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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.)

Serial thief nabbed with stolen gold

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Dombivli: A seasoned female thief responsible for a string of thefts targeting women commuters on Mumbai’s suburban railway network has been arrested by the Dombivli Railway Police. The accused, identified as Vaishali Sachdev (25), was caught red-handed with stolen goods including gold ornaments, mobile phones, and cash. Police confirmed that she has multiple criminal cases registered against her across several stations.


The arrest was made on Wednesday evening after Sachdev attempted to flee from a ladies’ compartment of the Asangaon-bound local train at Dombivli station. Alert fellow commuters, who had just realized their belongings were missing, raised an alarm. Spotting her suspicious behavior and attempting to deboard hastily, passengers confronted her. She was quickly apprehended with the help of railway police officers present on the platform.


Senior Railway Police Inspector Kiran Undare revealed that Sachdev is a repeat offender with at least 10 cases registered against her at different police stations. "She has a deceptive appearance and would often pose as a regular commuter in women’s compartments. Once inside, she would engage women in casual conversation and take advantage of the crowd to snatch wallets, gold ornaments, and phones," he said.


Over the past few months, a surge in thefts reported by women passengers at Kalyan, Dombivli, Titwala, Asangaon, and Thane stations had baffled police. The thefts followed a similar pattern, raising suspicions about a common perpetrator. Dombivli Railway Police launched surveillance operations and laid traps to nab the suspect.


Upon her arrest, police recovered an Apple iPhone valued at Rs. 70,000, cash amounting to Rs. 5,100, and 13 stolen mobile phones from her possession. The recovered goods are being returned to the rightful owners, and further investigation is underway to trace the rest of her network, if any.

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