I believe in financial discipline and I have always ensured that a majority of my earnings go into savings; because I believe in a formula “Expenses equals income minus savings”. So for me, it is first priority to save and then to spend. Being a seasoned investor, I have been into all – gold, property, fixed deposits, bonds, mutual funds, stock markets etc. Diversification of portfolio is good and advisable, but what disturbs me is the fact that a lot of people, at times, due to family pressure and emotional moments, go in the moment and take an investment decision which doesn’t give the best outcome, and at times leads to bad returns or even losses.


In financial assets, I have observed that individual investors are considering only two options – fixed deposits, tax saver bonds etc. for ‘safe’ returns and stock markets/mutual funds for ‘higher’ returns. I will not get into the latter, as equity markets are volatile and may even give a negative return (which people obviously do not consider or even think while putting their money into it). I do not understand why all of us Indians consider fixed deposits as a rock solid safe investment. There are various reasons why they are not! Let me list a few:

  • When a bank closes down, is liquidated, undergoes a reconstruction or amalgamation or is merged with another bank, the depositor is insured for up to Rs. 1 Lakh only – for Savings, Fixed, Current and Recurring Deposits and this includes both the principle and the interest amount accrued. Any amount more than that is NOT insured!
  • Gross NPA’s of Indian Banks was over Rs. 8 Lakh Crore as on Dec 2017. Yes you read that right!
  • Eleven public sector banks have extremely bad financial health that they cannot lend. They are under PCA framework now.

Also, check this chart of falling interest rates in India in the past 5 years:

To put this in simple words, investing in bank fixed deposits is neither one hundred percent safe, nor rewarding due to falling interest rates in India. Well, I am not writing this to scare you all, I write this blog to make you all aware of an investment product which should definitely be a part of your financial portfolio, which is safe and gives assured higher returns for long duration – government securities. The government securities are issued by the Reserve Bank of India (RBI) on behalf of the Government of India in order to finance the fiscal deficit. Government securities have always been considered as an investment option which is suitable only for banks, financial institutions and corporate. However, these securities are one of the best options for investment for common investors as well for the following reasons:

1) No risk: The government securities have always been the best example of a risk free security. Thus, for investors looking for risk free investment, government securities are best option.

2) Assured returns over a long term: One can get returns at an assured rate and unlike bank fixed deposits, these securities are available for longer duration (25-30 years).

3) Withdraw anytime: Government securities can be bought and sold like equity products on NDS-OM (Negotiated Dealing System- Order Matching) platform of CCIL. The liquidity in these securities is good as banks and financial institutions regularly participate in this market.


I personally believe to invest in government securities via a fund that invests in them. I researched more about the available options in the market and would like to draw your attention to Nivesh Lakshya Fund by Reliance Mutual Fund. Their primary objective is to generate optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by the central and state governments. Their fund’s strategy is to invest predominantly in long-dated G-Secs (25-30 year securities). The 8.13% GS 2045 current yield is 8%. The fund to have a maturity of 25-30 years, to start with. The gilts will be held till maturity (unless there is redemption request). The USP of this product is the certainty of returns, if investments are held till maturity of the underlying papers; without compromising on liquidity (can withdraw at any time).


Why should you invest in Reliance Nivesh Lakshya Fund?

  1. To secure the currently prevailing interest rates for long term: Why should one do that? Well, history shows that as countries transition to developed economies, they witness a fall in inflation and interest rates:

  • Even countries like China and South Korea saw yields falling massively.
  • India to be amongst the Top 3 largest economies as per an IMF forecast.
  1. Tax efficient: This is due to indexation benefit that it enjoys, and it is applicable after 3 years.
  2. An opportunity HNI’s wouldn’t want to miss: It gives a chance to invest for long term and preserve one’s wealth with the flexibility to withdraw investments anytime. One can get fixed and assured returns for a long duration (25-30 years) which is not available in fixed deposits and other instruments. Also, withdrawal at any duration is available.
  3. Good for Retirees and senior citizens: Comfortable retirement can be planned by securing a good interest rate for long-term income generation needs. Also, cash flows through Systematic Withdrawal Plan (SWP) with flexible withdrawal amount and frequency. (Preferably after 3 years for tax efficiency). Also, they can create legacy for their children and grandchildren by locking in good interest rates for 25-30 years.


And if you’re considering this, hurry up, because this NFO closes on July 02, 2018. Click here and head on to their website to invest!

June 18, 2018

How to Get Assured 8.25% Returns for the next 30 years! Definitely Not by Fixed Deposits!

I believe in financial discipline and I have always ensured that a majority of my earnings go into savings; because I believe in a formula “Expenses […]