Things I wish I had known 15 years back!

( Warning :- This article is loaded with  "Hindsight bias")


I have been an avid saver and investor over the last decade. I have immensely benefited from my saving and investment habit. Looking back, I think I could have done better in these areas. ( Not an exhaustive list but the things that are on top of my mind at this point of time)

1. I should have "fully loaded" my  PPF  account from first year.

I opened a PPF account 15 years ago( good decision). But I didn't fully invest into it every year. During the initial years, I kept PPF account active by doing some minimum investment. NSC or ELSS was my preferred choice for parking the money. The reason being "15 years in PPF" looked "too long " for me.

I probably didn't understand the power of compounding and also that PPF is more tax efficient than NSC.

This mistake was corrected a few years back and now the PPF account is extended for the next 5 years :-).

2. Choosing growth option in Equity fund.

During initial investment years I thought , Dividends from equity funds was the most efficient way of "profit booking"  a.k.a risk mitigation and it was better than growth plan. But didn't realize that in effect , dividends also broke compounding and selling units of growth option was the best way to book profits , if at all needed.

Now, most of my Equity MF investments are under growth option ( Direct plan- learn more)

3. Should have avoided more money in tax inefficient FD.

Bank FDs were my favourite investment to start with.

FDs are the least efficient way of investing for people in higher tax bracket. It doesn't help to beat inflation and no indexation benefit is available for FD investments.Having all your debt investments in FD is tax inefficient.

Of late, I use debt vehicles that defer taxation till withdrawal.

4. Having too many accounts.

I  used to open one SB account whenever I switched jobs and wanted to hold all the five star funds ! Attractive bank FD rate hoardings led to many banks for opening FDs.

Having too many accounts eother it be SB, FD, demat or MF folio makes life difficult for you. Simple is always better!

Realising this, started closing  many accounts and consolidating folios. Still some more work left here!.

Bundle of contradictory investment advise - Equity or PPF or FD?? :-)

Self explanatory ( with my notes :-) ) snippet from a newspaper.

FDs fetching more returns now!

With the increase in deposit rates, I see a lot of banks raising their interest rates for certain odd periods 500/555/1000 days ,etc. The rate of interest has gone up to 9% and even more for senior citizens.

Definitely a good news for all those who have money ready to be parked in FDs.

Be aware where you invest your money

Fixed deposits are considered safe when compare to equity. But this may also turn out to be risky if you invest in corporate FD offering higher interest without considering the risk . ( There is a high possibility risk of repayment in certain sectors where there is poor corporate governance standards.)
Some real estate companies have been offering high interest rates on their FDs. I am not saying that all of them would go bust but make your careful evaluation before you invest in FD of any company.
PSBs are considered the safest. But even there don't try to put all your eggs in one basket. Be aware of deposit insurance rules and make your investment decision wisely.


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10 % on FDs

Raising interest rates are a pain for new loan seekers and those who are paying home loans ( variable interest schemes). But for those who are thriving on interest income, interest rate increase is a good news.

10% interest is offered by many banks on specified time periods.( 0.5% extra for senior citizens). Although the interest rate is lesser than the inflation rates, it atleast bridges the gap between inflation and returns.

With a very volatile stock market and immediate future of economy not auguring so positive, FDs would definitely come back into the portfolio of the middle class investors.

( TDS would be made if your interest earned per branch, per bank, per financial year exceeds Rs10,000 per annum. Appropriate forms need to be submitted at your branch to avoid TDS, if your overall income is below the taxable limit )

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