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How Do You Manage Your Financial Goals Amid Falling Interest Rates?

In a recently concluded webinar with Tata AIA Life Insurance, experts revealed key lessons in financial goal management

April 05, 2021 / 04:18 PM IST

Are falling interest rates hampering your ability to manage your financial goals? Tata AIA Life Insurance explored methods to attain these goals in conversation with Harshad Patil, Chief Investment Officer, Tata AIA Life Insurance, and Feroze Aziz, Deputy Chief Executive Officer, Anand Rathi Private Wealth Management.

The discussion began with an exploration of the different financial instruments one can invest in, with interest rates witnessing a continuous fall. Both Pail and Aziz were of the opinion that interest rates are likely to remain on the lower side in the short term. For low-risk investors, a five-year period seems to be the sweets spot if a short lock-in period and decent returns are the primary considerations.

Guaranteed Benefit Plans as an Alternative

In a scenario where interest rates are low, guaranteed benefit plans can be a great option for investors looking for sustained returns. "A fixed deposit is one of the most inefficient debt portfolios, especially in the current circumstance," says Aziz.

The main advantage that guaranteed benefit plans have over FDs is that the rate of interest remains consistent regardless of changes in the market rate. Apart from guaranteed benefit plans, sovereign bonds and debt funds are also efficient options if your appetite for risk is low.

How Early Do You Start Saving?

Another significant point of discussion was how early in life an individual must start building a financial plan. Both speakers believed that the earlier one starts, the better - though a spending phase of a year or two after one starts earning won't do much harm.

Once you start building a financial plan, there are several plans, such as those provided by Tata AIA Life Insurance, which have something to offer for consumers of all risk appetites. These plans have the added benefit of tax savings and also deliver a wide portfolio of options. In consultation with your financial advisor, you can choose plans that best match your financial goals.

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first published: Apr 5, 2021 04:08 pm