In God we Trust!
Fiat money is about trust. You trust your government, hence you keep all your money in currency form, right?
Take the case of a common man…and his conversation with a acidic Subra of Subramoney.com:
Client: Hi Subra, I wish to discuss my financial life with you…May I?
Subra: Sure
Client: I have bought …..xyz Ulip plan.
S: Shit, this is a lousy product….you should not have bought it.
C: I know after reading your blog, but tell me, it is an IRDA approved product na?
S: hmmm…let us look at your other products. tell me what else you have?
C: I have 43 mutual fund schemes. Liquid funds, Income funds, balanced funds, and equity funds.
S: O M G you need only about 5 schemes from 3-4 fund houses. This is just too much. Why so many schemes?
C: My Financial Adviser asked me to invest in so many schemes…not sure why..can you think why he should have asked me to invest in so many schemes?
S: Frankly, I do not know…can we look at something else please?
C: I have a demat account and have invested in 45 shares. Can you please have a look…
S: Sure, Omg this is so bad!
C: I have also bought a house in Vapi – but have not got delivery….
S: Mr. Client please understand IRDA and SEBI have a role which you do not understand. They give licenses to users, regulate the forms, timing, training program, products, etc. HOWEVER it is not in their mandate to ‘protect’ the small investor / shareholder / unit holder / policy holder. If these guys are protected, it is clearly a chance event.
Your adviser may not know why you are investing, what is your time frame, …etc. so he may have advised you wrongly. Your banker has a target to meet and hence these ULIP policies in your portfolio. Since you are 55 and you have a sum assured of Rs. 2 crore for 5 years….not suggesting any change..
Client: Sir if I cannot trust the regulators, the banker, the financial adviser, financial media, subramoney.com (you keep putting in your disclaimer)…and I want to get a ‘REAL’ return, what should I do?
S: Good question. Let me ask my readers….and Mr. Client keep reading the responses my brilliant readers give.
And ha, start with a prayer, it helps. After all in God we trust
Jayant
Consolidate, Consolidate & Consolidate. 1 Bank acct, 4-5 MFs Max, 1 or max 2 term insurance, Strictly No ULIPs, No stocks if you dont understand them. Write down Subra sir’s advise and apply maniacal focus to implement it.
Shankarraju
As Subra mentioned, select two good fund houses like HDFC and Franklin templeton and select two schemes and invest in it.
Following are some points I could think of:
Avoid exposure to individual stocks, so better get out of stocks and invest it through Mutual funds (Diversified MF, not sector based).
Since you already have term insurance can continue it and I think no need to extend it, unless there is a compelling need to help any dependents you have. Even for tax saving purpose you can use “Tax saving MF” which comes under section 80C.
Strictly no ULIPs as it usually has insurance+Savings+huge-admin-charges and of very little use.
Ashesh Bharadwaj
Start educating yourself. Without knowledge, you will always be at mercy of someone.
Of course you are not expected to reach the depth of people like Mr. Subra (unless you choose this as your field) but atleast you will be able to differentiate a bullshit without tasting it.