In the wonderland of Investments and advisers

Those were the days (I am talking about nineteen eighties) when all we needed to know about investment were just 2 or 3 things – Good old LIC’s endowment policy and FDs in Nationalized banks. If one deviated even slightly and invested in LIC’s Money Back policy,instead of the standard endowment policy,one is considered adventurous. And the people who bought equities were relatively rare species.
People just had to deal with a LIC agent at the most and be done with that. At the end of their careers,a home was bought with the retirement benifits (mainly PF or PPF) and they happily lived ever after! And the most sensible investment which middle class families invariably made was on education – this ensured both material and intellectual wealth!

But today,the scenario is completely different. The business of Investment is no longer a mere peripheral activity.
We have investment advisers,financial advisers,wealth managers,customer relationship managers,key account managers etc etc. We also have myriad options for investment ranging from FDs to countless number of Mutual funds. In addition there are unending debates on whether one should go for “pure” insurance policies or the “adulterated” version – I mean the ones linked with units or equities or debt instruments etc.
As if these options are not staggering enough,there are also eternal debates on whether to buy or rent a house. The pros and the cons are discussed threadbare. However,at the end,the investor is more confused than ever about what he should do. In case one decides to buy a house in spite of the best of analysis against buying one,then there are issues on housing loans -whether it should be floating or fixed rate,whether or not one should go for insuring the loan (here again you have choices to make among several products available in the market).
If you are done with all this,be assured that you can not rest in peace. There are umpteen number of calls from all and sundry and of course from some well meaning friends (who are in the business of advising)on how to plan for your retirement. If the guy protests saying ‘I am only 28 years old and far away from retirement’,the adviser is quick to point out that this is the most ideal time to start planning for retirement. He will reel off calculations to show how he can end up with so many crores by the time he retires by investing a small amount of money every month. On the other hand if the guy is over 50 years,the consultant would ask “These days life expectancy has gone up and one is likely to live beyond 80 years. And you need enough money to fight against value erosion with time due to inflation. Don’t you want to maintain the same standard of living after your retirement?”. And before you say “No,I would rather try and keep things simple after retirement”, he will give you several options and scenarios for investing for retirement!
An just when you think you have committed all your surplus funds into different investment avenues,another smart adviser would turn up and give a lecture on how important it is to diversify your investment portfolio. Then you come across another guy talking about ten Golden rules of investing. One often quoted rule is “do not try to time the market”. Another one says “all leverages are bad” etc. Isn’t it the same thing as the good old value system which advises strongly against living on borrowed money or living beyond means?

The best advice I liked though was the one which says “Be a ‘Contrarian’ in investments”. What it means is that when everyone is buying shares in a bullish market,you sell and vice versa. I like the idea of being a ‘Contrarian’ in a different sense,though. To me the right ‘Contrarian’ strategy is when everyone around is splurging money in unwanted luxuries,you resort to simple living!


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