this table<\/a> and you will realize that Indian interest rates are bound to come down as 70-80% of world economies are having interest rates \u00a0less than 3-4%. US is at 0.5% and while Japan and EURO area are having\u00a0negative interest rates ! Indian interest rates as set by RBI is currently 6.75%. This is with inflation currently around 5.1%. With the formation of new MPC, RBI Gov. Rajan has been given the mandate to keep the inflation between a band of 2-6%. Considering that, 7-8% should be peak for interest rates in the economic. And if Global deflation continues, we might see even lower rates(as low as as 3-4%) in the economy.<\/p>\nWhile lower interest rates are good for the industry and the economy, for savers and retirees it is bad news. Imagine how savers are managing in developed economies where interest rates are zero or below zero!<\/p>\n
This also implies that you can’t afford to be all 100% in debt, you will have to assume some risk and get into equities. Although it is very difficult to say that you will be adequately compensated for taking that risk in equities. Even equity returns would fall from 15-17% CAGR to about 10-12% CAGR(or even lower) for longer periods of time.<\/p>\n
So when you are planning for your retirement 20-30 years down the line, keep in mind such return assumptions. Don’t assume lofty returns of 10-15% on your portfolio!In the short term(say 1-2 years), equities might zoom because\u00a0of global liquidity so it might make sense to be slightly overweight on this asset class. But if global growth doesn’t pick up in next 1-2 years, it will be very difficult to get returns from any asset class except Gold\u00a0as\u00a0people will just turn to Gold \u00a0for security. Hence, it is\u00a0always prudent to keep at least 10% of your portfolio in Gold.<\/p>\n","protected":false},"excerpt":{"rendered":"
Recently there was a lot of hue and cry\u00a0when Govt cut the PPF rates to 8.1%. Also long term FD rates are coming down drastically in the system. Currently 5 years FDs are fetching about 7.5%( might go even lower after RBI rate cuts in April). Now this is bad news for the savers and … Continue reading PPF rates cut- Is there more to go in terms of reduced interest rates on FDs and EPF\/PPF?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[28],"tags":[],"class_list":["post-1186","post","type-post","status-publish","format-standard","hentry","category-retirement"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p3wDt5-j8","jetpack-related-posts":[{"id":1345,"url":"https:\/\/www.trucompare.in\/blog\/are-interest-rates-headed-even-lower-with-demonetization\/","url_meta":{"origin":1186,"position":0},"title":"Are interest rates headed even lower with demonetization?","author":"Trucompare","date":"November 18, 2016","format":false,"excerpt":"I had written sometime back that interest rates are headed lower and so far that trajectory has held. With recent demonetization, the biggest impact will be on interest rates and don't be surprised if 1 year FD fetches you only 5.5 to 6% from the current 7%. With lots of\u2026","rel":"","context":"In "Investing"","block_context":{"text":"Investing","link":"https:\/\/www.trucompare.in\/blog\/investing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":851,"url":"https:\/\/www.trucompare.in\/blog\/definitive-guide-on-getting-the-best-personal-loans-in-india\/","url_meta":{"origin":1186,"position":1},"title":"A Guide On Getting The Best Personal Loans in India","author":"Trucompare","date":"December 17, 2015","format":false,"excerpt":"Personal Loans Personal loans, as the name indicates, are not associated with any specific kind of loan but are a great way of dealing with emergency situations or for those cases where normally loans are not available. Some facts and benefits of personal loans: Personal loans are usually not secured;\u2026","rel":"","context":"In "Personal Loans"","block_context":{"text":"Personal Loans","link":"https:\/\/www.trucompare.in\/blog\/personal-loans\/"},"img":{"alt_text":"best personal loans in India","src":"https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2015\/12\/Untitled.png?resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2015\/12\/Untitled.png?resize=350%2C200 1x, https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2015\/12\/Untitled.png?resize=525%2C300 1.5x, https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2015\/12\/Untitled.png?resize=700%2C400 2x"},"classes":[]},{"id":854,"url":"https:\/\/www.trucompare.in\/blog\/apply-for-personal-loans-bad-credit-history\/","url_meta":{"origin":1186,"position":2},"title":"How To Apply For Personal Loans With Bad Credit History","author":"Trucompare","date":"December 19, 2015","format":false,"excerpt":"Personal Loans Bad Credit History A credit history is a report on the past loans that a person takes. It depends on various factors like amount of loan, amount of credit left for repayment and number of times borrower has defaulted in repayment. One gets a personal loan bad credit\u2026","rel":"","context":"In "Personal Loans"","block_context":{"text":"Personal Loans","link":"https:\/\/www.trucompare.in\/blog\/personal-loans\/"},"img":{"alt_text":"TruCompare_head","src":"https:\/\/i0.wp.com\/trucompare.in\/blog\/wp-content\/uploads\/2013\/05\/TruCompare_head.png?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":958,"url":"https:\/\/www.trucompare.in\/blog\/guide-to-investing-in-elss-funds\/","url_meta":{"origin":1186,"position":3},"title":"Guide to investing in ELSS funds for tax saving","author":"Trucompare","date":"January 5, 2016","format":false,"excerpt":"ELSS Funds \u00a0What is ELSS? The indisputable purpose of an investment is to save tax and realize growth in the invested money. In the recent years tax saving has become all the more important with the tax saving ceiling under section 80C raised to 1.5 lacs from 1 lac. The\u2026","rel":"","context":"In "Tax Saving"","block_context":{"text":"Tax Saving","link":"https:\/\/www.trucompare.in\/blog\/tax-saving\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1206,"url":"https:\/\/www.trucompare.in\/blog\/are-you-still-buying-insurance-for-investment\/","url_meta":{"origin":1186,"position":4},"title":"Are you still buying traditional insurance plans for investment?","author":"Trucompare","date":"May 2, 2016","format":false,"excerpt":"I am still appalled to find many people still buying life insurance policies( especially endowment\/single premium\/money back) for the purpose of investment. When you are investing your money, you want to have returns that beat inflation\u00a0for a longer period of time. When you are buying life insurance, you are doing\u2026","rel":"","context":"In "Endowment Plan"","block_context":{"text":"Endowment Plan","link":"https:\/\/www.trucompare.in\/blog\/endowment-plan\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6,"url":"https:\/\/www.trucompare.in\/blog\/term-insurance-in-india\/","url_meta":{"origin":1186,"position":5},"title":"Best Term Insurance Plan in India- How to Choose the Right Plan for You","author":"Trucompare","date":"May 2, 2013","format":false,"excerpt":"Choose Best Term Insurance Plan in India What is term insurance? Term insurance is the cheapest way to protect your family\u2019s finances if worst happens to you. In this article, we will look at how to select the best term insurance plan in India that meets your needs. Term insurance\u2026","rel":"","context":"In "Term Insurance"","block_context":{"text":"Term Insurance","link":"https:\/\/www.trucompare.in\/blog\/term-insurance\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts\/1186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/comments?post=1186"}],"version-history":[{"count":12,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts\/1186\/revisions"}],"predecessor-version":[{"id":1202,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/posts\/1186\/revisions\/1202"}],"wp:attachment":[{"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/media?parent=1186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/categories?post=1186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trucompare.in\/blog\/wp-json\/wp\/v2\/tags?post=1186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}