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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.)

Ransacking History: Bickering over Shivaji Maharaj’s Legacy

Updated: Oct 21, 2024

Ransacking History: Bickering over Shivaji Maharaj’s Legacy

The legacy of Chhatrapati Shivaji Maharaj has sparked a political storm in Maharashtra, with NCP (Sharadchandra Pawar) leader Jayant Patil’s comments labelling the great 17th century warrior-king’s raids on Surat as “extortion” inciting backlash from the ruling BJP. Deputy Chief Minister Devendra Fadnavis swiftly condemned these remarks, asserting that describing the great leader as “a looter” was unacceptable.

Fadnavis called on Indian scholars to correct historical narratives about Chhatrapati Shivaji Maharaj, particularly those shaped by English historians. His plea reflects a broader sentiment in Maharashtra, where Chhatrapati Shivaji Maharaj is venerated as a symbol of Maratha pride and valour. While Marathi-speaking historians will be laudatory (and perhaps uncritical), it is instructive to begin with views of Englishmen. James Grant Duff, in his flawed three-volume ‘History of the Mahratthas’ (1826), felt constrained to extol Chhatrapati Shivaji Maharaj by saying “the richest plunder never made him deviate from the rules he had laid down for its appropriation.”

Dennis Kincaid, in his 1932 book, ‘The Grand Rebel: An Impression of Shivaji, Founder of the Maratha Empire,’ offers a stunningly readable and sympathetic portrayal of the great ruler as a charismatic leader who defied the odds to build a powerful empire.

Kincaid praises Chhatrapati Shivaji Maharaj’s military genius, guerrilla warfare tactics, and his capacity to inspire loyalty among his followers, describing him as “a man of extraordinary foresight and intelligence,” not merely a warrior, but a visionary leader with a strong sense of administration and justice.

Kincaid, who tragically drowned in 1937, gives Maharaj the greatest tribute when he compares Maharaj’s humanity to his brutal 17th century European contemporaries like Oliver Cromwell, whose genocidal practices in Ireland are still remembered and Count Tilly, whose brutal actions in the ‘30 Years War’ which ravaged Central Europe still continue to chill Independent India’s first President, Rajendra Prasad, described Chhatrapati Shivaji Maharaj as the builder of “an epoch in history,” who employed tolerance to supplant bigotry and lay the foundations of an enlightened government to end tyranny. He noted how the great leader had more than a dozen Muslim commanders in his army and navy. On the other hand, Sir Jadunath Sarkar’s classic biography, ‘Shivaji and His Times,’ (published in 1919 and revised in 1952), provides a more nuanced view. Sarkar hails the warrior-king with transforming a disorganized band of warriors into a formidable nation, calling it “one of the most remarkable achievements in the history of mankind.” Despite his critiques, Sarkar acknowledges Chhatrapati Shivaji Maharaj’s profound impact, lauding him as “not only the maker of the Maratha nation but also the political saviour of the Hindu race.”

Marathi-speaking historians offer a perspective deeply rooted in regional pride and cultural reverence. The great G. S. Sardesai, in his classic ‘New History of the Marathas’ (1946), provides a detailed account of Chhatrapati Shivaji Maharaj’s military campaigns, including the famed raids on Surat in 1664 and 1670. Sardesai views these actions as calculated moves necessary to fund the expansion of Chhatrapati Shivaji Maharaj’s kingdom and weaken the Mughal Empire’s economic stronghold. “The raid on Surat was not just an act of plunder; it was a statement of defiance against the might of the Mughal Empire,” Sardesai notes.

Babasaheb Purandare, one of the most celebrated chroniclers of Chhatrapati Shivaji Maharaj’s life, portrays the king as an almost mythical figure in his two-part, 900-page magnum opus, ‘Raja Shivchhatrapati,’ which was first published in the late 1950s.

He describes the Surat raids as bold strikes against a wealthy Mughal stronghold, carefully planned to fund the Maratha state and underscores Maharaj’s chivalrous conduct during the raids, noting that his orders spared non-combatants, illustrating a moral code even in conflict. “Shivaji’s Surat raids were not mere plunder but strategic strikes against the economic backbone of his enemies,” Purandare writes. Setu Madhavrao Pagadi celebrates the Surat raids as examples of Chhatrapati Shivaji Maharaj’s daring and innovative military strategies. Pagadi views the raids as more than financial manoeuvres; he considers them psychological blows to Mughal dominance. In the first raid on Surat, Maharaj’s forces targeted wealthy Mughal and Portuguese merchants while sparing local traders who paid protection money while the second raid in 1670 further cemented Chhatrapati Shivaji Maharaj’s reputation as a leader capable of repeatedly defying Mughal power. These historians argue that the Surat raids symbolize Chhatrapati Shivaji Maharaj’s broader strategy: destabilising Mughal control in the Deccan while simultaneously strengthening the Maratha state’s finances and military. If only today’s leaders could look beyond the petty politics and embrace the principles Chhatrapati Shivaji Maharaj stood for, they might find common ground in the enduring legacy of Maharashtra’s revered king.

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