When a young bank employee kid comes to me and says “I want to invest in equities but my parents, uncle, aunts…are all asking me to invest in bank deposits..what should I do?”

I give the normal spiel of why equities should make money in the long run…means say 5-7-10 years..she listens and starts a sip of Rs. 5000.

Then the markets remain down for a long time..she changes the amount to Rs. 2000 to handle the family stress. Then she gets a jump in salary and starts another SIP – sadly for her the returns are not to great, but IT IS BETTER THAN BANK FIXED DEPOSIT returns. She tells me..’Sir if I had not done this SIP all this money would be hanging in my cupboard’!!! She was happy that in a year she had put aside Rs. 60,000 in her new SIP.

However, the pressure from her maternal uncle, mother, father, and other elders in the family to shift to debt still remains.

Let us put things in perspective. She has a take home pay of about Rs. 80,000 post tax. She spends some of it, pays an EMI for the car, and has an investible surplus of about Rs. 65000. Not bad at all. This goes into a Recurring Deposit, Public Provident fund, etc. Rs. 2000 in an equity fund (general large cap fund) and Rs. 5000 in an ELSS fund. Her parents of course have no equity – and they are young too. Both are working in government jobs and have a decent indexed central government pension. Her elder brother works in the Central Govt and has an investment portfolio of pure government debt schemes. This family with a net cash flow of about Rs. 325000 a month invests Rs, 7000 a month in equities, and is scared that they will be brought to ruin by this ‘speculation’ that this 27 year old kid is doing. Her elder brother was aghast when she suggested him to invest in a pension plan which had some equity in it. He was happy that his money was so ‘safe’ in PPF. He held out a big lecture asking her to worry about a host of foreign banks taking over her private bank and how she was FOOLISH in doing a sip.

This is the typical case in most of the houses with a sarkari house background…hey here is the PROBLEM.

Most of us do not invest from a point in time to another point in time. We keep investing on and off. We keep putting money in equities when we find good opportunities or when we do a SIP..and I can reel off many many people who have got good, great or gorgeous returns. Sure for the uninitiated there are grotesque returns too..but hey that is life…My problem is not the kid who is investing, it is the kid who is writing….read on..

Suddenly one amazingly famous and well known news paper will print an article saying ‘PPF would have given you better returns’ or that ‘a  5 year sip would have got a return below bank fd’ or some shit like that..so these kids are under greater pressure…so read on


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  1. But the argument is very valid. – “5 year sip would have got a return below bank fd.”

    If 5 year SIP is giving returns below bank FD then how long investor should do SIP to get better returns than debt returns?

    Your suggestion of equity asset class giving better returns over long term is being questioned.

    Asset allocation is the way to go. And even in that, 80% equity portfolio is certainly risky even if the goal is long term.

  2. Sanjay Singhaniya

    If I would have been crystal gazer! 🙂
    All things said, asset allocation is the key. It truly seems that best days of equity are behind us. 60% equity and 40% debt is good allocation.

    I am looking forward to your “portfolio construction” blog series. I am thinking of constructing a portfolio not more than 5 mutual funds. But I may have to include gold ETF, tax free bonds at some point of time in the portfolio. 🙂

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