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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.)

Small Steps to Saving the Olive Ridley

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During a late evening walk in December, as the sun set into the sea and the sky turned an orange-pink hue, Suhas Toraskar, spotted a trail in the sand that he is all too familiar with—the Olive Ridley Turtles had arrived. A veteran in the conservation of the Olive Ridley turtles, the 58- year-old fisherman followed the trail and with a stick moved the sands to unearth the turtle’s eggs. He made a protective boundary around the pit to protect the eggs from predators. Two months later, he would set free the baby turtles into the water and watch them swim away to their new life. This has been a routine for Toraskar since 1993.

 

Hailed as a ‘biodiversity champion’ by the United Nations Development Programme India, Toraskar has been the guardian angel of the breeding and nesting grounds of the olive ridley turtle which is an endangered species. Called a 'Kasav Mitra', Toraskar speaks to The Perfect Voice about how he pioneered a movement to save the olive ridley turtles in Sindhudurg.

 

How did you become a kasav mitra?

I have been doing this for 32 years now. Back then, eating turtle meat and eggs was considered a delicacy. Dogs, wolves and birds would also prey on these eggs apart from people. When I returned to my village Wayangani from Mumbai in 1993, I was dismayed by what I saw and I decided to start protecting these eggs so that this species, which was fast disappearing, could be saved. After scanning the beach for several days, we would find one small nest. My family and I would probably find one nest in a year, keep it safe from humans and animals and then leave the babies into the sea. Ten years later, the forest department got involved and roped in locals by offering compensation for those who would find these nests and protect them.

 

How many turtle hatchlings do you get every year on an average?

The numbers are going down because of activity increasing on the beaches. Last year, we got around 250 nests but this year, they are down to 190. Until now, we have released 8000 turtle hatchlings into the sea. The olive ridley turtle lays eggs thrice a year in decreasing numbers. In the first round, they lay around 120 eggs of which around 70 eggs hatch, eventually. Turtles are shy and avoid human contact. Nowadays with activity on the coastline increasing, they are moving away from our beach and looking for other quieter spots. Since I began, we must have released almost one lakh hatchlings into the sea.

 

Is it true that turtles always come back to the same place to lay eggs?

It is partly true but if the same place has become busy or there are too many people or bright lights, they will move to a secluded place close to that. It’s their natural instinct to avoid humans and animals. Research says that no matter where they are, olive ridley turtles can swim thousands of kilometers between their feeding and breeding grounds and return to the same area to lay their eggs.

 

Turtle conservation has turned into a tourist activity now. Is this awareness beneficial?

Yes and no. More and more people are sensitised to the importance of conserving and saving these turtles but earlier, it was our fisherfolk who did it. Now, with the government offering a prize or compensation amount to anyone who finds and protects these nests, a lot of other people have got involved; even those who have no interest in conservation. They save a nest, earn money and then use it to drink alcohol. For easy money, these people patrol the beaches with bright torches every night. These lights disturb the natural nesting areas of the turtles who are therefore moving away from Wayangani.

 

How important is the olive ridley turtle to the environment?

Every creature has a role to play in the environment. Turtles are especially crucial to maintain the marine ecological balance. They feed on invertebrates, dead fish and small corals which helps release the oxygen that’s locked up there. This is how the turtles, which are listed as an endangered species, play a key role in the marine ecosystem. We fisherfolk understand the importance of the seas and the marine ecology and we know how essential the turtle is.

 

What steps can be taken to protect their breeding and nesting havens?

Instead of offering remuneration to anyone who finds a nest, the forest department must nominate people who are entrusted with finding and protecting these nests. That way, anti-social people will stop roaming the beaches with torches. We need a systematic approach to conservation.

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