THE Indian wealth plight is such that India saves heavily but does not invest wisely. We save for long-term goals such as emergencies, education and old age, but do not invest in long-term instruments.

Statistics show that we, Indians, save about 32 per cent of what we earn. But our exposure to growth-oriented financial instruments is still very low. About 65 per cent of what we save is in liquid and safe assets like cash, deposits, post office savings to name a few. Another 23 per cent is invested either in property or gold and, hence, only about 12 per cent of what we save is directed towards growth-oriented financial instrument, namely, equity.

It is awful how we have managed to duck such a fantastic asset class like equity that has the potential to perform exceptionally well. From 2003, the Sensex rose about seven times in only five years. But the benefits of such phenomenal bull phase was taken by the foreign institutional investors (FIIs), instead of us. By large, we Indians remained only the spectators in this phase. After realising by the end of 2007, we invested heavily. But that was too late, and from January 2008 onwards, the market fell badly that year. Then we stopped investments becoming fearful of falling markets. Amazing! I want you to think in retrospect and understand how think in retrospect and understand foolish have we been and how we entered the markets at the wrong time. Going forward, looking at the India growth story, such bull phases will convincingly occur time and again. Let's not be unwise to miss the opportunity this time.

While investing, an investor basically looks at highest and guaranteed returns with no risk or low risk and high liquidity. But remember, `only high risks can get you high returns'. We should expect the returns proportionate to the amount of risk we are ready to take. When it comes to investing, we Indians are a bit risk averse.

But risk aversion exists even in more matured markets. As per a recent survey by Wall Street Journal, the Europeans are the most risk averse. They rank even above Indians when it comes to going for safe and guaranteed returns.

It's okay to be risk averse, but then even our return expectations should be low.
Else, choose a prudent financial planner who will manage risk efficiently and earn you better returns.

How financially literate rather illiterate are we: Life insurance is among the most popular financial instruments in India.

Even though people may know its basics importance, but hardly 50per cent have an insurance policy in their name.

Among those who have a policy, most have taken it only for tax purpose or some investment purpose, forgetting insurance's real purpose, that is, risk cover.
Hence many are inadequately covered.

Indian investor thinks from his heart. Some matters like child education, marriage, are more important for him than his own retirement planning.

Today's complex financial services industry offers consumers a vast array of products and providers to meet their financial needs. Under-insured, over-leveraged and excessive new funds are mostly found in individual investment portfolios. These are all due to lack of knowledge or wrong notions developed over the years by the investors. The chances that a client may get involved in transactions that are financially destructive are more. Hence, to protect their investment portfolios from being shattered and to help their money earn more through sensible investment, the only solution is investor education, investor education and investor education.

The lack of financial prudence by individuals or in stances of investors getting duped is concerns shared by both developed and developing countries. Various researches have shown that levels of finan cial literacy worldwide are unacceptably low. In one of the re searches, it was observed that in a developed country like Australia, only 28 per cent of the respondents were able to calculate compound interest and in the US, the figures were even low at only about 18 per cent. For developing country like ours, the challenges are even more.