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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.)

What If Rabindranath Tagore Had Stayed a Lawyer?

Updated: Oct 21, 2024

What If Rabindranath Tagore Had Stayed a Lawyer

The remarkable cultural efflorescence known as the ‘Bengal Renaissance’ triggered by Warren Hastings’ appointment as governor of Bengal in 1772 can be bookended between the birth of Ram Mohun Roy (the same year) and the death of Rabindranath Tagore in 1941.

This Renaissance threw up luminaries from William Carey to Bankim Chandra Chattopadhyay to Toru Dutt to Swami Vivekananda and Jagadish Chandra Bose. The movement, marked by a synthesis of Eastern and Western intellectual traditions, found its zenith in Rabindranath Tagore. But what if Tagore had succumbed to familial pressures to pursue a career in law rather than the arts?

Born in 1861 into a remarkable and dazzlingly erudite family (the Tagores of Jorasanko), Rabindranath was youngest of Debendranath Tagore’s 14 children.

In his superb and wonderfully accessible book ‘Awakening: the story of the Bengal Renaissance’ (2010) Subrata Dasgupta describes how Rabindranath’s elder brother, Satyendranath, in an exasperated bid to make his precocious 17-year-old brother “professionally respectable, took him to England to study for the Bar.” After two years as a quintessential dilletante, Rabindranath returned to India which he later said was one of “utter disorderliness.”

Yet this decision to forsake a conventional career would mark the beginning of a path that redefined Indian cultural identity. Two years after his return as a lawyer manque, he produced ‘Sandhya Sangeet’ (1882), which was highly regarded by Bankimchandra Chattopadhyay. In 1883, he wrote ‘Nature’s Revenge’ and his first novel

These early works set the stage for a career that would eventually lead to the creation of ‘Gitanjali’ — the immortal collection of poems which sent W.B Yeats (and countless others since then) into raptures earned him the Nobel Prize in Literature in 1913, making him the first non-European laureate.

While he may have still written some luminous short stories or poetry, a full-time career in law would have stifled these creative impulses, leaving a gaping void in both Bengali and global literature.

But the instant recognition and influence of Tagore as composer has even exceeded that of Tagore the poet and novelist. In Rabindra Sangeet, he created a completely new genre of contemporary popular music. India, Bangladesh and Sri Lanka would not have had their national anthems had he remained a lawyer and iconic songs like ‘Ekla Chalo Re’ would perhaps not have come into being.

But Tagore’s influence extended far beyond his literary works. His establishment of Santiniketan in 1901 and Visva-Bharati University later on redefined education in India, promoting a learning environment that valued creativity and intellectual freedom over rote memorization. His role in the Bengal Renaissance was not just as a cultural icon but also as an educational reformer whose vision reshaped the pedagogical landscape of India. A life in the courtroom would have precluded these contributions, depriving Indian education of one of its most visionary architects.

Moreover, Tagore’s global appeal—rooted in his ability to bridge Eastern and Western thought—might have been confined to the courtroom. His interactions with legions of Western intellectuals like Ezra Pound, H.G. Wells, G. B. Shaw and his dialogues on spirituality and universalism, created a unique intercultural dialogue that enriched global understanding. Without his towering voice, a vital conduit for East-West exchange would have been lost and India would have been deprived of a profound cultural ambassador.

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