Financial planning, so far only a sophisticated alien term for most middle class investors, will be the key to survival. People in different stages of life will need different prescriptions to stay financially healthy when they retire.
Need for professional investment advisor will arise.
Savings will be driven more by investment and less by tax saving considerations.
Relook at insurance as pure risk cover and not as an investment.
Life and medical insurances are the places to start with.
Consider life expectancy of 85 years and inflation rate of 6 % per annum.
Real need in early stages of settled life is to take 75 % equity exposure through diversified mutual funds.
Over past 25 years, the Indian equity markets gave a compound annual return of 18 % per annum.
It is important to bear in mind that it is not what you earn, but how much you save and how you invest that determines your wealth level.
It is better to invest in an existing scheme with a proven performance than put money in an untested scheme.
The only use of fund’s NAV is to compare with its own past NAV. Comparing one fund’s NAV to another is meaningless.
The rising cost of healthcare makes medical insurance crucial