For some strange reason, there is a sense of nostalgia today. The discussion with a friend took me to my college days when I was very close to my late father.

In mid 1980's, my father, who had come up the hard way in life, and a self made man, 1/7

observed that a Savings in Cash of Rs 2.5 lakhs was critical, because Rs 2.5 lakhs invested in 12% p.a Fixed Deposits would fetch a monthly interest of Rs 2,500/- which was more than sufficient for a slightly upper middle class family to live comfortably, then. 2/7

Anything less than a saving of Rs 2.5 lakhs meant you start eating up your capital to meet your operating expenses, while anything greater than Rs 2.5 lakhs resulted in your capital appreciating with savings from accrued interest, after your expenses 3/7

Times have changed since those days. Taking a rain check 35 years later, I just imagined the plight of a person having only Rs 2.5 lakhs as savings, giving a monthly income of Rs 2,500 ( well he wont get that because the interest rates are much lower) 4/7

You can't survive for 3 days with Rs 2,500, even in rural India! The inflation of 1990-2010 has meant that you need to have at least Rs 30,000 every month (Rs 50,000 in Cities) to lead a decent life, which means that your savings has to be Rs 50 - 60 lakhs at least!!. 5/7

Are we happier than we were then? I just don't know. The way things are going , if one is in his 40s now, he need to save at least Rs 3 Crores during the next 15 years for him to barely meet his middle class life style when he retires in say 2035. A sobering thought! 6/7

And in earlier days, people invested or purchased from their Savings. But now, people invest or purchase from potential future earnings. A disruption like COVID 19 was something none foresaw, and it destroyed the financial plan of many a person. Hence be careful with your EMI 7/7