1. What you do not understand, is not worth knowing: If a financial planner tells you ‘Sir, you do not understand this, I will explain it to you’ – please be IMPOLITE and ask him to …….. (unprintable!). NOBODY (repeat NOBODY) is interested in ‘teaching’ you. Normally it is in the interest of the oil skin salesman that you understand LESS, rarely more. Unless of course he is a professor. If he is a professor, he is not really interested in teaching you, so he will not attempt.

2. Be careful of what your broker can do for you: First of all have less expectation from your broker. Then meet him. Then lower your expectations to the right level. He is interested in getting you to fill some forms, buy some shares, mutual funds, unit linked pension plans, etc. YOU and YOU alone are interested in knowing what is good for you. Take inputs from your broker, use your OWN brain and then decide. If he pushes you for time, ask him to take a chill pill.

3. ANYBODY who has a secret way of earning more is telling you a LIE. A pure blatant lie. There are no secrets that people go around giving free to all and sundry. Sadly some such people go around the world -and they have a fantastic affinity to recent retirees sitting on Rs. 85 lakhs and wondering what to do with that money. Be damn careful.

4. Oil skin salesmen today have many qualifications, be careful. Once upon a time you could trust your banker – but like I said that was once upon a time! So in the alphabet soup of qualifications they pick up a few alphabets and threaten you with their lingo. See point 1. What you do not understand is NOT WORTH KNOWING especially once you have retired.

5. Do not be overconfident (It cannot happen to me syndrome): Remember that is what everybody thinks, till it actually happens. Be careful. Ask your kids, friends, neighbors,….but decide on your own.

6. THE MOST IMPORTANT one: know whom to trust. Not your brother, brother -in-law,…..boss, exboss, banker….remember finding the right person is not easy, but it is a MUST – and you should have 3-4 people with whom you can discuss. Choose such a person carefully.

Risks are worth taking, only if you understand them.

If you are sitting in a group where investment advice is being given FREE and you do not know who is paying the bill, boss it is you. You are sucker who is being had

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

1. The regulator is here to protect the small investor: Very very very broadly yes, in real life situation no. Let us take an example – assuming that Siemens is the company making all the signalling systems in the world. Fairly obviously installation of signals reduces accidents, correct? However if there is a drunk truck driver who loses control and hits you on the other side of the road (on the footpath) and you are almost fatally wounded, who will you blame?

Similarly the financial regulator makes rules which about 5% of the end users make an attempt to understand. Maybe 10% of the people who make an attempt actually understand – this means about 0.5% of the user base understands. Too low, eh?

2. For developing the industry: Again broadly yes. In 30 years have not seen this happen, so will give this a pass.

3. For creating good and balanced regulations: This is again difficult, if you speak only to the manufacturers. SEBI speaks to say AMFI for making mutual fund rules and regulations. What happens? they are speaking ONLY to the manufacturers (asset gatherers and managers) – and leaves out the registrar, custodian, banker, broker, distributor, advisers, …etc. literally the whole support system of the mutual fund industry!

4. They make rules to help the investor: Hmmm if the regulator’s office recruits from the industry, talks to the same people who have to be regulated, there is likely to be some incest, right? Well, absolutely true. Take the condition that the same fund manager who does the accumulation should be the same person who does the annuity pricing and distribution. Does this sound good for the annuity seeker? No. It actually takes away flexibility for the client and he will be stuck with a poor fund manager. If you have started a pension plan (investing) when you are 24, you are stuck to the same company for the next 60 years. Amusing.

5. Spreading Investor awareness: sadly nobody except the investor NOBODY is really interested in investor awareness. However the investor does not even know what he/she is missing. So as a CSR (Corporate Social Responsibility activity) regulators expect players in the business – brokers, mutual funds, life insurance companies, banks to do this activity. This will NEVER happen – this is like asking the MD of an automobile company to do classes on road safety. Will he talk about the brake failures, etc.? I doubt it. Your call.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

I have no clue whether Mark Twain, Warren Buffet, Peter Lynch, Taleb, or anybody else has made this statement…if they have not, here is a original statement from Subramoney. As originals are very rare, please remember you read it here first.

One risk that all of us HAVE to understand is the risk of inflation. So for all those experts who think a portfolio containing public provident fund, national savings certificates, bank deposits are ‘No Risk Portfolio’ please think again.

The youngsters whom I meet have got the following advise….

1. Over the next 3 years nothing good will happen in this country so keep your money in debt.

Vow…why should a 24 year old worry about ’3 years from now’? Beats me. Ok let me stick out my neck. Over the next 3 years (starting Nov 2011) Hdfc Top 200 would have out performed the best FD that is available today (let us say SBI FD – not some risky debentures).

2. You will not incur a loss if you are in a debt portfolio. Correct.

You will NOT RETIRE either. My dad’s dividend income today is HALF the amount that he got as PF for his 37 years of service. If he had not invested his money in equities, he would not have the lifestyle that he enjoys today WITH HIS OWN MONEY staying in his own house.

A kid of 24 today runs the biggest risk of inflation and will not be able to RETIRE AT ALL (leave alone at 60) if he has a portfolio sans equity.

3. Invest in Real Estate – God does not make it any more.

Look at the 30 year figures, put it in excel and then take decisions. Maths and logic should prevail – not parental pressure – just heard of a 25 year old committing to buying a house because she was emotionally blackmailed by her mom to commit to a house.

Mom’s Logic: It is her house – at least it is forcing her to save by paying the EMI…

Like the depression babies of the US, India has the ‘Harshad Mehta’ and ‘Ketan parekh’ babies. These people keep talking of ‘My father lost his 3 lakhs in the market…or some such stories. Take a closer look – it is YOU who is to be blamed.Not the market, not Harshad Mehta, not Ketan Parekh, not SEBI…JUST YOUR LACK OF KNOWLEDGE..of course risk also comes for people who think websites and blogs can replace good advisers. For such people risk comes from reading too – because understanding is not a given, is it?

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Let us call him M.D.

He bought a house in Navi Mumbai for about Rs. 80 Lakhs, – of this about Rs. 55 lakhs was funded by a loan from the State Bank of India. Over the last 4 years he had paid a lot of interest, but the principal outstanding was still Rs. 52 lakhs.

He was also doing some SIPs which had seen an amount of Rs. 33 lakhs, but now in this market was worth Rs. 30 lakhs – not too bad, but the IRR was not too great. He does not have any debt investments except his LIC endowment policies – and all the policies are together worth Rs. 30 lakhs.

So far fine. He just lost his job with effect from December, 2011 or Jan 2012…..

He will have to find a new job, NOW and immediately.

What is at stake?

Household expenses (including children’s school fees) …….Rs. 100,000

EMI                                                         Rs. 52,000

His needs are as follows:

Rs. 1.5L x 12 = Rs. 18L – assuming he gets a job in 6 months, he will need Rs. 9 L.

He is about 53 years of age – he needs to have his retirement corpus in place. He knows that jobs paying Rs. 25 lakhs and above are almost non existent especially in Sales and Marketing unless you are willing to take aggressive targets. In the bfsi space perhaps it is only a bank that will take him. How does a 53 year old join an aggressive and young bank? Not so easy….

He can always sell his house (he thinks it has appreciated, my take is the appreciation is LESS than the interest paid on the loan..but yes that is a choice. Options are few and far between in the jobs. Most people expect a 53 year old to be holding a technical qualification or an address book of potential clients…he has neither…

What does one do? Looking for answers…

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Will you give up your job? In a country like India where domestic help, visiting doctors, live in maids, live in nurses – are still available, you may still have to leave your job.

How prepared are we to do this? Well are you physically and financially ready for this….that is the question.

Unfortunately or sadly there is just not enough Indian research on such topics. It is also very difficult to estimate the opportunity cost of this. So we need to go to the US of A for the answers or hope that the details would be similar to what research we have for the US population…

read on

http://www.financial-planning.com/news/baby-boomers-retirement-caregiving-healthcare-costs-2673823-1.html?ET=financialplanning:e3405:1863553a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=FP_Daily__061511

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

- risk of me not reaching there at all.

How could this happen?

Well let us say I need to catch a 6.30am flight. I need to reach the airport by 5am (well that is the rule book, and depending on the airline and the importance of the passenger it can change, but not by much.

I have to take a taxi at 4am (it takes about 40 minutes from my house to the airport). Or I could take a train at 4am which drops me at Kurla railway station at 4.30 am from where I can get an auto to the airport. The auto ride is about 15 minutes – and I can reach the airport at about 5am.

Now how all can things go wrong? Well the list is almost endless:

- the taxi could come in 5-7 minutes late (this is nothing by taxi driver standards), and then there could be traffic!

- there is a bridge where some tax is collected. Three of my friends have missed their flights sitting in a taxi in the traffic jam and unable to do anything. Sheer corruption, but you can miss your flight sitting there!

- the train could come 10 minutes late

- you could be late and miss the train. the next train is after 20 minutes ….so you can kiss the flight goodbye.

-the auto that you take from Kurla station could break down, and kiss the flight goodbye!

- some airlines are so sticky that if you reach a little late, they could shut the counter. Of course with so much competition, it may not happen, but then, it may just happen!

- you could reach the airport, and find that there are 50 people at the entrance wanting to get in. There are only 2 guys at the entrance checking your pan card to let you in…so you could fret, fume, scream, ..but miss your flight!

How much is the loss due to a missed flight?

Well if your employer is paying for your ticket, and you were the ONLY PERSON from your office attending a very important meeting, well your boss will tell you how he feels!

If it is a person like me who is planning to speak to a group of 30 people – and these people have come from Bhubaneshwar, Jamshedpur, …etc. man this is death! The client has lost time, effort, money,….and I have lost my reputation!

Should an employer recover the costs from the  salary of the employee? Well I think that is fair, but not sure what the employees think?

At least one employee who missed the flight, rushed by the next flight and did the work. However if you are going to give a lecture or attend a meeting…hmmm that option is also not possible.

However this has happened to me – I was on the Kingfisher flight to New Delhi to take a connecting flight to Chandigarh. Was traveling on behalf of a bank. I reach the airport at about 6 am..and I am told very politely by the girl at the KF counter “Sir you have been shifted to the  8.30 flight, did our representative not call you up yesterday?

LOL…nobody had called. However that was a time when the Mum-Delhi timetable was already drilled in my head – thanks to trips to Meerut, Delhi, Chandigarh, Panipat, …etc. etc.

The advantage of reaching early meant I had time to catch the SPICE JET flight. My only baggage was a pen-drive! So ran from the K F terminal to the S J terminal, and reached Delhi in time to catch the Chandigarh flight…and deliver the lecture. Whew! The joys of reaching a little early…..

I just heard about a friend missing a flight…

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Risk No. 1: No fund manager is talking about interest rates going up. Ben Bernanke who thinks all problems can be solved by keeping interest low will have a problem. Once a few countries (did you notice a few small countries bought gold recently – smaller quantity than what India did, but is it a trend?). So Greenback could be in some tight spot in the longer run. As a country and as a world investor, we need to be prepared for the cumulative effect of credit deterioration around us – sovereign defaults will increase, big corporates will struggle, Euro competitiveness is a joke – see the Chinese power equipment pricing power. The recession may have just started – remember W is just 2 Vs stuck together? So we may be in a double dip recession in the world. And India may not create enough jobs for the 3-4 million MBAs, engineers, C As,  we churn out.

Risk No. 2: We ignore what we want t ignore: When Dubai happened, we said Dubai is not US. When Greece happened, we said Greece is not US. When Spain happened we said…When the Red Shirts disturbed Thailand, we said Thailand is not India. Dubai, Greece, Spain are symptoms of a world living beyond its means. One day it will catch up. We are all hoping when the music stops, the parcel will not be in our hand.

Risk No. 3: Throwing US currency from being the ‘reserve’ currency will be bloody. The US thinks the rest of the world owes it a living. It subsidises cotton – which leads to farmer suicide. Even Sharad Pawar will have to wake up to this. Dollar is strong because the Euro is worse . Watch this space it will be bloody. Our blood.

Risk No. 4: We think India is insulated from all this. We are not. Our luck is which ever currency is strong, there will be enough Indians working there and remitting money from there. Thank God for Keralites, Sindhis, Punjabis, Gujaratis, and Tamilians – and their wandering spirit!

Risk No. 5: Thinking that only the above 4 risks matter.

Risk No. 6: Thinking all risks will be nicely tabulated and given to you in a website. I call this the MBA power-point solution – problem. Most of us want only 7 slides – problem, example, what will happen, what is supposed to have happened, what is the solution, scenario of this solution applied to past data,  and therefore will apply to the future, thank you and contact details.

Risk No. 7: The risk that will get your net-worth down is not listed here from 1 to 6. It is your behavior when the market is up or when the market is down. Investor behavior is much worse than Market behavior.

Amusing risk: I just received a ppt from a broking house – showing about 20 companies which were supposed to do well in the future. I had not heard about this research house, so I opened it out of curiosity. The sender Mr. J had called them ‘Multi-beggars’. Of course I do not wish to share the name of the analyst of the name of the company. This I think is the worst risk. There are 20 good analysts, but 2000 people masquerading as analysts…This is perhaps the biggest risk – if it is not the media .

difficult to agree with a sarkari persons views – even if it is personal but read on

http://www.business-standard.com/india/storypage.php?autono=394435

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Both these organisations are very aggressively run and run by the founder himself. Both the founders are about 50 years of age and have created a good name for themselves. Most of the employee wealth creation has happened because of ESOPs and not because the salaries are high. Not that the salaries are bad, but they are not high.

Like all typical Indian companies both the managements treated the top (say 3) layers decently and below that the people were treated like cattle. Or let us say like commodities. However all of them were told – we are like family, we will help you when the chips are down…blah blah blah HR / PR talk that employees bought.

Then came 2008 and the chips were down. Now the 3rd layer (from top) was asked to reduce their ‘team’ size. Of course one of the senior persons who treated me to lunch said ‘Subra if I do not sack, I will be sacked by my boss’. Point taken. It was his guilt feeling perhaps that he was justifying the sacking. I am not even a shareholder, just a friend who did not want to pay for lunch in a shamelessly expensive place that is all.

Alas! the crying, screaming, howling of the employees below the 3rd level fell on deaf ears. Sacking happened.

Then came 2009, market climbed up. Nobody was prepared for the quick recovery. Forget the retail investors, even the big bosses in the financial service industry were not expecting it at all. People are leaving both organisations in droves. A new type of ‘head hunting’ has happened. Typically the potential employer says:

‘Mr. A we are happy to take you on a salary of Rs. 60 lakhs – a significant 20% jump in salary, and a signing on bonus of Rs. 20 lakhs HOWEVER you need to bring 12 members of your team’.

and team leaders are taking their people along. Like the Pied Piper of Hamlyn the teams are following. Numbers may change, but one question which the team leaders are finding difficult to answer is:

“last time when the sacking happened you said you were helpless, with what face are you asking me to stay on?”

Team leaders, vice-presidents (junior, senior, assistant, executive – all varieties) – are not owners, correct?

Both these organisations are being touted as good buys, I have no clue. At this stage I do not even want to say in which field they are operating. Only thing I can tell you is these are 2 companies, in 2 different sectors

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Today the countries like China, Brazil, India, even Russia have a reasonably stable government and booming economies (by western standards). Also these countries have a population that is far more willing to accept that some changes in their lifestyles will be necessary. However the Western World is in a state of denial – there are likely to be riots in Greece, Spain, Portugal if the local population is asked to make sacrifices. Neither does the politician want to run the risk of  asking people to ‘live frugally’.

Now am I saying that the developed markets are more risky than the emerging markets? No. I have no such comment to make. Instead I am saying that the risk in the emerging markets is already in the price. The ‘risk’ of the developed markets is still not there in the price. That is the risk – of not wanting to price the risk!

Oops I seriously try to keep my posts simple. If you are a retail investor in the developed markets it is time you shed the ‘feeling’ that emerging markets are risky – after all it is a prejudice. Like the upper caste male who cannot accept that somebody from the lower caste is as good as he himself. Prejudice? Bias?

Well- if flight to safety means flight to safer regions you should be removing your money from Europe and investing it in Asia. Of course you could hope that Greece will get bailed out….there is always the American banks who can structure any deal…and charge fees from both ends .

Post Footer automatically generated by Add Post Footer Plugin for wordpress.