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Other than inflation, interest rate is also a risk. Investors should be aware that 20 years on, the interest rate then may be low.
Investors need to plan to be financially independent.
Low interest rates are a mark of a good economy and encourages companies to borrow, invest and expand their business. In developed countries, interest rates have been low.
It is ridiculous that we are worried about the rising interest rates. In fact the inflation has been very high but figures are artificially declared low by the government to prevent increase in salaries, etc and pamper the industrialist friends. Savings are not getting any net appreciation due to inflation. Purchasing power has eroded rapidly in last four years as never before. Let us stop worrying about giving free money to industrialists and concentrate on the common man so that he is able to sustain his daily livelihood and plan meaningful savings for retirement. Remember that we do not have social security system or even medical coverage for the common man. All our tax money is spent on schemes which are directed to the so-called very poor who never pay any taxes. Interest rates including those of small savings like PPF, etc need to rise further to be meaningful. Middle class is being taken for a ride.
I used call this risk as a" interst rate risk". When any of my investors ask about guaranteed return, like Bank fd.I advice them not to depend fully on Bank fds, because in other term, there is a hidden risk of getting expected return in long term. The bank fd , which is looking good today( without concerning inflation) after maturity the interest rate might fall. At that point of time , it would be very hard to maintain all needs, with lesser return of bank fd.
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