F&O is almost always a path to financial destruction if you are a ...
There are some savers who just keep their money in the bank, along with savings in the EPS, NPS, or EPF, in various permutations. Throw in some fixed deposits and insurance products, generally ill-chosen, to this product mix, and their savings menu is complete. The drawback of this mode of saving is that the returns are poor, and a great deal of money is left to idle.
The good part is that not only is the money being saved, but it starts early, continues throughout the saver’s earning life, and it does not suffer any shocks. The benefits of starting early and long decades of compounding mitigate, to an extent, the ill effects of investments that can underperform.
The next type of saver is the one who wants to save more and invests it to get higher returns. Such people feel that they are financially literate and can take decisions that are, essentially, calculated risks.
They go beyond deposits and explore mutual funds. In theory, the higher potential returns come with higher risk. Typically, such investors make some good decisions and some bad ones.
However, if they stick to some basics, it is bound to work out well. They should conduct research to choose reasonably good funds to invest in. They must invest gradually through a SIP, and should not stop investing in the face of volatility.
As long as they stick to these basics, and let a few years pass, they will do fine. In hindsight, they may not invest in the best possible funds or earn the highest possible returns, but their savings will be much better than deposits, especially if one takes taxation into account.
One way or the other, these two types of savers will get by. The second type does better than the first, but neither destroys wealth.
