Not very long ago people believed you finished your education, got a good job and relaxed. This is no longer true. Welcome to the next 20-30-50 years:

1. Taxes in all forms will GO UP: Frankly there is no attempt by any government anywhere in the world to become more efficient – this will force taxes to go up.

2. More institutions will fail us: If you were a 50 year old American you should be worried about your Social Security benefits dying much much before you die. You will surely outlive your Social Security.

3. If you are a 25 year old Indian working in a PSU organisation or even in the Government your pension is likely to be self managed. If you are scared of equities, think again. Inflation will chew your investments. Learn financial management, record keeping, investing in equities, asset allocation, re-balancing, etc.

4. Holy cow institutions like Life Insurance Corporation, Unit Trust of India, State Bank of India will SURELY give you NEGATIVE REAL RETURNS on your ‘investments’ – because these are not investments, they are savings instruments.

5. If you are in the government service, be ready for big parts of your organisation being privatised. For e.g. the railways may outsource the canteen, banks may outsource credit rating, banks may outsource payroll management – things which look unbelievable now.

6. National Pension Scheme will not take off in the current mode. Not sure when it will take off. Fund managers may have the mandate to invest in index funds, but the performance gap between 2 schemes will be so high, that there will be panic.

7. The return on bond funds will be negative when interest rates are dropping!

8. NPS does not realise that people are not as scared about fees as they are scared of poor management! esp when it comes to money management!

9. The regulator normally speaks the language of the biggest player…so do not have too much expectations from that side!

10. Whatever is happening in financial services is also happening in the medical field…so be careful there too!

Be careful the government, big psu companies, ….will …

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  1. Agree, Subra.

    Just one point. UTI AMC of late has been re-inventing itself. Though they are not in the same league as HDFC AMC yet, they sure are improving and currently, have a fund amongst top 10 in most equity fund categories.

  2. In US, equity market has given 0% returns in last decade. There is a article which mentions that it is because of changing demographics. Retirees are withdrawing from stock market and young generation is not putting enough money to avoid the slide. Same thing can happen in India too after 2-3 decades.

  3. Point #7 needs elaboration. Is it that real returns from bond funds will be low / negative when interest rates are low? Because bond funds generally perform well during falling interest rates. Not clear.

  4. bond funds in India are expensive 🙂 fund managers with ability to time are not too many..so if you see 5-8 year kinda returns, it is sub ppf, but for the tax angle.

  5. Agree with Subra on UTI. Not as sanguine as NPR on UTI, particularly after Finance Ministry’s attempts to push the candidature of the brother of advisor to FM as the chairman of UTI. Talk about conflict of interest, vested interests and what not. I will stay miles away from UTI.

  6. Hey Subra dont scare people like this, you could cause social anarchy. Think of the dowry an IAS officer gets and think of his drop in net worth. No no, this cannot happen, the government will raise taxes to 100% – too bad like Greece only the salaried will be taxed – Imagine – you will have to hand over all your income to the state and then some. Meanwhile the government will give you 5% of it back through social secrurity.LoL.

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