liquid funds safety of capital and liquidity is paramount investors need to watch for credit composition of the liquid funds before investing in the case of income funds credit analysis of underlying bonds and duration exposure is that much more important however investors may not have the bandwidth or access to information to understand the same factors like this further highlight the need for having a professional financial adviser how can conservative investors best deal with the scenario of declining interest rates from small saving schemes and fds markets are at a point where small savings rates are declining and posttax returns are barely keeping up with inflation if the investor has an appetite for marginal exposure to equities disciplined investing in mips could be an option arbitrage funds and debt accrual funds are other alternatives is the shift in financial savings from physical to financial assets likely to be sustained we think the shift to financial savings is a longterm trend and we are in the early innings as a catalyst to accelerate the flows to financial assets many investors have realised that liquidity is at a premium and hence vehicles such as reits and real estate funds that provide access to hard assets will gain more popularity in the current context the recent outperformance of equities over other asset classes has reinforced this idea how far is nps from becoming the ideal retirement solution the nps does offer more flexibility with a choice of asset allocations and heightened chances of better returns given the greater focus on more volatile assets such as equities compared to epf which is more focused on gsec term deposits and debt however the corpus under nps is taxable at the time of withdrawal this is the biggest drawback of the scheme especially considering all other social security products in india enjoy eee regime also despite equities in india being a big wealth generator contributors dont have the option to invest more than 50 of their nps allocation in equity irrespective of age then there are other issues like a compulsion to opt for annuity and inability to change annuity provider that are concern areas of the current nps framework