For an Indian citizen in India, looking to retire years from now on which of the following would be a better retirement fund ?

  1. Retirement plans (Deferred/Immediate annuity plans like https://www.licindia.in/pension_plans.htm)
  2. Government saving schemes which give a return of 8.5% (Ex.: http://www.indiapost.gov.in/NSC.aspx)
  3. Invest in gold/precious metals

My recommendation was to invest annually in gold (or a gold fund if not physical gold). Accumulate and store the metal and be able to sell it of bit by bit when the person retires. Given the country's socio-economic factors this also seems to be, almost, the safest and probably more rewarding route to take.
Which of the above would be the better way to plan for retirement, in India, assuming an average couple make the family.

  • I dont understand the downvotes, considering there are other questions around which ask for the best option available. Downvoter, care to comment ? Jul 17 '14 at 0:42
  • This question was viewed over a 1000 times and still has negative votes. I wonder why this question isn't in the umbrella of personal finance Feb 21 '15 at 10:21

Indians appear to have a cultural preference for gold, but it's not really a reasonable retirement plan all by itself. Retirement should optimally be a set of diversified investments across as many asset classes as is possible and gold has no diversification whatsoever. Nor does it necessarily have a good expected return. And it tends to be highly volitile. And there is a rather large cost to transacting (the selling price and buying price differ by a relatively large amount). Gold is a fine addition to your retirement savings, but it shouldn't be the whole thing or anywhere near it.

The government saving schemes you mention seem to just barely keep up with inflation or perhaps be below current Indian inflation. They are kind of like a savings account but you are locked in to an interest rate. This means you will benefit if inflation or interest rates fall after your purchase but be harmed if they subsequently rise. Probably a good thing to add to a portfolio, but it shouldn't be the whole thing. Alternatively, just use a real savings account.

A defined benefit pension plan like the one you mentioned will take on more profitable investments and hopefully be able to meet its obligations to you. If it does, this is likely a reasonable option. In that case your main worry would be inflation, since the benefits are defined in terms of nominal currency. You should also worry about the solvency of the organization. Many pensions in the US (especially government pensions) are underfunded and some people will almost certainly not get their full payments. Private pensions in the US are much better but not perfect. Not sure how responsible pension managers in India are on average.

I notice you didn't mention any options that invest directly in risky assets, like indian stocks or international stocks. Like a mutual fund, for example. That is where a large portion of most people's investment should probably be and it will be largely unaffected by inflation, unlike the pension and government saving schemes you mention.

You can also think out of the box. Maybe invest in some real estate, for example.

At the end of the day, your best bet is to invest in lots of different things. You don't know what kind of risks the future holds, so by having investments in lots of things you minimize your worst case scenario.


There is no one size fits all or a BEST strategy.

If you are looking at building a retirement kitty none of the options listed by you are right.

The right way would be to have a mix of more risky instruments in the beginning and more towards more of safe instruments towards retirement.

Safe Instruments: Examples like Bank Fixed Deposits, NSC, PPF, NPS, some debt funds, etc

Risky Instruments: Shares, Futures, Options, etc

  • Would you please elaborate more on the risky instruments and safe instruments ? Jul 16 '14 at 5:37

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