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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.)

Twice the Exams, Twice the Opportunity

Updated: Mar 4

CBSE board exams

The Ministry of Education’s proposal to conduct CBSE board exams twice a year has sparked significant debate. The draft policy states that this year’s Grade X exams are being conducted over 32 days (from February 15 to March 18) across 84 subjects. From 2026, the first phase of exams will be held from February 17 to March 6, while the second phase will take place from May 5 to May 20, spanning a total of 34 days. This shift has raised important questions about the effectiveness of biannual exams in reducing stress, improving student performance and ensuring smooth implementation. This is a bold idea, but only a strategic and well-executed rollout can prevent it from becoming an overload.


The most compelling argument for holding the board exams twice a year is that it provides students with an opportunity to improve their scores without the pressure of a single high-stakes exam. The current model forces students to hang their hopes on a single attempt, often leading to stress and anxiety. With two exam windows, students can now approach the exams with greater confidence, knowing they have another chance if needed.


This proposal also ensures that exams remain spread out. With the first phase taking place in February-March and the second in May, students who face health issues, personal crises, or inadequate preparation can take the second exam without losing an entire academic year. Moreover, this model aligns with international assessment systems that allow multiple attempts.


Conducting the exams twice could lead to a more continuous learning process rather than last-minute cramming. It encourages students to stay engaged throughout the year, enabling a better understanding of subjects rather than merely preparing for a single high-stakes event.


Yet, the reform is fraught with challenges, both logistical and academic that could turn this bold idea into an overload. Beginning with the restructuring of classes for completing the syllabus to developing question papers, and finally the logistical nightmare of conducting both the exams.


This year’s single-phase exams already span 32 days across 84 subjects. From 2026, the two-phase system will increase the overall exam duration, and will require greater coordination in setting question papers, deploying invigilators, and managing evaluation timelines. Conducting two rounds of exams annually means CBSE will need to develop separate question papers and grading systems to ensure fairness while preventing leaks or predictability.


Instead of reducing stress, biannual exams could lead to a cycle of constant preparation. Some students may feel compelled to take both exams to maximize their scores, resulting in year-round exam anxiety rather than relief.


Teachers may find it difficult to balance completing the syllabus on time while preparing students for two different exam windows. The academic calendar will definitely need restructuring to accommodate two phases without compromising classroom learning.


Increased exam frequency will require higher budget allocations for conducting exams, evaluating answer sheets, and maintaining exam centre security. Schools, especially in rural areas, may struggle with limited infrastructure to manage two large-scale exams.


Despite these concerns, India appears well-positioned for this transition. Over the past decade, exam reforms have gained traction, digital infrastructure has expanded in classrooms, and the country has embraced artificial intelligence in education. Most importantly, CBSE has decades of experience in managing large-scale examinations. The first two years will be a logistical nightmare and undoubtedly a learning process for the entire education system.


All reforms are a stagger step process and I believe that the narrative for influencing stakeholders to accept this will be in highlighting the reform as an Optional Second Attempt, making transparent the process for Curriculum and Assessment reform, a conscious and efficient scheduling and declaring results on time. A pilot implementation before a full rollout would be ideal.


In the coming months, both sides of the debate will grow more vocal. Some debates, like the classic Tom and Jerry dynamic, are inevitable - full of disagreement yet inextricably linked. Schools, too, will need at least two years to ‘figure it out.’


Yet, in a world where the younger generation has choices in everything, from shampoo brands to careers, it makes sense to extend that freedom to exam formats. Let students decide, and let them learn to live with the consequences. They may (pun intended) just figure out how to handle the heat.


(The author is learning and development professional. Views personal.)

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