April 15, 2024
Fixed deposits help save money, not grow your capital: Ajay Lakhotia, founder of StockGro

Putting money in a fixed deposit may fetch you a consistent return, but this return is low, and will in most cases not help you grow your capital, says Ajay Lakhotia, Founder of StockGro. Sharing valuable insights on the importance of investing, Ajay Lakhotia said that it is important to spread awareness on investment avenues. Ajay Lakhotia was speaking at The Times of India Right To Excellence Financial Literacy Summit.

According to Ajay Lakhotia, any asset class that an investor chooses to put money in will always carry an element of risk. “Any asset class will always carry some element of risk. It’s not that if you invest in gold or real estate or any other assets, there will be a consistent return except fixed deposit, which will give you a consistent return but a very low return,” he said.


Ajay Lakhotia went on to explain that returns from fixed deposits are inflation adjusted. ”If you could buy a stock for 100 rupees this year, next year, it will cost you 107 rupees. So that 7% interest that you are seeing is mostly an adjustment for inflation,” he said. “You are sometimes actually losing the value of capital rather than increasing the value of your capital,” he added.

“When people save money, and they keep putting that money in a fixed deposit, that is not investing, that is saving your money. That is not growing your capital, that’s not making your money work for you,” he explained.

Sharing a surprising insight, Ajay Lakhotia said that less than 5% of India’s working population invests in different asset classes or liquid asset classes. “That’s surprising because everyone has the education. Everyone has the knowledge, everyone understands how different asset classes work, which includes stocks, mutual fund bonds, but it’s a very small percentage of the total population that actually invest,” he said.

He is of the view that this gap with regards to investment exists not because people are averse to risk, it’s because of lack of awareness. “The understanding, the knowledge of different asset classes, how the investment works, what is the kind of risk that it entails, And how we mitigate that risk. That’s something which is missing,” he said.

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