Ravi and Mohan were best friends. In 1996, both retired from their jobs. Ravi put all his savings in Fixed Deposits because he felt they were safe. Mohan listened to his advisor and invested his money in a mix—FDs for safety and mutual funds for growth.
In 1996, FDs paid about 14% interest. Ravi was happy, thinking he would never need to worry about money. Thirty years passed. The interest on FDs fell to only 7%, but prices of food, medicine, and electricity kept rising. Ravi started cutting down on outings, stopped dining out, and worried about medical bills. Eventually, he had to go back to work for extra income.
Mohan’s portfolio kept growing because part of it was invested for long-term growth. Even with ups and downs, his money kept pace with inflation. Mohan did not need to change his lifestyle—he could enjoy his retirement and do what he loved.
The Lesson: Asset Allocation Wins
Many people think “FDs are safe.” But over time, FD returns go down and the cost of living goes up. Relying only on FDs is risky for retirement. The smart way is to spread money across different types of investments—FDs for safety, equity or mutual funds for growth, and other instruments as needed. This asset allocation helps money grow faster than expenses, protects against inflation, and gives peace of mind in all phases of life.
Simple Tips for Retirement Planning
- Put a portion in growth assets even after retirement.
- Review the portfolio occasionally and rebalance if needed.
- Never rely only on FDs or one investment source.
- Take advice before making any big change in your retirement portfolio.
Asset allocation is the key to enjoying retirement without worry or cutting expenses. It helps one survive and thrive for decades, no matter how interest rates change.
