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Useful articles for your finance management by our team of experts

Money Management of Previous vs New Generation

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money management

Previous Generation

Time and changed and so has our lifestyle. Communication has got better and technology has made things faster. But, did our attitude towards money management when compared to our parents and grandparents change? Yes, it has. There are many reasons for this – inflation, uncertainty and so on. Let us see some major differences here.

Safety of Capital

In most of the products available at that time, one thing which was certain was safety of capital. This was because most of those products were from post office or government organizations. They also offered decent returns which meant the investor did not have to look to alternate options.

No Diversification

Diversification was mostly not needed as the existing products provided returns which beat inflation by big margin. Also, there weren’t too many options as there are today in order to look for diversification.

Monopoly in Life Insurance

As far as life insurance was concerned, it was a monopoly. Only LIC was the trusted company which had wonderful claim settlement record and also gave back some returns.

Real Estate

Real estate was the best bet for many in the previous generation. It gave tremendous returns. The growth in the economy started driving real estate. It took the middle class to the next level.

New Generation

High Risk Products

In order to combat inflation, high risk products have been introduced in the market such as mutual funds. They invest in equity oriented instruments and thus are able to beat inflation. Unlike the older generation, the new generation needs to pick such products as safer products like FDs do not match inflation.


Uncertainty is all over the world today. There is no guarantee that one product will be sufficient to achieve all your goals. You need to split your investment into multiple products with varied risk appetite and time frames to fulfil your dreams.

Unsecured Retirement

Defined benefit schemes have made way for defined contribution schemes. Retirement life is not financially secured for today’s generation. Insurance based pension plans charge more and yield less. PF and NPS will give some relief but may not guarantee anything substantial. Hence, we need to plan well in advance for this goal and also treat it as a priority.

Importance of Term Plans

There are many insurance plans in the market which claim to offer good investment with insurance but fail miserably. Only form of insurance which actually provides proper insurance at a decent cost is term insurance. Moreover, online version is much cheaper and easier to buy. So, term plans take care of insurance and Mutual Funds, FDs, PPF, etc take care of investment.

  • http://www.cstax.com.au/ Richard Peter

    Cash Exposure Risk: In
    Australia and round the globe, cash rates have been cut down to extraordinary
    levels due to which SMSF’s with high cash have been suffering along returns
    near about 2-3%. Hence, in an environment of low interest, all SMSF’s should
    consider other assets such as bonds (fixed interest). Diversification into
    other aspects such as bonds can help to minimize the risk.

    Hence, for Self-Managed Super Funds Australia one should diversify their
    portfolios. Only by amalgamating assets and investing in the right manner
    trustees can reduce the basic risks associated.

  • sunaina

    I believe that it has taken a complete 360 degree turn. We have more options to plan and invest our money and that too quite easily. I recently bought Tata AIA Life’s Smart growth plus plan. It offers flexibility in choosing policy term, has good policy returns and tax benefits u/s 80C & 10(10D). You guys can check out the video…Good one!


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