I was just hearing a dialogue between 2 kids earning about 20k a month. Needless to say they have a hand to mouth existence. However one is the son of a successful (cash rich) father (employee in a psu bank) and the other is completely on his own (father does not support him).
The topic of discussion was equity markets. Here is how the discussion went:
Kid 1: Jindal Power is a good issue worth applying for.
Kid 2: What is the minimum that I can apply?
Kid 1: No, no you should apply for Rs. 100,000 – only then you can get some shares.
Kid 2: I do not have that kind of money.
Kid 1: I will get you the forms – there is a bank who will pay for it and charge you interest.
Kid 2: That is great! How much do I have to pay?
…..here are 2 kids who do not know anything about Jindal group (except that they saw one Jindal group company cross Rs. 1000 so the interest in the project. They know nothing about power, but they know that infra is now an ‘in’ theme. So they will apply – and for this the second kid will have to open a demat account, savings bank account, and a E-broking account. Then he may not have any money to apply! Surely about 2k is lost / locked up in this transaction….
Try telling this kid about concentration risk, advantages of a SIP, need to maintain accounts to track where one is going – it is all lost!
So it is easy to create a wealth destructive behaviour…and keep wondering why no money is being made…
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