A 5% Decade – Safal Niveshak

On the morning of April 10, 1912, the Titanic set sail on her maiden voyage. She was the largest ship afloat, built with the latest technology, and marketed as “unsinkable.”

Her captain, Edward Smith, was a veteran of the seas. The ship’s design was considered so safe that she carried lifeboats for only about half the passengers on board. Even the safety drills were minimal.

The voyage was smooth for four days. And as we saw in the 1997 film Titanic, passengers dined in luxury, strolled on the decks, and marvelled at the engineering. The weather was calm and the North Atlantic Ocean was playing nice.

Then, just before midnight on April 14th, the Titanic struck an iceberg. In less than three hours, she was gone, with over 1,300 people dead. Now, the Titanic sank not just because of the collision, but because there hadn’t been enough preparation for the possibility that something could go wrong.

Now, it’s easy, more than a century later, to point out the mistakes. But the deeper lesson is far more uncomfortable. It’s that they had prepared for the journey they expected, not the one they got. And that, in many ways, is what we all do.

We prepare for a career that keeps moving upward. We prepare for relationships that stay the same. We prepare for our health to hold steady. We prepare for investments to grow at the rate we’ve built into our Excel sheets. In fact, we get so used to the idea of smooth sailing that we stop asking what happens if the water turns rough.

I see this often in money conversations. People tell me their plans for the next ten or twenty years, and almost always, the numbers in those plans assume the stock market will deliver 12–15% a year. At that rate, ₹1 crore today becomes ₹4 crore in ten years. It looks achievable, and most investors are certain of that.

And yet, history tells us it’s possible to have a whole decade of much lower returns. Between early 2008 and early 2018, for example, the BSE-Sensex delivered only about 5–6% a year from peak to peak. High starting valuations, a global crisis, and a few slow-growth years along the way made it a lost decade for compounding.

Go back further, from March 1992 (Harshad Mehta crisis) to March 2012, and the Sensex rose from about 4,300 to 17,000, or roughly 6–7% annual growth over 20 years (excluding dividends). That’s not a disaster, but it’s far from the 12–15% many investors build into their plans.

I don’t want to sound like Cassandra, forever warning about storms that may never come. But what if it could happen again?

Today, we’re starting from relatively high valuations, especially in parts of the Indian market. If earnings growth slows even slightly, or if global headwinds persist, returns can compress. Sometimes, after a strong run like we’ve seen in recent years, the next leg is slower simply because so much optimism is already priced in.

So, what if the next decade delivers only 5%? Suddenly, your ₹1 crore grows (not to ₹4 crore) to just ₹1.6 crore. That big gap isn’t just about missing some extra returns, but it’s the difference between a life that fits your expectations and a life where you have to rethink everything.

For context, even fresh savings feel different across scenarios. For example, ₹50,000 a month for 10 years becomes ₹1.3 crore at 15%, but only ₹77 lakh at 5%. The takeaway is simple and uncomfortable, which is that at lower returns, your savings rate does the heavy lifting.

And it’s not just investing. The same gap shows up in our careers when we assume promotions will come every two years, or in our health when we skip taking good care of our bodies because “I feel fine,” or in relationships when we stop investing time because “things are good.” And just like the Titanic’s lifeboats, we realise too late that our margin of safety was far smaller than we needed.

I think the solution isn’t to live in fear of every possible iceberg. Instead, it’s to build for more than the perfect forecast. To leave yourself a little more savings than the financial plan demands, a little more skill than the job currently requires, and a little more time for the people you care about than your calendar says you can spare.

Translate that into action with respect to your money:

1. Increase your savings rate by 2–5% this year and try to increase SIPs annually;
2. Set a written asset-allocation rule with bands (say 60/40, ±5%) and rebalance (say once a year);
3. Hold 12–18 months of expenses in high-quality debt/liquid funds to avoid forced selling when you need the money;
4. Insure properly (only term and health insurance), so a bad event doesn’t become a bad financial decision; and
5. Avoid leverage where possible (live and invest within your means).

The wisest people I’ve studied, all operate with the idea that something may go wrong. Not everything. And not always. But something. And when it does, you don’t want to be scrambling for lifeboats in the dark.

If the Titanic had been fitted with enough lifeboats for every passenger, and if the crew had drilled for evacuation, the story might still be tragic, but far fewer lives would have been lost.

If Captain Smith had been less confident in the idea of “unsinkable,” maybe they would have slowed down in iceberg territory. That’s what “preparation” helps you with. When you have it, people barely notice. When you don’t, everyone sees.

So, it’s worth asking these questions:

• If the next ten years — in your finances, work, health, and relationships — give you only 5% instead of the 15% you’ve been counting on, will you still be okay?
• Will you still sail well towards the shore you’re aiming for?
• Or will you wish you had packed more lifeboats?

Think. Don’t be nervous. But think.

And yes, we must take some adventures in life and investing. The point isn’t to live with fear or caution that you never leave the harbour. But even when you set out for a long journey, make sure the ship is strong, the crew is ready, and there are enough lifeboats for everyone on board.

Adventure is sweeter when you know you can survive and make it home, even if it takes a bit longer.

Two Books. One Purpose. A Better Life.

“Discover the extraordinary within.”

—Manish Chokhani, Director, Enam Holdings

“This is a masterpiece.”

—Morgan Housel, Author, Psychology of Money