Illustration: Jayachandran/MintUntil a few years ago, when real interest rates slipped below zero because of high inflation, Indian households shifted their savings from financial assets. The returns on various financial assets not only help households make investment decisions but also provide insights into broader issues such as inequality or financial stability. Equities and residential real estate have shown similar real returns of about 7% per year. The biggest takeaway from the study is that in the long run, risk assets outperform safe assets by a significant margin. Also, in the long run, the real return on safe assets could be more volatile than commonly perceived.

Source: Mint January 07, 2018 16:52 UTC