The frankest answer is I do not know. However I do train lots and lots of people so the easiest thing is to pick a phone number and give it to you. Or even worse put a few numbers on my blog / site. Well I do none of these..instead here are some suggestions (some serious, some tongue in cheek – I could not find which is serious and which is play!).

Here are some of the suggestions:

1. Simple, go to Google and find him / her.

2. See for well qualified people: Caveat: We are all well qualified people so we have a vested interest in making this suggestion. Since people who read all this stuff online, we will always say this and you will believe this. God bless all of us.

3. Look for a very, very rich distributor: If he is worth a few billion rupees, he may not harm you too much – it may not be worth the effort.

4. Look for people with vast experience: like a person who has spent 38 years in LIC. It helps because he may not know how all he can make money out of you, so you are safe slightly.

5. Look for people with industry awards: there are many industry awards like MDRT, etc. which means this guy has sold well. It is proof that he can sell well. Will he sell products suitable for you is your problem, not his. Only make sure you are not privy to his private conversations when he is in those groups. If you hear words like ‘chipka diya’, ‘so much wool in his head it was easy to pull it over his eyes’ , ‘Malaysia mein majha nahin, is saal Europe jana hai’…well they are talking about you.

6. Your nephew, niece, neighbor, that pyt from the bank: all similar so it does not matter whom you pick. Picking has no connection to competence – so what i say will not matter.

7. If after all this you do find him, ask him ‘Why do you still call it practice’ – and er..what do you refer to me as in your ‘practice’…I asked my doctor also but his English was not as good as yours…:)

Ok let me cut all the skepticism.

Simple: Get a savings bank account – one in a private sector bank and one in a public sector bank.

Get 2 credit cards: one with a limit of Rs. 50,000 and one with a limit of Rs. 500,000. Keep the big card at home and the small card in the purse. Use the small card online, offline, on the phone, etc. and pay off on time. Use the big card once in a while to keep it alive. Use it only in a very big hotel where u feel secure. Use the big card for an emergency if you need to admit somebody to hospital. Otherwise keep it under  a lock and key.

Get a term insurance FROM A COMPANY YOU TRUST. I have a friend who has bought term insurance from the cheapest company, ONLINE and every time we meet he says ‘I am sure they will not pay my wife….’. Then why buy? So please buy from a company YOU trust, but BUY it online.

Put money in equity funds with more than Rs. 7000 crores in assets under management – if you do not know how to locate them put it in Templeton India Index fund or in an ETF.

caveat: I am not a big fan of Index funds in India.

Make a will, communicate it to your kids.

If you think this advise is enough, go to www.amarseva.org and make a nice donation. They need it for doing a world of good to the kids in the world. or go to www.akshayapatra.org or go to www.ishafoundation.com ….or choose your own charitable organization, but tell me about them in the comments column.

Then chill.

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  1. You wrote:
    “Put money in equity funds with more than Rs. 7000 crores in assets under management ”

    Subra, what are the disadvantages of investing in a small equity fund with lesser (say 60crore) asset under management?

  2. Sir,

    Good post for financial planners as well.. Finding a one who works in your interest is a task.

    Regards
    Abhishek

  3. Sorry if I am changing the topic.

    Are two credit cards absolutely necessary? I do not have even one. I have not felt the need for credit card even once. I have two debit cards which are lying unused under lock and key.

    Do you think credit card is a must? I am very scared of credit cards because of all the horror stories I have read.

    I would rather keep Rs. 50,000 or more cash at home. In case of theft at least I have something valuable to keep the thief satisfied.

    As for the emergency hospitalisation, I am lucky that I live in a small town where the doctors know me and can wait for the next day for payment.

    I do not buy anything online.

    I know credit cards are very usefull, espicially while travelling, but are two cards necessary?

    Regards,

    Sachin

  4. a bigger fund is better monitored – for example Hdfc pays more attention to Hdfc prudence than it does to say their child plan!! Also as the fund size increases, the asset management charges keep coming down..there is no risk of a run on the fund – again a theoretical risk, but it happened in case of FMPs. Monitoring fund manager’s integrity in this country is ALMOST impossible…remember the episode in Hdfc mutual fund..last year? A small corpus may not get the attention of the fund house, the media, the investors….so unless you know the fund manager personally a big 800 pound gorilla is better…

  5. Thanks Subra. Fair points. One doubt though.
    There can be a ‘run’ on a fund whose money is invested in illiquid instruments (say long term GILT). In case of run, the fundhouse is forced to sell the underlying bonds at deep discounts.
    However, for an equity fund, even if most of the fund-investors exit, all the fund has to do is to sell the shares in share market. There shall be little change in NAV. In fact, the small size of the fund ensures that broader share market is not affected by selling of underlying shares of the small-fundhouse.

    Clarification will be highly appreciated.

  6. Sambaran have you tried to sell 100,000 Cummins India in a falling market…then you will know. The fall in the market because there is a panic in one mutual fund can really HURT everybody!

    No stress test is done in India abt the portfolios of equity funds..so we do not know what will happen in a falling market is the best answer to give 🙂 at best.

  7. Hello Subramoney,

    What i think is a bit philosophical
    i.e.
    always and always the principle rule should be
    INCOMES – SAVINGS = EXPENSES

    Follow this and everything will be on its proper place.

    Regards,
    Bhawin

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