Break the inertia

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Financial adviser Dick Mody lists the benefits of investing in government schemes

Financial security is nothing but making sure people ‘plan’ for their—and their families’—future needs in terms of basic necessities, comforts and luxuries by judiciously choosing long-term savings and protection plans. Each of us has different types of family responsibilities and, more important, unique earning and spending levels. So if you want to ensure that your future lifestyle needs are met and protected, you must aim for financial independence and security.

“I earn well enough today, why bother about tomorrow?”

This is one of the most common questions I get to hear. It may sound logical at first; however, two important factors need to be carefully considered that make planning not a luxury but a necessity: Inflation or future rise in prices; and natural progression of needs, with either aspirational upgrades or increasing family responsibilities.

“I barely meet my expenses; hence, I cannot plan”

This is the second and very relevant point to address for a financial planner like me. In today’s times, with the rise in real-estate prices, rental rates and overall cost of living, especially in metros, a large chunk of one’s post-tax pay goes towards meeting EMIs and personal spending. Interestingly, the new generation of Indian consumers has also shed the conservative attitude towards taking loans that their parents may have had. This gen-next is not averse to borrowing (with high credit card spends) to meet their present-day aspirations; including ownership of high-end vehicles, foreign trips, and even liberal personal spends. This is leading to an interesting impact: lower ‘net savings’ despite rising levels of ‘gross earnings’. If one does not strike the right balance, there is a risk of financial imprudence—essentially, one will never be able to make a meaningful plan to attain future financial security.

Act now

All considered, it is my firm belief that we should all do the following:

  • To begin with, break the inertia and optimise your limited resources.
  • Something is better than nothing—so start small, but do start.
  • If you can’t immediately provide for everything, identify your most critical priorities; for instance, life protection, medical coverage, pension creation, etc.
  • Once you decide these, there are several low-cost options from not just the private sector but government-sponsored welfare schemes too.

Government welfare schemes are for one and all

In today’s media blitz, I am sure you have heard of a host of plan options from leading private-sector mutual funds and insurance companies. But few people speak about the options that abound in government schemes, which anyone can avail.

Pradhan Mantri
Jan Dhan Yojana
First-time bank account holders Inculcates a basic saving habit as it reduces cash in hand and thus propensity to spend wastefully · No need to maintain any balance unlike regular bank savings accounts
· Free RuPay debit card
· Easy process to open and operate
· Accident and life cover provided
Pradhan Mantri Jeevan
Jyoti Bima Yojana
Low-cost life insurance Provides support to immediate family in case of demise of key earning member ₹ 2 lakh life cover for a premium of just ₹ 330 per annum
Sukanya Samriddhi
Long-term saving plan, especially for newborn girl child up to age 10 years Earns attractive interest of 8.1 per cent per annum. You can contribute a maximum of ₹ 1.5 lakh Minimum contribution is just ₹ 1,000;
can be opened at any post office/bank
Atal Pension Yojana Creating long-term security after retirement Earn monthly pension from the age of 60 ranging from ₹ 1,000 to ₹ 5,000 per month Age-linked reasonable amounts per month can be contributed till the age of 60
Pradhan Mantri
Suraksha Bima Yojana
Accident death/disability cover Provides financial support at a crucial time; entry age is any time between 18 and 70 years ₹ 2 lakh cover at just ₹ 12 per annum


Thus, if budget is a constraint, a good start would be to take advantage of these and later aim to participate in private-sector offerings as your capacity to save rises. In fact, it is also a good idea to suggest these schemes to our domestic help and other deserving people who may not be financially savvy.

In conclusion

Limited resources should not hamper your long-term planning. Make sure you prioritise key long-term goals and make a beginning, however small. To start with, take full advantage of government initiatives and schemes, and resolve to step up into mutual funds and private life insurance-related wealth products as and when your investible resources grow.

We at Ethical Advisers firmly believe investments should be based on well-researched facts and deep knowledge, not rumours. We welcome any questions that you may have on this or other topics related to long-term investing; feel free to contact us.

Dick Mody, a 25-year veteran in the Indian equity markets, is the founder-CEO of Ethical Advisers. Write to us with your financial queries at and Mody will answer them in this column. You can also reach him directly at or visit

Photo: iStock
Featured in Harmony — Celebrate Age Magazine
October 2018