Author: Everypennycounts (aka Saurabh S)

Welcome to my personal finance blog! With over 18 years of experience in financial services, I’m here to help you become more money-conscious and take charge of your financial future. I’ve witnessed firsthand how transformative it can be to truly understand and manage your finances. Everyone deserves to feel confident in their financial decisions—whether you’re planning for the future, making smart investments, or managing everyday expenses. My goal is to simplify complex financial concepts, share practical tips, and offer guidance that you can easily apply to your life.

When the Paycheck Stops, How Should Your Money Work?

Shyam retired at 60.

His children were settled. The home loan was closed. Life was finally slow and peaceful.
But one question kept coming back again and again:

“Will my money last… and will it give me regular income?”

Shyam did not want excitement from his investments anymore.
He wanted stability, income, and peace of mind.

That’s when he met Ravi.

“I Don’t Want Big Returns, I Want Peace”

Shyam explained his concern honestly.

“I don’t want to take big risks now.
I need monthly income for expenses.
And my money should grow slowly so inflation doesn’t hurt me.”

Ravi smiled. This was a very common retirement question.

“That’s actually a good starting point,” Ravi said.
“In retirement, the goal is not to beat the market.
The goal is to protect money, create income, and avoid stress.”

Step 1: Understanding the 3–5 Year Reality

Ravi first spoke about time.

“Shyam, since your focus is the next 3–5 years, we must be careful.
Markets can go up and down sharply in short periods.
So we should not depend heavily on pure equity funds.”

Shyam nodded. He remembered how markets sometimes fell suddenly.

Step 2: Making Stability the Base

Ravi then explained the foundation.

“A large part of your money should be in debt mutual funds.”

He kept it simple.

These include:

  • Short-duration funds
  • Medium-duration funds
  • Bond and corporate bond funds

“These funds invest in government securities and strong companies.
They are not flashy, but they are stable and predictable.”

Ravi added,

“Think of them like the ground floor of a house.
Strong, quiet, and reliable.”

Shyam liked that comparison.

Step 3: Adding Gentle Growth with Hybrid Funds

“But what about growth?” Shyam asked.

Ravi replied calmly.

“To beat inflation, we add conservative hybrid funds.”

He explained in simple words:

  • Most of the money is in debt
  • A small part is in equity
  • Risk stays controlled
  • Growth is slow but steady

“This gives your money a chance to grow
without giving you sleepless nights.”

Shyam felt reassured.

Step 4: Optional Low-Risk Equity Exposure

Ravi also mentioned another option.

“If you are comfortable, a small portion can go into
equity savings funds or arbitrage funds.”

These funds:

  • Keep volatility low
  • Do not behave like full equity funds
  • Are used only as support, not the main plan

“This step is optional,” Ravi clarified.
“Comfort matters more than returns.”

Step 5: Turning Investments into Monthly Income

Now came the most important question.

“How do I get monthly income from all this?” Shyam asked.

Ravi explained a simple solution.

“We use something called a Systematic Withdrawal Plan (SWP).”

With SWP:

  • A fixed amount comes to Shyam every month
  • Withdrawals are planned, not random
  • Remaining money stays invested

“It works like a salary from your own savings,” Ravi said.

Shyam smiled. That’s exactly what he wanted.

What Ravi Clearly Avoided

Ravi also made one thing very clear.

“For a 3–5 year retirement goal,
we usually avoid pure equity funds.”

“They are great for long-term wealth creation,
but too risky for regular income needs.”

To Sum up

Ravi summed it up for Shyam:

  • Debt funds for safety and stability
  • Conservative hybrid funds for slow, steady growth
  • Optional equity savings/arbitrage funds for balance
  • SWP for regular income
  • Focus on peace, not performance charts

Shyam’s Realisation

After the conversation, Shyam felt lighter.

“This feels comfortable,” he said.
“My money doesn’t need to run fast.
It just needs to walk steadily with me.”

Ravi smiled.

“That’s exactly how retirement investing should feel.”

In retirement, the best investment plan is not exciting.
It is simple, steady, and quietly supportive.

When money works silently in the background,
retirement feels exactly the way it should—peaceful.

Disclaimer: This is only a general example to explain how retirement investments can be planned. Every person’s needs are different. Your lifestyle, monthly expenses, health needs, and comfort with risk can change what is suitable for you. Please consider your personal situation or speak to a financial advisor before investing.

What Falling Markets Do to Our Minds

Sunita sat across the table, stirring her tea absent-mindedly.

“Ruby,” she said, “I don’t even know how to explain this. I open my app every morning and the number is lower. I close it, but it stays in my head the whole day.”

Ruby nodded. “Like checking your weight every morning after a wedding season?”

Sunita laughed. “Exactly like that.”

“Everyone Around Me Is Talking About It”

“At office,” Sunita continued, “people are discussing markets during lunch. One person says everything will fall more. Another says this is just the beginning. At home, my cousin sent a voice note saying he exited everything.”

Ruby smiled. “Markets don’t fall alone. They come with noise.”

She added, “It’s like when one neighbour says there’s a water shortage, suddenly everyone starts storing buckets — even if taps are still running.”

Sunita nodded slowly. That made sense.

“Why Does Staying Put Feel So Wrong?”

“I know I started investing for the long term,” Sunita said. “But right now, doing nothing feels careless.”

Ruby leaned back. “Doing nothing feels wrong only because your mind wants relief.”

She continued, “When something feels uncomfortable, our first instinct is to act — not because action is correct, but because action feels comforting.”

“Like switching TV channels during ads?” Sunita asked.

“Exactly,” Ruby smiled.

“So What Should I Do Right Now?”

“First,” Ruby said, “stop treating this like a fire that needs to be put out today.”

She explained, “If your fridge stops cooling, you act immediately. But if it’s just making noise, you observe. Markets are noisy right now.”

Sunita relaxed a little.

“So I don’t have to decide anything today?” she asked.

“No,” Ruby said. “Today, your only job is to pause.”

“But Every Month, Money Still Goes In”

Sunita hesitated. “My investment gets deducted automatically every month. Watching that happen now feels painful.”

Ruby nodded. “Like paying your gym fees even when your weight hasn’t reduced yet.”

Sunita laughed again.

“You don’t stop going,” Ruby said. “Because you know results don’t show immediately. Investing works the same way.”

“I Didn’t Know I’d Feel This Nervous”

Sunita looked thoughtful. “I thought I was okay with ups and downs. Turns out, I’m not.”

Ruby smiled gently. “Nobody knows how they’ll react until they’re inside the situation.”

She added, “This isn’t weakness. It’s learning.”

“Like realizing night driving makes you uncomfortable only after you try it?” Sunita said.

“Yes,” Ruby replied. “And next time, you plan better.”

“Should I Stop Watching All This?”

“Yes,” Ruby said immediately.

She explained, “Checking numbers again and again won’t change them. It only spoils your mood — like opening the fridge repeatedly hoping sweets appear.”

Sunita smiled. “So… less checking?”

“Much less,” Ruby said. “Once in a while is enough.”

“What If I Panic Again?”

Ruby took a piece of paper.

“Let’s decide this now,” she said. “When you’re calm.”

Together they wrote:

  • I will take money out only if I actually need it
  • I will not react just because others are panicking

“This paper,” Ruby said, “is for days when your mind starts negotiating.”

Sunita folded it carefully and put it in her bag.

A Simple Truth Ruby Left Sunita With

As Sunita stood up to leave, she asked quietly,
“Ruby… do people who invest well not feel scared?”

Ruby shook her head.

“They feel scared,” she said. “They just don’t let fear drive.”

She added, “Think of this phase like traffic. You don’t get out of the car just because it’s slow. You stay seated and wait.”

Sunita smiled. The tea was cold now, but her mind felt lighter.

Nothing had changed in the markets. But everything had changed in how she looked at them.

An NPS Scheme Change Every Investor Should Understand: The Scheme A Merger Explained

Raj, a 38-year-old private sector employee, had a simple ritual.

Once a year, usually around tax-saving season, he would log in to his NPS account, download his statement, glance at the numbers, feel reassured—and log out.

But this year was different.

An email from NPS caught his eye: “Scheme A will be merged with Schemes C and E…”

Raj frowned.

“Merge? Scheme A? Did I invest in something risky without knowing?”
“Will my retirement money be affected?”
“And is this change only for private sector employees like me?”

By evening, Raj did what most sensible investors do when confused.

He called Sunil, his long-time financial planner.

“Sunil, my NPS statement is changing. Should I be worried?”

Sunil smiled.
“Relax, Raj. Nothing has gone wrong. In fact, this is a clean-up exercise, not a problem.”

Seeing Raj still anxious, Sunil pulled out a notebook.

“Let me explain this the easy way.”

What exactly was Scheme A?

“Raj,” Sunil began,
“Scheme A was an optional asset class under NPS Active Choice. It invested in things like infrastructure funds, REITs, and InvITs—what we call alternative investments.”

Raj nodded slowly.

“But,” Sunil continued, “very few people chose it.

The corpus stayed small, liquidity was limited, and some investments had long lock-ins. Not ideal for a pension product.”

So why is Scheme A being merged now?

Sunil explained:

“PFRDA looked at three things:
1. Scheme A was too small to manage efficiently
2. It had liquidity constraints
3. Regulators want simpler, cleaner investment structures

So they decided: Let’s merge Scheme A into Scheme C (Corporate Bonds) and Scheme E (Equities)—larger, well-diversified, liquid schemes.”

Raj leaned back.

“So this isn’t because markets crashed or returns were bad?”

“Exactly,” Sunil said.
“This is preventive maintenance, not damage control.”

“But is this only for private sector employees like me?”

Raj’s next question came quickly.

Sunil shook his head.

“No. This applies to everyone who had opted for Scheme A:

  • Private sector employees
  • Government employees
  • Corporate NPS subscribers
  • All Citizens NPS

You’re hearing about it because Active Choice subscribers were the ones using Scheme A.”

Do I need to do anything now?

Sunil laid out the options clearly.

“You have two choices, Raj:

Option 1: Do nothing

  • Scheme A money will be automatically merged
  • No tax impact
  • No charges
  • No paperwork

Option 2: Use the free switch window

  • Till 25 December 2025, you can reallocate that money
  • You can choose how much goes into:
    • Scheme E (Equity)
    • Scheme C (Corporate Bonds)
    • Scheme G (Government Securities)
  • No switching cost for this move”

Raj smiled.
“At least they’re giving time.

“Now the important part—how should I invest post merger?”

Sunil leaned forward.

“Raj, you’re 38. Private sector. Long runway till retirement.
This change is actually a good opportunity to reset your NPS correctly.”

He wrote three letters on paper: E – C – G

Sunil’s suggested post-merger allocation for Raj

For someone below 40:

SchemeAllocation
Scheme E (Equity)70–75%
Scheme C (Corporate Bonds)20–25%
Scheme G (G-Secs)5–10%

“This,” Sunil said, “does three things:

  • Equity captures India’s long-term growth
  • Bonds reduce volatility
  • G-Secs provide stability without dragging returns too much”

Then he added:

“If you want something simple and low-maintenance, just remember this.”

E 60% – C 30% – G 10%

“It works beautifully for most people between 35 and 45.”

Raj’s final takeaway

Raj closed his notebook, visibly relaxed.

“So my retirement is safe.
The scheme is simpler.
And I actually get a chance to improve my allocation.”

Sunil nodded.

“That’s the right way to see it.
NPS is a long-distance train, Raj. Track maintenance doesn’t stop the journey—it makes it smoother.”

Raj smiled.

For the first time, that NPS email didn’t feel like bad news.

It felt like a course correction done in time.

✍️ Note

If you’ve received a similar NPS message and are unsure what to do, remember:

  • This change applies to all Scheme A investors
  • You have time till Dec 2025 to act
  • A simple, age-appropriate E–C–G allocation is all you need

The Real Cost of Retirement Most Private Sector Employees Ignore

“Will My Money Really Last?”

A Real Retirement Conversation Between Ravi and Vikas

Ravi looked uneasy as he stirred his tea.

“Vikas, I’m 35. Private sector job. No pension. EMIs, school fees, rising expenses… honestly, retirement feels like a moving target.”

Vikas smiled.
“That feeling is more common than you think, Ravi. Let’s make this real—with numbers you can relate to.”

Rule 1: Start Early — Time Is Doing More Work Than You Think

“How much do you save for retirement today?” Vikas asked.

“Mostly EPF,” Ravi replied. “Around ₹7,200 a month from my side, same from my employer.”

Vikas nodded.
“That’s ₹14,400 a month, or about ₹1.7 lakh a year. Now here’s where time plays magic.”

He continued,
“If you’re 35 today and continue contributing till 60, assuming:

Salary grows at 6% annually

EPF earns ~8% per year (historical average)

You could accumulate ₹1.5–1.7 crore only from EPF.”

Ravi looked surprised.

“And if you had started at 25 instead of 35?” Vikas added.
“The same contributions could have crossed ₹3 crore.”

“So delay cost me half the money?” Ravi asked.

“Yes,” Vikas replied calmly.
“Time penalises late starters and rewards early ones.”

Rule 2: What Will Retirement Actually Cost You?

Vikas asked,
“What are your monthly expenses today?”

“Roughly ₹50,000,” Ravi replied.

“Good. Now let’s project this forward realistically.”

Vikas explained:

Inflation assumed: 6%

Retirement age: 60

Life expectancy: 85 (25 retirement years)

“Your ₹50,000 expense today becomes roughly ₹1.6 lakh per month at age 60.”

Ravi blinked.

“That’s nearly ₹19 lakh per year,” Vikas continued.
“To fund this for 25 years, assuming post-retirement returns of 6–7%, you need roughly ₹3.5–4 crore as retirement corpus.”

“And this,” he added,
“still excludes:

Children’s higher education

Marriage expenses

Home upgrades

Major medical emergencies”

Ravi leaned back. “That’s eye-opening.”

Rule 3: Salary Grows. Expenses Grow. Investments Must Grow Too.

Vikas asked,
“How much are you investing outside EPF?”

“About ₹10,000 per month in SIPs.”

“That’s a good start,” Vikas said.
“But let’s see the impact of stepping it up.”

Scenario A: No Step-Up

SIP: ₹10,000/month

Return: 10%

Tenure: 25 years

Corpus: ~₹1.3 crore

Scenario B: 10% Annual Step-Up

Same SIP

Same return

Same tenure

Corpus: ~₹3.2 crore

“That’s more than double,” Ravi said.

“And you didn’t increase effort—just aligned investments with income growth,” Vikas replied.

Rule 4: Compounding Breaks When You Interrupt It

“Every time you stop, withdraw, or pause investments,” Vikas said,
“you’re not just losing money—you’re losing future growth on that money.”

He explained with a simple example:

₹5 lakh withdrawn at age 35

That same amount, left invested at 10%, could become ₹54 lakh by age 60

Ravi frowned.
“So small withdrawals today are expensive tomorrow.”

“Exactly.”

Rule 5: Asset Allocation — Stability Matters More Than Returns

Vikas continued,
“Returns don’t come from guessing markets. They come from staying invested through cycles.”

He explained a realistic allocation:

Age 35: ~65% equity

Age 45: ~55% equity

Age 55: ~40% equity

Post-retirement: ~25–30% equity

“This reduces the risk of retiring during a market crash and protects your lifestyle.”

“So it’s not about chasing the best fund?” Ravi asked.

“No,” Vikas smiled. “It’s about not panicking at the wrong time.”

Rule 6: Children Can Take Loans. Retirement Cannot.

Ravi hesitated.
“But my daughter’s college education will cost at least ₹20–25 lakh.”

“True,” Vikas said.
“But education loans exist—and they come with tax benefits under Section 80E.”

He continued,
“Your daughter will have 30–35 earning years ahead of her.
You will have zero earning years after retirement.”

Ravi nodded slowly.

“Support your children,” Vikas said,
“but don’t make yourself financially dependent on them later.”

The Real Takeaway

Ravi smiled for the first time.
“So retirement planning isn’t about finding the highest return product?”

Vikas shook his head.
“It’s about:

Starting early

Increasing investments gradually

Staying invested

Protecting compounding

Planning realistically, not optimistically”

He paused and added,
“In retirement planning, time and discipline matter more than brilliance.”

Disclaimer – This article is for educational purposes only. Numbers are illustrative and based on reasonable assumptions. Actual outcomes may vary depending on market performance, inflation, and individual behaviour. Please consult a qualified financial advisor before making investment decisions.

Between Groceries and School Fees: The Hidden Financial Anxiety Parents Don’t Admit

A few weeks ago, I met Raya, a working mother balancing deadlines at work, the chaos of running a home, and the constant hope of giving her teenage son the best possible future. Our conversation didn’t begin with money. It rarely ever does.

We were talking about schools, board exams, and how fast children grow up. And then, almost as if she had been holding it in for a while, Raya said quietly:

“My son’s education is just four years away. Am I on the right track?”

Her words didn’t sound like a question about investments.
They sounded like the weight of a mother’s responsibility.

Questions That Don’t Come at Convenient Times

Raya told me that these financial worries don’t show up when she’s sitting with a spreadsheet or reviewing her portfolio.

They appear in life’s in-between moments.

Like the time she was making breakfast, spreading butter on toast, when a news headline flashed on the kitchen TV about rising higher-education costs. Her mind went blank for a second as she wondered:
“Will I be able to afford it?”

Or during her commute when a colleague casually mentioned switching to a new mutual fund category. Suddenly, Raya found herself thinking:
“Should I be looking at that too?”

Or late at night, after finishing the dishes, when she logged in to check her portfolio and saw one of her funds underperforming for the last few months.
“Should I be worried?” she wondered.
But she didn’t know who to ask.

The Personal Side of Financial Questions

As we continued talking, more questions emerged — the kind investors often carry silently.

“This fund hasn’t been doing well lately. Is it a temporary phase or should I get out?”

“My son wants to study engineering… should I plan differently for that?”

“Everyone’s talking about these new fund categories — but how do I know if they’re meant for someone like me?”

None of these questions were technical.
They were emotional.
They were tied to life, not markets.

And like many investors, Raya didn’t ask these questions loudly. They lingered in her mind while she was choosing vegetables at the grocery store…
or waiting for her son outside his tuition class…
or paying the electricity bill and thinking about all the rising expenses.

What Raya Really Needed

For years, questions like hers either went unanswered or were addressed with overly generic advice.

Raya didn’t need a Do it Yourself (DIY) investment article.
She didn’t want jargon-filled explanations.
She wasn’t interested in chasing the “best fund.”

She simply wanted clarity.

She wanted someone to tell her:

“You’re doing fine — here’s where you need small adjustments.”

“This underperformance is normal — here’s why you don’t need to panic.”

“This new fund category may not suit your timeline — here’s what fits better.”

She needed someone who understood her life, not just her portfolio.

The Real Essence of Personal Finance

As Raya spoke, I realized her story represents millions of investors.

Investors who don’t want predictions — they want peace.
Who don’t need complexity — they need confidence.
Who don’t chase returns — they chase financial security for their families.

Raya reminded me of something important:

Personal finance isn’t about markets.
It’s about moments — the small, ordinary moments where life and money intertwine.

And when investors have someone they can talk to freely, honestly, without judgement or jargon…
that’s when true financial clarity begins.

Is Your Retirement Plan Wrong? The Real Truth About Insurance Policies

Rita walked into Ram’s office right after work—ID card still around her neck.

“Ram, I think I’m sorted for retirement.”

That sentence always made Ram slow down.

She pulled out a brochure.
“HR’s insurance partner explained this plan. ₹1 lakh a year. After 60, guaranteed pension. No market tension.”

Rita smiled.
“With EMIs, kids’ fees, and job uncertainty, this feels safe.”

Ram nodded.
“Let’s talk through it—using your daily life, not brochure language.”

“What Happens to Your Salary-Cut Premium?”

“Rita,” Ram asked,
“when ₹1 lakh goes from your bank account every year, what do you think happens next?”

Rita answered like most salaried professionals would.
“It grows for retirement.”

Ram replied gently.
“First, it gets divided.”

He explained it like a monthly salary slip:

  • Some part goes to insurance cost
  • Some to admin charges
  • Some to agent commission
  • What remains goes into investment

“It’s like your CTC,” Ram said.
“The full number looks big, but your take-home is smaller.”

Rita nodded slowly.
“That makes sense.”

“The Return That Doesn’t Beat Rising Costs”

Ram continued.

“These plans typically give 4 to ~6% return over 20–25 years.”

Rita said,
“But that’s stable. No ups and downs.”

Ram smiled.
“So is your old PPF passbook.”

Then he asked:
“Do you remember what petrol cost 15 years ago?”

Rita laughed.
“₹50 per litre?”

“And now?” Ram asked.

“₹100+.”

Ram paused.

“If expenses double every 12–15 years, can a 5% return handle retirement for 25–30 years?”

Rita went quiet.

“The Harsh Retirement Math We Ignore”

Ram scribbled numbers.

“You invest:

  • ₹1 lakh per year
  • For 25 years
  • Total: ₹25 lakh”

“At retirement, you’ll have around ₹45–50 lakhs.”

Rita did a quick mental calculation.

“That’s barely:

  • Two medical emergencies
  • One major hospitalisation
  • And household expenses for a few years”

Ram nodded.

“And remember—there’s:

  • No salary hikes
  • No Diwali bonus
  • No company medical cover anymore”

That hit hard.

“Why We Love Guarantees (And Why It Hurts)”

Ram leaned forward.

“Indians love guarantees because:

  • Our parents trusted LIC
  • Fixed deposits felt safe
  • Markets scared us”

He paused.

“But safety without growth works only when:

  • Life expectancy was lower
  • Expenses were predictable
  • Families were joint”

“Today,” Ram said,
“you may live till 85–90, with rising healthcare costs and nuclear family support.”

Guarantees, suddenly, didn’t feel so comforting.

“Same Salary, Smarter Allocation”

“Now let’s rework this like a middle-class budget,” Ram said.

Term insurance

  • ₹1 crore cover
  • Costs roughly the same as one family dinner out per month

Mutual fund SIP for retirement

  • Monthly SIP adjusted to your salary cycle
  • Increase SIP when appraisal happens
  • Equity does the long-term heavy lifting

“Same discipline. Same monthly deduction,” Ram explained.
“Different destination.”

Result?

“About ₹1.5 crore in 25 years.”

Rita blinked.

“That’s a retirement I can actually imagine,” she said.
“Medical, travel, dignity.”

“The Moment of Clarity”

Rita closed the insurance brochure.

“So this plan wasn’t bad,” she said slowly.
“It just wasn’t meant for retirement.”

Ram nodded.

“Insurance plans are like umbrellas.
Great when it rains.”

“But retirement,” he added,
“is a long road trip. You need a strong engine, not just protection.”

Rita smiled.

“I wanted peace of mind,” she said.
“But I also want peace in my 60s and 70s.”

Ram smiled back.

“That’s when retirement planning truly begins.”

“A Thought for Every Salaried Person”

Retirement is not about avoiding market volatility.

It’s about avoiding dependency.

Plan accordingly.

Borrowers Smile, Savers Pause: The Repo Rate Story Explained

Shyam looked worried as he stirred his evening tea.

“Bharat,” he said, “every news channel is shouting that RBI has cut the repo rate. Home loans, EMIs, fixed deposits, debt funds—everything seems connected. But honestly, I don’t quite get what really changes for people like me.”

Bharat smiled. “Good question. Let me tell you a story—because a repo rate cut is like a domino effect. One push, and several things start moving.”

First Things First: What Is the Repo Rate?

“Imagine this,” Bharat began.

“Banks are like households. Sometimes they fall short of cash. When that happens, they borrow money from RBI. The interest rate RBI charges banks for this short-term borrowing is called the repo rate.”

“So when RBI cuts the repo rate,” Shyam interrupted,
“banks borrow cheaper?”

“Exactly,” said Bharat. “And when money becomes cheaper for banks, the effects slowly reach all of us.”

How a Repo Rate Cut Reaches Your Home Loan EMI

Bharat continued, “Let’s start with something close to your heart—your home loan.”

  • When banks get money at a lower rate from RBI,
  • They eventually reduce lending rates for customers,
  • Especially for floating-rate loans like home loans.

“So my EMI goes down immediately?” Shyam asked hopefully.

Bharat chuckled. “Not always immediately. Banks pass on rate cuts with some delay. But over time, yes—
your EMI can reduce or your loan tenure can shorten.”

“In simple terms,” Bharat added,
“repo rate cuts are good news for borrowers.”

Shyam nodded. “That part I like.”

What Happens to Fixed Deposits?

“But what about my fixed deposits?” Shyam asked cautiously.

Bharat’s tone turned gentle.

“This is where the story changes direction,” he said.

“When lending rates fall, banks don’t want to pay high interest to depositors either. So after a repo cut:

  • New FD rates usually go down
  • Renewals happen at lower interest rates
  • Long-term FD income slowly shrinks”

“So savers suffer?” Shyam asked.

“Not suffer,” Bharat clarified,
“but returns become less exciting. That’s why rate-cut cycles are great for borrowers—but a bit painful for pure FD investors.”

Now the Interesting Part: What Happens to Bonds & Debt Funds

Bharat leaned forward. “This is where most people get confused.”

“Think of bonds like old contracts,” he explained.

  • Old bonds pay higher interest
  • New bonds (after rate cuts) pay lower interest

“So old bonds suddenly look valuable,” Shyam said.

“Exactly!” Bharat smiled.

That’s why:

  • Bond prices go up
  • Debt mutual fund NAVs rise
  • Especially funds holding existing bonds

“But,” Bharat raised his finger,
“this gain mostly comes from price appreciation, not long-term income.”

Short-Term Excitement vs Long-Term Reality

Bharat continued, “Once rates are lower:

  • New bonds offer lower yields
  • Debt funds reinvest money at lower rates
  • Returns stabilize and may cool down”

“So the big gains don’t last forever?” asked Shyam.

“That’s right,” said Bharat.
“Rate cuts give debt funds a boost, not a permanent gift.”

So… What Should a Thoughtful Investor Do?

Shyam leaned back. “Okay Bharat, give it to me straight.”

Bharat summarized calmly:

  1. Borrowers
    • Enjoy lower home-loan and personal-loan costs
    • Especially helpful if loans are floating-rate
  2. FD Investors
    • Expect lower rates ahead
    • Lock-ins need careful timing
  3. Debt Investors
    • Short-term and low-duration funds offer stability
    • Long-duration funds can benefit initially but carry more risk
    • Don’t chase returns blindly after a rate cut

“The key,” Bharat said,
“is to align your debt investments with your time horizon, not headlines.”

Shyam’s Realisation

Shyam smiled. “So a repo rate cut isn’t good or bad. It just… changes the rules of the game.”

Bharat nodded.

“Exactly. RBI doesn’t cut rates to make investors rich or poor.
It does it to support growth. Smart investors simply adjust their strategy.”

Shyam finished his tea, calmer now.

“Thanks, Bharat. Next time the news screams ‘Repo Rate Cut’,
I’ll know which domino is falling—and which one affects me.”

How to Make Safe Investments Give Better Returns

For conservative investors, predictable income and capital safety often take priority over maximising returns. Products such as fixed deposits and Post Office schemes are therefore commonly used.

However, the final outcome depends not only on the product selected, but also on how the income generated by that product is utilised.

A simple example using the Post Office Monthly Income Scheme (MIS) in combination with a Post Office Recurring Deposit (RD) illustrates this clearly.

Step 1: Using MIS as an income generator

Assume an investor allocates ₹1,00,000 to the Post Office MIS Scheme for a fixed tenure of 5 years.

MIS interest rate: 7.4% per annum

Annual interest: ₹1,00,000 × 7.4% = ₹7,400

Monthly interest payout: ₹7,400 ÷ 12 = ₹617 (approx.)

This monthly interest is paid out and does not compound within MIS.
At the end of 5 years, the investor receives the original principal of ₹1,00,000.

Step 2: Reinvesting the monthly income through RD

Instead of spending the monthly ₹617, the investor opens a Post Office RD and deposits the same amount every month.

Monthly RD deposit: ₹617

RD interest rate: 6.7% per annum

RD tenure: 60 months

The RD allows these small monthly deposits to compound over time.

At the end of 5 years, the RD matures at approximately ₹44,000.

Of this accrued amount, around ₹37,000 is the total earnings made through Post office MIS interest and the remainder interest is earned through the RD account.

Final outcome after 5 years

Component Amount (₹)

MIS principal returned 1,00,000
RD maturity value 44,000
Total value after 5 years 1,44,000

Effectively, the original ₹1 lakh grows to ₹1.44 lakh over 5 years.

Now, let’s understand what is the effective annualised return?

When evaluated as a single investment:

Initial investment: ₹1,00,000

Final value after 5 years: ₹1,44,000

This corresponds to an annualised return (CAGR) of approximately 7.5%, higher than a typical 5-year cumulative fixed deposit offering around 7%.

Why does returns improve despite modest interest rates?

The improvement does not come from higher interest rates.

Instead, it comes from:

Treating MIS strictly as an income product

Giving that income a systematic reinvestment path

Allowing compounding to work through RD

In effect, the investor converts a periodic income into a long-term growth engine without increasing risk.

Final Takeaway :-

Conservative investing becomes more efficient when income is intentionally reinvested rather than passively received.

This principle applies not only to Post Office schemes, but to any strategy where the regular cash flows are involved. Structuring income with discipline can quietly improve long-term outcomes—even in low-risk portfolios.

A Simple Story That Explains How to Invest a Large Amount Safely

One Monday morning, Mr. Mehta walked in looking like someone who had just received a big wedding gift but didn’t know where to keep it safely.

“I have ₹20 lakh after selling an old property,” he said. “I want to invest it… but I’m scared of doing it too fast. Markets go up, down, spin around — I can’t figure out what to do.”

I smiled. “Relax, Mr. Mehta. You know what your situation reminds me of? Having a huge bucket of water and trying to empty it into a small bottle. If you pour it all at once, everything spills. But a slow, steady pour keeps things clean.”

He laughed. “That explains my financial mess perfectly.”

And so we began…

Step 1: Choosing the Right ‘Parking Spot’ — Like Finding a Place for Extra Bags

“Think of your ₹20 lakh like luggage you’ve brought back from a long trip,” I said. “Before arranging it in the cupboards, where do you keep it?”

He thought for a second.
“Usually in the guest room or store room.”

“Exactly! You don’t dump the suitcases directly into your wardrobe. Similarly, before sending the money to equities, you park it safely.”

So we explored three “rooms”:

1. Liquid Funds → The ‘Guest Room’

Like a spare room where you keep things temporarily — clean, safe, and easy to access.

Perfect if:

  • You plan to start investing soon.
  • You want zero tension.

2. Arbitrage Funds → The ‘Locker’

Like putting jewellery in a locker instead of a regular cupboard. Same safety, but smarter tax-wise, especially for high taxpayers.

Good for parking the luggage for a few months.

3. Ultra-Short Funds → The ‘Store Room’

Not visited often but secure.
Ideal when the wait is slightly longer.

Mr. Mehta laughed, “So basically, you’re telling me not to scatter the ₹20 lakh all over my financial house!”

“Exactly,” I said.
“Let’s keep it neatly in one room until we’re ready.”

Step 2: Entering the Market Slowly — Like Merging Into Traffic

“Now imagine driving onto a busy main road,” I continued.

He nodded.

“You don’t blast your car into traffic. You merge slowly, right?”

“That’s true.”

“That slow merging is what we call an STP — Systematic Transfer Plan.”

I explained:

  • If the market is like a calm road → merge over 6 months
  • If it’s like peak-hour traffic → merge over 12–18 months
  • If there’s a sudden traffic lull (market correction) → merge faster

“It’s just common sense,” I added.
“Even Google Maps won’t tell you to accelerate blindly.”

He chuckled, “I didn’t know investing had so much in common with driving.”

Step 3: Avoiding Everyday Mistakes — Like Grocery Shopping When Hungry

“Mr. Mehta,” I said, “Have you ever gone grocery shopping when hungry?”

His eyes widened. “Worst idea ever! I buy half the store.”

“Exactly! Investing everything at once when markets look exciting is the same mistake.”

Some examples:

Mistake 1: Waiting for the perfect price

Like waiting for the perfect mango in summer.
You keep waiting… and the season ends.

Mistake 2: Stopping midway because the market dips

Like stopping your morning walk just because it rained one day.
It breaks the routine.

Mistake 3: Investing all ₹20 lakh in a single shot

Like adding all spices at once while cooking —
chances of messing up are high.

He laughed so loudly the receptionist looked inside.

Step 4: The Plan That Gave Him Relief

“So let me summarise,” I said.

“Your ₹20 lakh will first rest safely — just like luggage waiting to be unpacked.
Then, month by month, it will slowly move into equity funds, like merging into traffic without honking or panic.”

He leaned back.

“You know… this finally makes sense in everyday terms. Investments always felt like rocket science, but you made it sound like managing my own home.”

“That’s the truth,” I replied.
“Good investing is usually just good housekeeping.”

And That’s How Mr. Mehta’s Journey Began

He left with:

  • A calm mind
  • A clear plan
  • And confidence that came from simple rules, not market predictions.

The ₹20 lakh wasn’t a burden anymore.
It had become a well-behaved guest, ready to settle into a long-term home — one month at a time.

Build Perpetual Passive Income: A Proven PPF Method Every Investor Must Know

Imagine this.

You are 35 years old.

You’re busy with career, family, kids, EMI, school fees — the usual life roller coaster.

Retirement feels far away… almost unreal.

But what if I told you that with just ₹5,000 per month, you can create a guaranteed, tax-free, lifetime pension that will start at age 60 — and never run out?

Yes, never.

This is not a scheme, not a policy, not a “new fund offer”.

This is your own PPF account — when used smartly.

Let me take you through this in a simple story.

The Story of Raj — A 35-Year-Old Who Built His Own Pension

Raj is like many of us — disciplined but busy.

He wants to retire peacefully, without worrying about markets, returns, or taxes.

One day, he learns about a powerful strategy:

“Use your PPF not just as a savings tool…

but as a pension generator.”

Curious, he begins at age 35.

Let’s understand this….Raj’s Pension Plan in Three Steps

Step 1: Age 35 to 60 → Invest ₹5,000 per month

That’s ₹60,000 per year

For 25 years

At a safe, government-backed 7.1% interest

Raj invests consistently.

By the time he turns 60…

His PPF balance grows to approx. ₹39.97 lakh

(Yes, fully tax-free!)

Step 2: Age 60 → Stop investing, start living

Raj stops his monthly deposit at 60.

Now the PPF money continues earning interest — tax-free.

At 7.1% per year, his ₹39.97 lakh earns:

₹2,83,852 interest per year

or

₹23,654 per month (tax-free)

Step 3: Age 60+ → Withdraw only interest = Pension for life

Raj withdraws just the monthly interest.

Because he never touches the principal:

The corpus stays intact

The pension never stops

Everything remains tax-free

This becomes his personal lifelong pension plan, created without buying any annuity or policy.

Final Result

If you invest ₹5,000/month in PPF from 35 to 60:

Your tax-free pension at 60 = ₹23,654 per month (approx.)

This pension can continue forever

Your principal remains untouched

Why This Strategy Works So Well

PPF interest is guaranteed

Backed by the Government of India.

Entire amount is tax-free

Contribution, interest, maturity — all exempt.

No market risk

Perfect for conservative investors.

Self-created pension

No need for expensive annuity products with low returns.

You retain control

Remember – Retirement is not about age — it’s about preparation.

Your PPF, when used wisely, is not just a savings product.

It’s your personal pension engine, silently compounding for decades and giving you a peaceful, tax-free income for the rest of your life.