"My daughter earns four times what I used to make, but I think I was better off in terms of financial freedom because our wants were few," says 62-year old Carmeline Lobo, a retired private sector employee.
Sharad Inamdar, a 64-year old retired navy official, sounds positive and excited about the winds of change. He wishes globalisation had happened earlier: “Opening doors to foreign investors gives a layman more choices. There are proper rules and more transparency in the markets today – something not so evident decades ago."
Both agree that today’s generation is a lot 'freer', financially.
This is why we, at wealth, put together nine reasons why we enjoy better financial freedom than before:
1. You get to choose the best interest rates!
Till the early 1990s, interest rates were regulated. That is, the Central Bank of India would decide a single lending and single borrowing rate. All banks offered the same rate and you had little choice. Today, interest rates are market linked, which means banks are free to price their products.
That means you, as a consumer, get to choose the best deposit and bargain for the loan that offered the lowest interest rate.
2. Life insurance is not just LIC or UTI
Earlier, Unit Trust of India (UTI) was the only mutual fund available, and government controlled at that. The year 1987 marked the entry of non-UTI public sector banks and insurance companies.
In 1993, private sector mutual funds appeared. Their insurance counterparts came in 2000. You could choose from not just debt and equity funds, but also, floating rate funds, sector funds and theme funds.
Similarly with insurance, there was endowment and money back policies, ULIPs and riders, and so on. So today, you can choose from a variety of financial instruments.
3. Get loans at the click of a mouse
Taking a home loan 20 years ago was unimaginable, because only those without money took loans. Besides, high interest rates made it practically impossible. My father took a home loan in 1983 and paid an interest of 18 per cent. Twenty years later, I pay 8 per cent and also get tax sops for the same.
Today you can earn for one just year and think of buying a home. Back in the day, buying a house was what you did just before retirement.
4. You pay less taxes. Really!
In the 1970s, you income tax would have been as high as 93 per cent of your income. Today, you pay 30 per cent and still complain because it seems a lot.
| Year | Exemption limit (in Rs) | Entry Rate (in %) | Peak Rate (in %) | Peak rate income (in Rs) |
| 1949-50 | 1500 | 4.69 | 25 | 15000 |
| 1970-74 | 5000 | 11 | 93.5 | 200000 |
| 1974-75 | 6000 | 13.2 | 77 | 70000 |
| 1980-81 | 8000 | 15 | 66 | 100000 |
| 1995-96 | 40000 | 20 | 40 | 120000 |
| 1998-05 | 50000 | 10 | 30 | 150000 |
| 2007-08 | 110000 | 10 | 30 | 250000 |
5. Today, IPOs are worth more than Rs 10
Certified Financial Planner Gaurav Mashruwala says, “The price of public offers is fixed much more efficiently today through the process of book building.”
Earlier, IPOs were priced at Rs 10. This was mandatory by the government. It didn't matter what the real intrinsic value of the share was. Today, investors have the freedom to evaluate a company and choose the best price. This also ensures much more transparency.
Next page: How much can I invest?
Read: Get wealthy: Live within your means!
Illustration: Vaibhav Shirke
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