During my interaction with serving Officers, I find many of them still put all their savings in the DSOPF with 7.1% annualised returns. With inflation hovering around 7.5% (lifestyle inflation is much higher), we are getting a negative appreciation on our investments. 

Moreover, any investment of more than Rs 5 lakh in DSOPF from this financial year onwards will attract taxation on the interest part. 

Though this is a secured and risk-free investment with no taxation on maturity, we are losing out on the purchase value of our hard-earned money with every passing day. 

Based on asset allocation towards debt, we can continue with our contribution to the DSOPF fund. However, the balance savings should get invested in the equities, either directly or through mutual funds. It is essential to invest in equity to beat inflation for the real positive growth of the investment portfolio. 

Many of us may not be comfortable investing in equity. It could be either due to our earlier not-so-good personal experiences or the general myth that equities are not a good option due to their inherent risk. 

Over the last four decades, BSE Sensex has given 15% of compounded annual growth rate year after year despite many corrections en route. Investment of Rs100 in 1980 is worth Rs 53000 now!. A small amount of money if invested regularly in good quality equity mutual funds, as part of SIP, can create a large amount of corpus over a longer period of time. 

Just to have an idea, an investment of Rs 5000/- per month over twenty years in DSOPF at a 7% annual rate of interest will fetch us Rs 25.37 lakh on maturity. Whereas, the same investment done in equity mutual fund at 15% annual RoI will fetch us Rs 65.58 lakh on maturity (15% RoI is assumed based on BSE Sensex returns over last four decades; However, maturity value at different RoI is shown too in the graph below).

Robert T. Kiyosaki in his book Rich Dad Poor Dad says, “Rich people make money work for them, others work for money throughout their life

So, let’s try and manage our money in a better way!

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