Experts echo his concern that leaving money idle or confined to a single “safe” option can result in lost compounding potential and reduced purchasing power over time.
In a recent post on X (formerly Twitter), Chartered Accountant Nitin Kaushik cautioned Indian savers about what he calls the “Silent Wealth Trap” — the tendency to park most of their money in fixed deposits (FDs) without considering the impact of inflation and missed opportunities for growth.
“FD rates today are around 6.3-7% per annum, while inflation is about 2.1%. Your real return is approximately 4.2-4.9% per year,” Kaushik explained, highlighting how ₹10 lakh kept in an FD would effectively grow to only around ₹10.42 lakh in real purchasing power after a year.
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Despite this limited gain, about 70% of Indian households still prefer FDs as their primary savings vehicle. Kaushik attributes this to the comfort of “guaranteed safety,” a lack of financial literacy, and widespread aversion to market volatility.
However, he warned that the notion of safety is only valid as long as inflation remains low. “If inflation rises above your FD returns, real wealth erodes,” he wrote, stressing that financial security comes from diversification, not complacency.
Kaushik suggested a balanced investment mix — combining fixed deposits with equities (which have historically delivered 12-15% CAGR), debt funds (6.5-8%), and inflation hedges such as gold or REITs. “Diversify — don’t stagnate in one asset class,” he advised.
Experts echo his concern that leaving money idle or confined to a single “safe” option can result in lost compounding potential and reduced purchasing power over time. Building real wealth, they say, requires strategic diversification, periodic portfolio reviews, and a willingness to adapt to changing market conditions.
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As Kaushik summed up, “Don’t let your money sit idle — diversify to protect and grow real wealth.”
