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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.)

Seafarers’ Mental Health and Fatigue: Causes and Solutions

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There is a lot of buzz on Seafarer’s mental health, harassment, work-life balance, etcetera. These issues came into limelight during the COVID and impacted all industries globally. The seafarers too were impacted, primarily as an outcome of uncertainty in getting a reliever for signing off and going home. The virus also generated fear of life disrupting the normal thought process for the 8 billion on the planer. So, attributing (mental health, harassment, work-life balance) as a ‘mariner (Seafarer) problem’ is not just grossly misleading but utterly rubbish.


It appears that the hype around Seafarer wellness is more centred around a business opportunity at the cost of marine professionals and the shipping industry. It is pathetic that even ex-Mariners are jumping and harping on this.


Two of the most important issues which can disturb the peace of mind of any Employee as well as a Seafarer in the marine environment are:

a. Inadequate wages (which leads to incapacity of a Seafarer to provide reasonable comfort to their family)


b. Lengthy contracts (which keeps them away from family for 6 to 9 months)


But CEO’s and Onasis of the Shipping industry shy away and turn a blind eye, because this is going to cut their bottom line profits. Thus ‘mental health’ seems to be a conspiracy of convenience created by vested interests and promoted by Shipping companies to cover these two significant issues. The survey results below of 128 active Seafarers highlights their key concerns.


Survey done by JAG Consultants, Singapore

If professional Psychiatrists find it a challenge to cure patients, then are ‘mental health’ and ‘work life balance’ Consulting firms really doing something to (superficially) improve seafarer well-being or are they just making hay while the sun shines? Is it a sugar coated pill which contains chalk powder?


It is time the Seafarers rise and tell their employers that we are mentally sound, sharp and responsible professionals shipping over 14 billion tonnes of cargo worldwide. It is hoped that Seafarer unions reputed to be ‘running with the hare (seafarers) and hunting with the hounds (shipping company) take note and stop this disrespectful exploitation of Seafarers self respect and labelling seafarers and the marine profession as a bunch of irresponsible lunatics.


Seafarers in 20th Century

Interestingly these terms were unheard of in 20th century, when seafarers were ‘paid well’ and ‘respected' for the sacrifice they made, to live a life in isolation, away from the normal, full of risks and also staying away from family.


In 20th century, the seafarer wages were 75 per cent or more of the OPEX (Operational expenses) which have been squeezed to around 55 per cent in the last 15 years. Even the average global inflation of about 5 per cent has been ignored, while their counterparts working in the shore office of the Shipping company get a wage rise regularly. Stop their wage rise and they too will require ‘wellness’ consultants. Thus, how fair is it to expect ‘quality and commitment’ from seafarers when they are left to just a ‘superficial’ increase in wages, linked to a falling national currency v/s the dollar?


Industry ignoring the writing on the wall

One does not need be ‘Harvard returned’, nor is there a need for a 'seafarer survey'. It does not even require 'common sense' which may be deficient in maritime stalwarts. Even an average student in primary class, will be able to conclude that all that is required to un-do this mess created by Ship Owners, Ship Management companies and supported by Charterers, is:

a. 50 per cent increase in wages, to compensate for 15 years backlog and

b. 50 per cent reduction in contract durations, to enable seafarers spend more time with family, improve well-being and perform with greater efficiency when they return from leave. Thus lesser incidents and claims improving bottom line profit.


How can the Shipping industry prevent DALI's and Wakashio's with a crew on-board that is ‘under-paid’ and ‘mentally disturbed and physically fatigued’?


Employees follow their leaders

Let’s analyse what the experts in (GMF) Global Maritime Forum consider necessary for Seafarers:

  • Fostering respect and inclusion: CEO’s should first set an example with Seafarers working in their own company. Respect their sharp mind and mental fitness.

  • Zero tolerance for abuse and harassment: CEO’s should first STOP the abuse, harassment and bullying of Seafarers by paying them inadequate wages and making them sign lengthy contracts. (Take it or Leave it)

  • Transparent criteria to ensure fairness and equal opportunities: CEO’s should first be transparent about their own million dollar bonuses, their first class travel or private jets, which they may have earned at the cost of hard-working seafarers.

  • Offer flexible contract lengths: Hope CEO’s do not negotiate ‘flexible contracts’ with reduction in wages.


Last and not the least, GMF should check the source and sample of their survey of 400 seafarers. Key concern of 128 active seafarers as survey are:

» 70 Per cent Seek an increase in wages

» 24 Per cent Want reduction in length of contract

» 1 Per cent Preventing abuse and harassment

» 10 Per cent Seek increase in manning levels


A CEO’s short term vision

While the global unemployment rate is around 5 per cent but the Shipping industry is facing a shortage of Seafarers which is now at a 17 year high. As per present trend this shortage is only going to increase. The current situation is unsustainable and seafarers are left with limited options. What is necessary is a call for a “collective industry-wide agreement” and a transparent framework for ‘wage increase and regular review’ and ‘reduction in the duration of contract’. These were the key issues even in the 20th century and will remain so in future. Get these two in GOOD order and then we can certainly hope that Seafarers will be a happy lot and will also lead to a reduction in the frequency and intensity of DALI’s and WAKASHIO’s.


(The author is a Shipping and Marine consultant. Member Singapore Shipping Association and empanelled with IMO as a specialist consultant.)

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