top of page

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.)

Welfare marred by political slugfest

ree

Mumbai: As the winter sun set over the Arabian Sea on Friday evening marking the first anniversary of the Mahayuti government’s current term, Chief Minister Devendra Fadnavis wore the look of a man who has weathered a storm to find a steady rhythm. Armed with a decisive mandate and a singular promise to hit the “reset” button on the state’s development engine, Fadnavis continued a quiet, relentless push towards “saturation governance” delivering welfare directly to the doorstep of the common man even though the headlines of 2025 were often dominated by coalition friction.


As the Mahayuti government turns one, the narrative is not merely about the miles of Metro rail added or the investment MoUs signed. It is equally about the bruising political reality of managing the Mahayuti – a three-legged coalition where the other two legs, Eknath Shinde’s Shiv Sena and Ajit Pawar’s NCP, often seem to be marching to their own drumbeats. For Fadnavis, 2025 has been a high-wire walk between his trademark administrative velocity and the relentless gravity of coalition politics.


Explicit Goal

Fadnavis entered 2025 with the explicit goal of reviving the “CEO style” governance that defined his 2014-2019 tenure. His first move was the resurrection of the “CMO War Room,” a monitoring unit designed to bypass bureaucratic lethargy. The results on the infrastructure front have been visible. The long-delayed phases of the Mumbai Metro have seen accelerated trial runs, and the Vadhavan Port project has finally moved from paper to groundwork.


His push for transparency – launching the ‘Maha-Netra’ portal for real-time tracking of civic works – was aimed at cutting the ‘percentage culture’ that the opposition often highlights. To his credit, the administration looks sharper, faster, and more responsive than it has in half a decade.


Coalition Conundrum

However, politics has a way of muddying the clearest of administrative waters. While Fadnavis has the numbers, the internal dynamics of the Mahayuti have been far from smooth. The elephant in the room remains Deputy Chief Minister Eknath Shinde.


Having served as Chief Minister prior to this term, Shinde has reportedly found the transition to Number Two difficult.


Sources in Mantralaya whisper of a “cold war” over file clearances. The friction creeped from administration to party organizations and came to a head last month when Shiv Sena ministers took the extreme step to boycott the cabinet meeting to protest the political poaching of grass root workers by the BJP.


If Shinde provided the friction, the NCP provided the shock. Within a month of government coming to power, a senior NCP minister had to resign following allegations of links to an accused in a heinous organized crime syndicate. For Fadnavis, who also holds the Home portfolio, this was a double-edged sword. While his swift acceptance of the resignation was meant to signal “zero tolerance,” the opposition Maharashtra Vikas Aghadi (MVA) seized the moment. “How can the Home Minister claim the state is safe when his own cabinet colleagues are dining with gangsters?” said Congress leader Vijay Wadettiwar.


The incident chipped away at the “Party with a Difference” image the BJP carefully cultivates. It forced Fadnavis into damage control mode, diverting energy from governance to political firefighting.

 
 
 

Comments

bottom of page