Is Your "Safe" Money Actually Disappearing?

Market Update - Tuesday, 13 Jan

The day began with news that U.S. President Trump announced a potential additional 25% duty on any nation trading with Iran. India maintains significant trade relations with Iran, totaling approximately $1.68 billion annually. This bilateral trade primarily involves the export of basmati rice, tea, sugar, pharmaceuticals, and pulses, while imports consist of dry fruits and nuts, with very minimal crude oil imports.

This latest duty threat caused the market to go into a tizzy during the first half of the day, though it eventually recovered to ensure no significant ground was lost by the close.

• Looking at the charts for the day, the Nifty saw a wide range of movement between a low of 25600 and a high of 25900. Despite this 300-point swing, the index ended with a slight drop of 0.22%.

• Support appears to be forming around these levels, and the long-term trend for the Nifty remains positive.

• Similarly, the Nifty Junior was down 0.26%, and Mid-caps fell 0.14% in a very flat session, though their long-term trajectory also stays positive.

• Small caps managed to rise 0.64%, even though momentum trends are pointing downward.

• The Nifty Bank saw a gain of 0.22%, maintaining a positive mid and long-term trend.

• In the commodities space, gold saw a minor dip of 0.17%, with the price for 10 grams in India sitting at 140,000 rupees. Gold is becoming increasingly expensive, and all trends for the metal remain positive.

• Silver is also gaining, with the official price at 262,880 rupees per kg.

Other Market Triggers

• Specific stock movements showed Reliance dropping 2% on unconfirmed news regarding a potential halt to their lithium-ion battery project. L&T lost 3%, while ITC continued its downward trend with a 1% drop.

• Hindustan Unilever fell 0.6%, and both Maruti and Mahindra saw declines. Conversely, stocks like ONGC, Grasim, and ICICI Bank helped prop up the Nifty.

• In the Nifty Next 50, gainers included Vedanta, Hindustan Zinc, Trent, VBL, LTIM, and Naukri.

• On the downside, DLF continued to fall following news from another real estate major regarding missed guidance, while IRFC and Chola Finance saw marginal dips.

• Omaxe emerged as a top mover, surging 12.69% after announcing a 500 crore investment in a project in Ludhiana.

US Market Updates

• In the U.S. markets, the S&P 500 saw gains of 0.15% and the Russell 2000 rose 4.44%, while the Dow and NASDAQ remained flat.

• However, several individual stocks were hit hard. Intel dropped 3% following a previous 10% surge, and Citigroup also fell 3%.

• American Express and Capital One faced pressure after President Trump suggested limiting credit card interest charges to 10% for one year.

• In the NASDAQ 100, stocks like AMD, Tesla, and Google saw gains, while Meta fell 1.7%. These market movements are monitored closely as part of various investing strategies, though they do not constitute formal recommendations.

What to watch next ?

• While these geopolitical games and negotiation tactics continue, there is also talk of both sides meeting as an Indian minister is currently in the U.S. There remains hope that a deal could be reached soon, which would resolve the current atmosphere of uncertainty.

• The markets are currently reeling under this uncertainty, but the long-term outlook remains hopeful.

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What To Read This Week ?

The Wealth Bulletin: Is Your "Safe" Money Actually Disappearing?

We often talk about the taxes we see—the Income Tax deducted from our salaries or the GST we pay on our favorite meals. But there is a Third Tax that is far more dangerous because it is invisible. It’s called Inflation, and if you aren’t paying attention, it’s quietly draining your wealth every single day.

The Hidden Tax: More Than Just Rising Prices

Most people view inflation as a natural phenomenon beyond the government's control. In reality, it acts as a "Secret Tax." While you feel the pinch of direct and indirect taxes, inflation works silently in the background. It doesn't take money out of your wallet; it simply reduces what that money can buy.

A Brutal Reality Check: 2011 vs. Today

Let’s look at the math. Suppose you had ₹100 in 2011. Depending on where you kept it, here is what happened to its value over the years:

The Verdict: Even if your money grew to ₹173 in a bank, the things that cost ₹100 in 2011 now cost ₹198. You are effectively poorer today than you were 15 years ago because your "safe" investment couldn't keep up with the cost of living.

The "Risk" Paradox

Inflation is designed to reward those who take risks and penalize those who don't. In the modern economy, avoiding risk is the biggest risk of all. If you keep all your capital in "safe" instruments like Fixed Deposits (FDs), Post Office schemes, or ULIPs, you might see a 5% or 6% return. However, after you factor in taxes and inflation, your Real Rate of Return is often negative. You aren't growing wealth; you are just losing it slowly.

Strategies for the Middle-Aged & Seniors

It is a common habit among middle-aged and senior citizens to prioritize "safety" above all else. While capital preservation is important, a portfolio stuck entirely in low-yield debt is a sinking ship. To maintain your lifestyle, you must:

• Aim for "Inflation-Plus" Returns: Your goal isn't just to make money, but to make more than the inflation rate + the tax you owe on gains.

• Embrace Calculated Risk: Moving a portion of your capital into higher-growth assets is now a mandatory activity.

• Blended Averaging: Combine safe investments with growth-oriented ones to ensure your average return beats the rising cost of bread, fuel, and healthcare.

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