Many Indians save diligently but fail to build wealth as low returns, inflation, and hesitation toward investing quietly weaken long-term financial outcomes.
Tarun Kakar, Founder of EZY Wise Services
Despite rising incomes and growing financial awareness, a large section of Indians continues to struggle with wealth creation. According to Tarun Kakar, Founder of EZY Wise Services and a registered Mutual Funds Distributor, the issue is not a lack of savings, but an over-reliance on traditional saving instruments that fail to beat inflation.
“Most Indians believe that saving money is enough to secure their future,” Kakar said. “But savings without investing do not create wealth. In many cases, they slowly erode purchasing power.”
Inflation vs Savings: The Hidden Cost of Playing Safe
India’s inflation rate has historically hovered between 4% and 7%, depending on economic conditions and consumption patterns. In contrast, most savings accounts offer interest rates of around 3% to 4%, which often fall short of inflation.
This gap has a compounding impact over time. For instance, at an average inflation rate of 6%, ₹1 lakh today would lose nearly half its purchasing power over the next decade. In real terms, the value of that money would be significantly lower, even if the account balance appears unchanged.
“People feel secure seeing money sit in their savings account,” Kakar explained. “But if inflation is rising faster than your interest income, you’re effectively becoming poorer every year.”
Why Investing Is Essential for Real Wealth Creation
To grow wealth in real terms, money needs to earn returns that outpace inflation. Historically, equity-oriented investments and mutual funds have delivered higher long-term returns compared to traditional savings instruments, particularly when held over extended periods.
“Investing allows your money to participate in economic growth,” Kakar said. “Equity and mutual fund investments, when done with a long-term mindset, have the potential to generate returns that savings accounts simply cannot.”
While market volatility often discourages first-time investors, data shows that long-term investing smoothens short-term fluctuations and benefits from compounding. Systematic Investment Plans (SIPs), in particular, help investors stay disciplined and reduce the impact of market timing.
The Psychological Barrier Holding Indians Back
According to Tarun Kakar, one of the biggest challenges is behavioural. Many individuals perceive investing as risky while underestimating the risk of inflation eating into idle money.
“There’s a deep-rooted belief that savings are safe and investing is dangerous,” he said. “But ignoring inflation is one of the biggest financial risks people take without realising it.”
Industry experts agree that a lack of structured investment planning, especially among middle-income earners - results in missed opportunities for long-term wealth accumulation.
A Balanced Strategy: Save for Safety, Invest for Growth
Kakar stresses that savings still play a crucial role, particularly for emergencies and short-term needs. However, beyond maintaining an emergency fund, surplus money should be systematically invested based on one’s risk profile and financial goals.
“Savings protect you in the short term,” he said. “Investments build your future. Wealth creation happens when both are used in the right proportion.”
As India moves toward greater financial inclusion, experts believe bridging this investing gap will be key to improving long-term financial well-being for individuals and families alike.
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