Here’s something to think about before we begin. Your imagination will set some context.
- Imagine, you can have a retirement “account” where you can put all your money, stocks, bonds, and policies in one place.
- Imagine, you can put pre-tax income in it. Meaning: will not be taxed when you invest, but you will be taxed on any redemptions as income when you exit.
- Imagine, if you can actually put substantial amounts of money in these accounts without first having to pay taxes.
- Imagine, you can pick your own instruments of investments or your own fund managers, without having to depend on whatever EPFO or LIC has to offer.
In finance, if something sounds too good to be true, it isn’t. So, no such “account” exists in India. But it does in the USA and many other developed nations.
Let’s figure out how this account can look in India’s context.
In this conversation with Shray, Deepak shares why he feels now is the time for India’s concept of a Retirement Account – he calls it the MERA account. This account should help improve investment opportunities for retail customers, create a longer-term investment horizon and push people to save for their retirements.
Read our past post: The My Empowered Retirement Account (MERA).
Listen in as we discuss:
- The concept of a retirement account
- Impact on the economy and people
- Imagining a retirement account scheme that works for India
- The operational aspect of such an account
- Who would oppose such a thing?
Show notes and references
2:00 Seven consecutive years of positive market returns for India
4:00 Seize the opportunity of India story with retirement accounts
Read: My Empowered Retirement Account (MERA)
8:30 Where do LIC and EPFO invest retirement money
“We’re giving asset managers our retirement money and asking them to do great things for the next 20 – 30 years… But, they’re not doing great things… They are conservative.. not letting me realize my larger risk appetite.”
14:30 ELSS equity funds hold money for a longer period of time. Can’t they act as retirement funds?
17:00 The peril of investing for retirement with post-tax money
25:00 Deepak introduces his idea of MERA – My Empowered Retirement Account (MERA)
33:00 Why does this matter so much at the national policy level?
41:20 Who are the people who would feel this is not a good idea?
