Indian retirees are most vulnerable in the world- as per recent RBI report. The major reason behind is their borrowing and investing habits of families. Irrespective of class, most household wealth in India is tied up in real estate and gold.
Meanwhile, investment in financial asset and pension funds remain very less which is almost 5% of total household wealth. This is in contrast with households in other countries that invest significantly in financial assets and pension funds but have almost no gold holdings.
The borrowing patterns of Indians are widely different than other nations, placing them at a higher risk.
- When it comes to deploying Indians hard earned money, they rely heavily on physical assets. like gold and real estate rather than financial assets. Average Indian holds 84% of its wealth in real estate and other physical goods, 11% in gold and the rest 5% in financial assets like deposits and savings accounts, mutual funds, publicly traded shares, life insurance and retirement accounts.
On the other hand, households in Tamil Nadu, Daman, Pondicherry, Diu and Andaman and Nicobar have a strong penchant for gold as they put 28.3%, 25.7%, 24.4%, and 23.5% of their money respectively towards this assets.
Thus I would like to conclude:-
I strongly believe that you should have an investment portfolio with different classes of assets (different sources of Investment) to cater to different needs and time periods.
Example:- In case of an emergency Gold can be ideal to immediately address your capitalize needs. But from a long-term perspective, an investment in real estate is the best as it provides tax benefits and also a rental income, thus a more secure option.
However if liquidity ticks high on your investment check-list, you may consider skipping the real-estate market altogether.