Imagine somebody referring me to Rahul Dravid, Saina and Prakash Padukone and asking me to invest their money! I would have spoken to them and found that

a) they had a lot of money in LIC policies and

b) they had a limited earning life and a long living life

c) even after retirement they would have some expenses on lifestyle, gym, health which was far more than ordinary mortals.

What would have I suggested?

a) since you already have a lot of endowment plans, you do not need any more term insurance

b) do a SIP in an index fund

c) keep about Rs. 50L in a short term bond fund

sounds simple right?

I would have been ripped apart (like I am going to now) by the IFA community (and the financial media) for under performing Franklin, Hdfc, Icici Pru, Mirae, Motilal Oswal by a mile for a long time.

What would have I told the client:

look chief, this is simple. You work extremely hard to earn money, and during your PLAYING life my ONLY JOB is to protect your capital – principal and inflation. I am sure that I would have achieved that objective. Even if somebody had checked out his portfolio he would not have been able to find fault.

AFTER their playing careers (Prakash and Rahul) I would have sat with them and said let us slowly shift from Index fund to managed funds, introduced them to a couple of friends who are venture capitalists (if P and R do not seek higher returns with peripheral capital who will). I would have explained the risks – and before that secured their lifestyles with 30 year Gsec giving them cash flows enough to sustain their lives.

I would have had quarterly discussions and annual reviews, and taught them that they should say NO to products beyond the basic products.

I really do not know the facts of the case, so I am not commenting, but imagine the stress for the Indian golden girl Saina. At least R and P are not in their playing days, so the stress will not speak on their performance. I hope Saina’s amount lost is not enough to impact her performance. If it does impact her performance, THAT WILL BE THE REAL LOSS.

God bless them – all the 3 are people I just love. I hope their money is recovered, and they now stick to indexing. Preferably in a world weighted index.

 

http://www.firstpost.com/sports/rahul-dravid-saina-nehwal-prakash-padukone-duped-of-crores-of-rupees-by-bangalore-based-firm-4390357.html

  1. Nice article, Guess it did impact Saina’s performance. She was knocked out of All England open in the first round yesterday.

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