conditions. This has sparked concerns about potential corruption, as critics question whether the pricing reflects the actual value of the vehicles.


Sanjay Jadhav, Badlapur Congress President, criticized the municipality's handling of the situation, stating that the vehicles were initially intended for waste collection but have been left unused due to the COVID-19 pandemic. He accused the municipality of misusing public funds and called for the restoration of the vehicles instead of selling them off. Jadhav warned that if the vehicles are auctioned, the Congress party would organize protests and hunger strikes against the decision.


The ongoing saga of the Kulgaon Badlapur Municipality's waste management vehicles highlights a troubling trend of financial mismanagement and lack of accountability, leaving citizens questioning the integrity of their local government.

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