Well being cynical is one sure way to make people think, right? Not sure but I keep trying it all the time.

‘Sir your income will increase by 12% every year so you can increase your SIP contribution …..’

‘Like Subra says ‘If you give up the Barista coffee which you have everyday and instead invest Rs. 105 in a SIP you can get RICH’.

‘Sir over the past 33 years the equity markets have given 19% returns, so you can expect at least 17% over the next 33 years’

‘Equities are the best asset class for long periods, WORLDWIDE’.

All statements which can be true, BUT MAY TURN OUT to be absolute falsehood if things go wrong. I am not belittling the importance of regular savings, simple habits, and investing in equities.

However NONE (repeat after me and read my lips NONE) of the financial planners want to ask you:

what will you do if your income remains stagnant for 4 years?

what if the NATION’s net worth drops 40% over 5 years (2007 to 2012, USA)

what happens if the bond markets start returning 1.4% p.a. and inflation is running at 3% (USA: currently)

what happens if the economy grows at 1% per annum for 5 years, and RBI keeps a LOW interest regime (USA, currently)

what happens if your spend on home, medicines, and other necessities rises from 39% to 80% over 9 years – and these are crucial years leading to your retirement?

what happens if your greatest asset (your home) was to DROP values by 45% over 5-6 years and shows NO SIGN of going back to your ‘mentally highest’ value?

I am asking all these questions because the PF industry is not equipped to ask these questions. Why?

a. They do not believe such nasty things will happen and more importantly

b. They are scared thet the client will run away

Remember all these scenarios HAPPENED in the USA and no adviser had prepared the clients to be ready with the answers. Of course, they do not say that they KNEW it would have happened, but preparing for a doomsday scenario does not mean PRE-EMPTING it…..

So do continue your SIPs, make sure that your salaries keep a little ahead of inflation, do what your job wants you to do, use the Barista money for a SIP, but hey keep the parachute ready too 🙂


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  1. Dear sir,
    please elaborate what is meant by Parachute. This article really made me think of the adverse effects of economy and how to shield my clients from such effects.

    It would be nice if you could put more light on the shielding aspects.


  2. Subra sir,

    You would make a daemon of Risk management guy , but hey I think you all ready are,

    What exactly is that Parachute you are asking to keep ready…….

  3. I think the FP need to describe the problem situation and provide solution. Merely asking questions will not help. For every foreseen risk there has to be contingency plan in place.

  4. Subra Sir,
    isn’t Asset diversification is the answer here, but you are slightly against Property and Gold, so if i go with your words my option will be Equity and Bonds. (I am not a F Planner, am in service and aged 33 yrs.)

  5. Subra,

    Please let us know how to keep salary ahead of inflation at all times.If this is in a working person’s hands he’ll not do a job but become a business man.

  6. what happens if the bond markets start returning 1.4% p.a. and inflation is running at 3% (USA: currently)

    Well i think we are already in it. consumer inflation is 11-12% and bank fd offers 9/10%.

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