Invest wisely..it's your money after all!!. Review on Investing in India

1. Various journals, TV channels, financial service organizations, investment consultants, brokers, portals, NBFC’s, all and sundry are ever ready to give you advise, buy this, sell this etc. Don’t believe a word. Hear and read what they have to say if you like to, just as everyone reads the astrological columns(no one remembers it after 2 minutes)….but do your own thing. All these guys have their own hidden agenda, investor interest is not on it.

   
   




2. UTI: don’t go anywhere near it. Firstly it’s too big to care or service a small investor. They have their own agenda, and as has been shown UTI works in tandem with market manipulators and vested interests.

   
   




3. Mutual funds: People are supposed to go to mutual funds because firstly, every investor doesnt have the time, patience or savy to play the stockmarket by himself, secondly these guys are supposed to have expert fund managers who know better. Thats only the theory, reality is very different.Firms with fancy sounding “firangi; names like Zurich, Templeton, Prudential, Sun f & C, Morgan Stanley, Meryl lynch, or well known 'family' names like Bajaj, Birla, Tata, Kotak etc.manned by so called experts earning fancy salaries(paid by poor you & me), spend tons of money on advertising, and slick brochures (paid by you & me again!) Promise you the moon! Lure you with fancy promises of unspecified returns! Dont bother about the screaming headlines and the copy, read the fine print which shamelessly says; the scheme does not guarantee / assure / promise any income / dividend / return; or words to that effect!. The sole purpose seems to be to con and lure the investors, garner the money, firstly cover their own expenses and salaries, and play the market with balance left.

   
   

Very often they become puppets in the hands of market manipulators. Investors be damned! Do you need examples? a..Rs.10, 000 invested in Pru-ICICI tech fund over an year ago is worth half the amount today. ;Rs.10, 000 invested in Sun F&C over an year ago is worth Rs.3720/- as on 31-3-2001. What expertise! ;Rs.10, 000 invested in Morgan Stanley over 9 years ago, is yet to be at par. d.. Masterrgain 92, has barely grown by 20% in over 9 years, same money if out in NSC would have doubled in 6 years! Moral of the story: don’t go anywhere near the mutual funds or UTI schemes, or similar schemes offered by others including Banks.

1. Equity: Primary market IPO, s ! Pal-peugot an indo-italian joint venture, disappeared without a trace. So have many other plantation companies and NBFCs. The shares are not even worth the paper cost! IFCI, the mighty FI is quoting below par! There are too many shocks to be listed. So what does one do? After having burnt my hands in all such investments, I have reached certain conclusions which I would like to share with readers. Don’t take it as a gospel truth, I too could be wrong, but I have no hidden agenda anyway.

Basic philosophy of investment plan should be:

1. Dont put all your eggs in one basket. Spread the risk, spread your investments.

   
   




2. Make regular, periodical investments, not once in a year. This is to ensure that 3-5 years from the start, every month, and every year you start getting back something or the other. Plan your cash-flow in such a manner that by the time you reach a higher tax bracket, the returns from your present investments take care of your tax liabilities as well as tax saving instruments so that your disposable income remains undisturbed.

   
   




3. Maintain a steady flow. Dont let your money sit idle even for a week. Let it grow. Keep minimum balance in your SB a/c , just enough to care of sudden emergencies.

   
   




4. Don’t put more than 30% of your investible money in risky instruments, however slight the risk may be. 5. Always remember, its your money, no one else will care for it as you can. Dont trust AMCs Banks, MFs, NBFCs or Companies to take care of you, they are too busy taking care of themselves! Even that also they cant do it properly.

   
   

My suggestions

1. Insurance: however lousy the service may be, LIC and GIC are still a good bet. Money back policies, pension policies, annuity plans, Bima nivesh, there are variety of options. Private insurance companies may sound more efficient and promise higher returns, but security? What if they disappear? Who will bail them out?

   
   




2. PPF: best investment.

   
   




3. NSC’s and KVPs: returns to day are not as lucrative, but considering the safety and security aspects and tax benefits, its still a good bet.

   
   




4. Bonds and Deposits: many public sector units, & corporations accept deposits and pay good interest.

   
   




5. Post Office savings: RD’s and Monthly Income plan are good.

   
   




6. Blue chips: There are many blue chips which are now affordable. Companies with good fundamentals, rich reserves and solid assets like Reliance, Tata Steel, HLL, HDFC, are worth. Build up a small porfolio of select stocks from a long term point of view.

   
   




7. Property: Buy a plot of land somewhere in an area which is likely to grow in 5-7 years. Whoever invested in buying plots in 80’s in Koramangala(Bangalore), Noida or Gurgaon, are stinking rich to day. Don’t be in a tearing hurry, do your research, take a considered decision, meanwhile park your funds in a safe bet.