Pearls of investment wisdom
- 1. Pearls of Investment Wisdom Now, after many years of experience with so many so called advisers and experts on investments, I have arrived at the following conclusions! Sorry if these offend some of you. I am open to any counter arguments or points from your side and can also share further details if any of you ask. 1. FX trading: My advise: No, Never. If you still want to try it, do not invest more than say 10% of your wealth and be sure you are ok to lose it all. I haven't come across anyone who consistently makes money through this option. 2. Equity or stocks or Mutual Funds, whether India or US: here be ready for long term. Do not invest more than say 20-30% of your wealth. As in point 1 above, be ready to lose it all! If you are not comfortable losing any money, keep away!! 3. Long-term savings plans or retirement plans or kids education: the monthly commitments or premiums can become quite burdensome. The so- called advisor who's actually a sales guy will tell you 'market conditions', it's for the long-term etc...but best to keep out of US$ based long-term plans for most Indians, as quite simply if your job goes do you pay the US$ premiums or your living expenses. Do you want to default on your own investments and lose your hard-earned money? Avoidable... If you still want to invest, take these long-term plans in INR and monitor them closely and regularly. 4. Life-insurance: of course take it...preferably in INR as for a us$ cover you might face the same issues as for the long-term saving plans described above. 5. Medical insurance: while if you are working, your employer provides you this, but you cannot afford a separate one in US$ (for reasons in point 3 or 4 above) and Indian insurance companies generally won't cover you as you are NR! 6. Bonds or so-called Fixed income products: we are attracted to these as bank FD's give very low returns and the same investment advisors (actually, sales people) want to tempt us here. But, here your entry price could be high and you lose at maturity or the Bond issuer defaults as has happened with so many 'big' names in the past!
- 2. My advise will be don't put a substantial part of your wealth here either as you never know! 7. Keep your money in lottery products for the long-term where hopefully, your capital is safe, e.g., National Bonds, Mashreq millionaire, ADCB Millionaire Destiny, FAB Savings certificates, etc. Here also, do some prudent checks: like are they government backed for example...so, do you want to take the risk or for what amount of investment 8. Bank FDs: no sales guys like this, and they've told all of us these rates are so low. But Friends, better to get low return on capital, rather than no return of capital as above!!! Keep maximum funds here...choose your Bank wisely as here also there have been a few hiccups with some prominent names 9. Real estate: Only invest in a property after doing your thorough home-work, where you also will be willing to stay in the future, if required. Investing, thinking prices will appreciate might not always be a wise move. Do factor in the time- frame, investment, paper-work, location, price appreciation or depreciation, forex conversion rates, etc… Best of Luck!