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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.)

Mumbai University goofs again: Old syllabus question paper given to LLB students


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In yet another embarrassing mistake, the University of Mumbai (MU) on Tuesday distributed an outdated question paper for the fifth-semester LLB ATKT (Allowed To Keep Terms) examination. The paper, based on the old syllabus, caused confusion and anxiety among students, who had to wait nearly 30 minutes before the correct one was provided.


The ATKT system lets students move on to the next academic year even if they fail in some subjects, as long as they pass those failed subjects within a set timeframe.


A final-year LLB student who appeared for the Labour Law & Industrial Relations II exam shared their frustration with The Free Press Journal:“


"Getting a question paper from a syllabus that was scrapped over three years ago was heartbreaking. It completely threw us off. Even when the new paper was handed out, our confidence was already shaken. We couldn’t focus properly because we had prepared for the new syllabus.”


While Yuva Sena leaders alleged that around 60 colleges received the wrong paper, the university said the error affected 30 colleges and roughly 2,000 students.


In a statement, the university clarified: “The question paper was dispatched from the handwritten manuscripts section at 9:30 AM. Soon after, the college informed us that the paper was based on the old syllabus. On checking, it turned out that the paper setter had indeed submitted a version based on the outdated syllabus. The link to the paper was immediately deactivated and a new one was sent out. Students were given an extra 30 minutes, and all colleges were notified via phone.”


Yuva Sena senate members, who have repeatedly criticized the university’s examination department and the Centre for Distance and Online Education (CDOE)—formerly the Institute of Distance and Open Learning (IDOL)—again demanded accountability.


“For the past one and a half years, we’ve been asking for a joint meeting to discuss the ongoing mismanagement in MU’s exam department and CDOE. But the administration keeps ignoring us. Even today, during the third-year law exam, fifth-semester students received a paper from the old syllabus. It took 30 minutes to fix this after students raised concerns. This is just the latest in a long list of blunders,” said a Yuva Sena representative.


They also questioned whether the Controller of Examinations and the exam department director would finally take moral responsibility and step down.

This incident follows another recent mistake by MU—just a month ago, it issued degree certificates to the 2023-24 graduating batch with “University of Mumabai” printed under the emblem.

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