what is the meaning of allowing FDI in Insurance and pension funds
Insurance in India is offered by Private companies as well [ICICI, Maxbupa, SBI, Max and tons of other companies].   These are priavte companies, as Insurance sectors one has to look for long term stability, not everyone can just open an Insurance company, there are certain capital requirements. Initially the shareholding pattern was that Indian company should have a majority shareholding, any foreign company can have only 26% share's. This limit has now been extended to 49%, so while the control of the private insurance company will still be with Indian's the foreign companies can invest upto 49%. It's a economic policy decission and the outcome whether positive or negative will be known after 10 years of implemenation :) Pro's: - Brings more funds into the Insurance segment, there by bringing strength to the company - Better global practise on risk & data modelling may reduce premium for most - Innovation in product offering - More Foreign Exchange for country that is badly needed.   Con's: - The Global companies may hike premium to make more profits. - They may come up with complex products that common man will not understand and will lead to loss - They may take back money anytime as they are here for profit and not for cause.   Pension today is offered only by Government Companies. There is a move to allow private companies to offer pension. Today life insurance companies can launch Pension schemes, however on maturity the annuity amount needs to be invested into LIC to get an annuity [monthly pension].
&gt;  &gt; The state has never, over 30 years, followed standard practice and used an actuary to determine how much to put into the pension funds each year. The legislators just pulled numbers out of the air each year. As a result the pensions have never been properly funded. The benefits are rich but, according to the people on this panel the main issue is this under funding.  This is a half truth.  Mr. Ingram, CPS and others are just as at fault for letting politicians kick the can down the road.  In contract negotiations, they don't pressure the legislature to come up with the money and keeping those pension accounts funded.    The state passed a law in 1988 changing the length of time the state needed to cover its pension debt, expanding it to 40 years, and the Teachers Unions never cared as long as they got as large a promise as possible.  As long as the payment promises are large, they never cared about having the accounts funded.  &gt; 2/3 of the teacher's pension hole is for people already retired. Changing benefits for current teachers will not help enough.  A good chunk of these teachers are retiring with 6 figure salaries that grow at 3% per annum.  It's insane, whether they are already retired or not.  The math is insane. So your dollar never leaves America until it leaves for an investment - which would be FDI. If you sent the dollar home to Mexico, that’s a remittance current account flow. Then later, you want to use that dollar for a housing investment in Mexico, it’s just domestic investment. If you move to the US, I believe that’s another remittance flow (though it might even be a service flow because the bank is the one moving the dollar!). Then to invest in Mexico you need to go through an FDI channel. Defined benefit pension funds will typically target treasuries + a spread that depends on how well funded the plan is and the duration of the liabilities. So for example, if a DB fund is 90% funded (meaning assets are 90% of liabilities) and the liabilities have a duration of 20 years, they will target the 20 year treasury rate + a spread that will bring the plan to just over 100% funded in around 20 years. This spread will usually be much lower than 8% p.a. Obviously it's much more complicated than this, but hopefully this gives a general idea. "I was able to attend an open discussion on Illinois pensions a few years back.  Dick Ingram, head of the Illinois Teacher's Retirement System spoke, as did a public employee union leader, Governor Quin's budget director and Christine Radogno who is a state lawmaker.  It was eye opening on many levels.  Some of the points that stick with me are:      * The state has never, over 30 years, followed standard practice and used an actuary to determine how much to put into the pension funds each year.  The legislators just pulled numbers out of the air each year.  As a result the pensions have never been properly funded.   The benefits are rich but, according to the people on this panel the main issue is this under funding.     * Some years the state declared a pension holiday and put nothing into the pension funds at all.  When this was brought up the largely union crowd started to turn on Radogno but she held up her hand, said she had voted against that and then commented that the unions all signed off on the pension holidays.  As one the crowd's heads turned to the union rep on the board.  He turned red and stared at the floor.     * 2/3 of the teacher's pension hole is for people already retired.  Changing benefits for current teachers will not help enough.     I asked Mr Ingram how much additional tax he would need to plug the hole in the system he manages.  He answered ""double"".  I asked for how long.  He said ""It doesn't work like that.  I'd need double the current amount forever.""  I came away much better informed but deeply saddened.  Like 69% of the people polled, I want these teachers and public employee to get their money.  I just don't see how it can happen." "When you invest in a single index/security, you are completely exposed to the risk of that security. Diversification means spreading the investments so the losses on one side can be compensated by the gains on the other side. What you are talking about is one thing called ""risk apettite"", more formally known as Risk Tolerance: Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand. (emphasis added) This means that you are willing to accept some losses in order to get a potential bigger return. Fidelity has this graph:  As you can see in the table above, the higher the risk tolerance, the bigger the difference between the best and worst values. That is the variability. The right-most pie can be one example of an agressive diversified portfolio. But this does not mean you should go and buy exactly that security compostion. High-risk means playing with fire. Unless you are a professional stuntman, playing with fire usually leaves people burnt. In a financial context this usually means the money is gone. Recommended Reading: Investopedia; Risk and Diversification: The Risk-Reward Tradeoff Investopedia; How to construct a High Risk portfolio Fidelity: Guide to Diversification KPMG: Understanding and articulating Risk Appetite (pdf)" You assume that you'll be working at a bulge bracket, who have structured programs and are used to hiring globally.  If you go work at a hedge fund, it could end up being a small shop who would rather not deal with any additional issues.  On my campus - many companies don't hire international just because there are so many qualified domestic applicants.  This is probably the most competitive and lucrative field out of any profession. its not so much that NFIP is a problem, as it is that it subsidizes building there.  Without it, there would still be government bailouts/relief aid.  The problem with a privatized system instead of a fair assessed insurance price is the extra 20% tacked on to premiums to cover insurer profits.  Basically though, there has been some privatization of flood insurance in US areas, and premiums are skyrocketting.  Its politically difficult to raise these premiums, and all of the insurance companies believe in global warming/climate change.  Its easier to privatize and cause even higher premiums, than it is to vote for the one who will raise NFIP premiums. This is not an answer to all of your questions but merely an eleaboration on one of your comments: Are there any other areas in the UK that would return rental yields   much above 10% net?   Shares. I could withdraw the money and buy shares for the dividend income, but it is hard to choose shares that yield more than about 6% and they are volatile. I wrote a post about using shares to invest a pension pot. http://www.sspf.co.uk/blog/016/ You may find it of some interest. Of course, the investing would take place within the pension 'wrapper' so you'd only be paying tax on the income taken out each year. The other alternatives you mention suggest paying for the expertise and time of an IFA would be a very economical decision. £1,000 to best use £150,000 seems a bargain to me. Some of the avenues you mention seem very risky from my understanding so someone to determine your tolerances and propose a holistic solution is a good path forward. Best wishes!