We are in the cowboy stage of financial advisers. Let us say something like the 1970s of the stock exchange or the 1940s of the banking industry!

Let me list a few:

1. If you do not understand equity markets stay away: Correct advise only if you are so damn rich that you are not worried about inflation and real returns. Or if you are planning to be dead in 5 years and inflation will not affect you.

1.a. The correct advise HAS TO BE: ‘If you are afraid of equities start small and do a SIP in an index fund with very low asset management charges (like Idfc index fund).

PS: i have no connection to Idfc.

2. Do not borrow for your education: If you cannot afford higher education (at Rs. 25 L for Isb Hyderabad it is not cheap) you should borrow. A good degree is useful. However it is NOT a passport to a great career. A prof at one of the IIMs told me ‘MBA went out of fashion about 5 years ago, we knew about it in 2012’. I still think the ROI justifies the borrowed funding of a good quality MBA degree.

3. In addition to the house you live buy another one, the rentals will help: no further comments, but does not work in India.

3.a. Now that you have retired DO NOT SELL THE 2 other houses that you have it will give you rental income: Actually the returns from assets is to be seen differently at different ages. When you are young you want appreciation, when you are older you should be looking for CASH FLOW.

4. First pay off all debt and then start INVESTING for retirement

4.a. Even if you have a home LOAN put full Rs. 100,000 into your PPF it is tax free.

The home loan is normally priced at 10.65% – PPf earns at 8% whereas equities should give you tax free returns of about 12-14% on a long term basis.

4.b. Correct advise should be: “Invest in equity SIP, pay the minimum EMI, and put Rs. 500 in your PPf to keep it alive….’

5. Take money out of your PPF, take a bank loan at 12%p.a. and use that money for ‘investing’ in the equity markets’. Genuine advise from a stock broker -turned financial planner’…..and ALSO SAID ‘see Subra also says EQUITY gives equity estimates at 19%+ 2% compounding.

5.a. This (5)  is one of the worst INTERPRETATIONS of my blog. Really. Would like to shoot him. Now. with a double barelled gun. Now.

6. You must have about 30% gold in your portfolio – see the past 3 year’s track record. I can make the following WRONG statements TRUTHFULLY:

1. Invest in equities (see the average for 2002 to 2007)

2. Invest in real estate in Ghatkopar (see the average from 1976 to 1994)

3. Invest in Wipro (see the returns from 1980 to 2007)

4. Invest…………blah blah………oil, silver, ….

Of course there are some more brilliant nonsense that is available on Google….search and identify. Your home work for today….

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  1. Subra Sir,

    I personally feel, PPF has to be fully subscribed, Not because it is a tax free investment etc, but as a very good risk management strategy in life, especially for businessmen, because the PPF corpus can not be adjusted even against government dues, or any other Banruptcy, So for business guys subscribe full against all the member in the family, for salaried guys at least full subscription against own name,

    I feel the risk management nature of PPF gives this an edge which can not be compared to any other investment.

    What do you think?

  2. Hi Siddhant,
    If you can get life insurance under MWP act, then it is also protected from bankruptcy and even personal/home loans. I believe we need to get into PPF only if we need tax break. For salaried person PPF is made mandatory, for business people other 80C options can also be considered.

  3. Hello Shankar,

    Insurance will be applicable if you die, I am talking about a situation where you become bankrupt….

  4. “In addition to the house you live buy another one, the rentals will help: no further comments, but does not work in India.”

    Please Subra, do give some comments on it. If you already blogged about it n-times, can you point me to your favorite one? I need to know your point of view on this.

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  6. sir,
    I am reader of your blog for last 1 year. My father have loan of 50Ls.
    I want to pursue MBA from USA or european college on Loan. Can you please elaborate point second(2).I am 23 ys and earning 20k per month for last 1 year after my graduation.

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