Portfolio Review?
Let us do a small exercise:
Go and get your Manila folder which has all your investments. Now answer the questions truthfully:
1. Why did you make that particular investment?
2. Psst……is it insurance or investment?
3. What returns were promised when you invested?
4. If you were promised 24% p.a. and you have actually got 6%p.a. WHY did YOU not find out?
5. Why are you doing this exercise? Ever wondered?
6. What is the overall weighted average return on your portfolio?
7. If the overall weighted returns on your portfolio is LESS than 9%, why not put all your money in bonds?
8. Have you ever RETURNED any product to the shop saying ‘this is not for me?’
9. Have you ever CONSIDERED RETURNING A FINANCIAL PRODUCT? Did you know it is NOT POSSIBLE at all?
10. Have some products outlived their utility?
11. Did you buy a life insurance product just to protect somebody’s job or meeting Quarterly targets?
12. I had once bought the shares of a company just because my broker had become a director there. He did not like it and QUIT the board. Out of sheet laziness I did not sell off that share – now it is languishing….INVESTING LAZINESS – not following your OWN WRITTEN PLAN. Have you committed such mistakes?
13. Did you buy a financial product under duress? threat? as a favor? for getting a locker? Throw away such products.
14. Are you WAITING to reach ‘investment value’ before you give it up? I know MANY MANY people who will pay the premium of a ULIP till it reaches the ‘paid amount’ – which could mean say 8 years. This is called THROWING GOOD MONEY AFTER BAD. Do not do that. Just throw it away, it it makes sense.
Madhu
“13. Did you buy a financial product under duress? threat? as a favor? for getting a locker? Throw away such products”
– This was about to happen to me. The IC__I bank was renovating their office and more lockers were available. The first thing they asked me is CTC, second is suggested min 25% to max 50%(??) of that amount on to ULIPs.
I said no ULIPs, no insurance. On the second round they suggested guaranteed return product(??). On further checks it is again insurance. Then I made the following proposal to the manager for a locker,which I am going to pay for anyway.
–
As I messaged you, I am NOT planning to invest in ULIP products. Here is what I can promise
1. Have my wife open account.
2. Decent amount of FDs on both of our accounts.
3. Own and operate demat account
4. Buy general/term insurance through your branch.
5. Buy direct MFs through your branch. (SIPs and direct buys)
6. I think I have good CIBIL score(xxx+). I would consider credit products from your branch.
–
Didn’t hear back after that.
Viren Phansalkar
Once tried to reason with friend to surrender his endowment plan after 1st premium itself. He understood that he bought a bad product, however he was not ready to throw away that policy before it attains paid up value or surrender value. I reasoned with him that over next 2 years, you have to pay 40k (20k*20k) and after that maximum amount that you may get is 30k. So it was like pouring 40k to get 30k back.
Strange thing: he did not listen to me (not that i felt bad about it)
Mira D
6. 7 made me wince.
Once I’d bought shares of Purity Flexpack because a senior who was very smart quit to join them… he quickly left them too.. I still have those certificates
Abhijit
Last point is too good. It really makes sense to withdraw whatever you get and invest in a better tax avenue (ELSS).