Does the case for higher equity allocation amidst a lower interest rate environment, stand in good stead?

With interest rates softening and the yield coming down considerably for the fixed income securities, one of the most important questions an individual needs to answer is "How safe is my investment in retirement funds"?

Most of the investors parking funds for their retirement needs in fixed income securities are witnessing lower returns already due to declining interest rates. There is fall in yield and the same fall is affecting various government savings schemes including EPFO.

If the interest rates keep falling, which is expected in coming years, individual investors may be forced to think of equity as an asset class. More allocation to equity assets is definitely on the cards, as it still remains one of the most important asset class that beats inflation.

Indeed allocation to debt runs a risk of not outperforming inflation, and hence investors are at a risk of losing money when the same is parked in fixed deposits or other fixed income savings.

Equity markets on an average have been able to generate 16 per cent returns over the long term.