Moneylife Events
Be Safe & Smart with your Investments
Sucheta Dalal and Debashis Basu spoke to an audience of young, old and experts, and shared their ideas and experience on investing in a Safe and Smart way over your financial life
 
Sucheta Dalal, managing editor of Moneylife, said that one should keep it simple and should invest in just a few products. And the path to a safe future is to choose safe products. When it comes to choosing a bank, Ms Dalal said that government banks are the safest. Small cooperative banks are the ones that go bust most often and should be avoided. 
 
Ms Dalal warned about “ponzi schemes” which aim at fooling people to buy into attractive schemes promising extraordinary returns. She explained that the main problem is that people do not distinguish between purchasing consumer and financial products. They anyway get lured by big names and a strong sales pitch. The trick is to look through the “sales pitch” and not get carried away. Ms Dalal warned that companies like Amway, Tupperware, Herbalife are also examples of pyramid schemes.  According to research, less than half the people are able to sell and make money and end up blaming themselves and not the company. These Ponzi/MLM/Pyramid Schemes which operate at every level in the country have succeeded in cheating people from top managers to the poorest people. 
 
One should be careful while investing one’s money in fixed deposits, she said. Bank deposits are usually safe but corporate deposits should be inspected carefully before investing. “Do not go for any deposit which does not have a legitimate credit rating,” said Ms Dalal. And most importantly, if the interest rate offered is 3% higher than bank fixed deposits, one should stay away. 
 
Relationship managers usually work only to earn themselves fat commissions from your investments. Thus, most “relationship managers” resort to mis-selling or hard-selling a product. In order to be safe, one should have all communication documented. Ms Dalal also touched up on an area related to credit cards, insurance and credit scores. 
 
In the second session of the seminar, Mr Basu's presentation was titled, “Salary Cannot Make You Rich, What Can?” With a short introduction to the young students, on the usual spending patterns, he went on to explain the need to have a clear understanding of your salary outgoings and possible savings. 
 
Debashis Basu spelt out the various ways in which one can be smart with money and presented to the audience the best way in which one can invest safely. The best way to start investing safely is by planning your finances, he said. Mr Basu took the audience through planning concepts by which investors can plan their investments. Examples were shown on how one could use the power of compounding to their benefit. “The best way to invest smartly is to start as early as possible and save as much as possible”, said Mr Basu. 
 
He discussed the example of HDFC Equity fund which has delivered 44 times return over 20 years. If you had invested Rs100,000 in January 1995, guess what the returns were by December 1998, after four years? Minus 7.8%. Enough to frustrate even the die-hard believers.
 
The lesson is simple: the long term drift of a good quality fund or stock is higher. But the move is never in a smooth way. By nature, stocks move in fits and starts. They also decline sharply if they are overvalued. If you really want to gain from the enormous wealth that stocks and funds can create, you have to understand this and stay patiently invested in a good fund or a bunch of good stocks. 
 
Inflation is the permanent risk and is difficult for one to avoid. The only way to overcome inflation is by smart investing. Savers should avoid trying and timing the market on their own and should stick to regular investing.
 
The risk involved in various asset classes was explained and how much returns these assets are expected to generate was informed to the participants. How a mix of these assets could be used for different investment horizons to keep you money safe was also discussed.

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COMMENTS

Ashutosh

2 years ago

If Amway is illegal pyramid scheme then how come it is operating in more than 100 countries and has a history of more than 50 years? Kindly provide facts.

Nifty, Sensex in uncharted territory – Weekly closing report
The indices have made an all-time high and will continue to drift higher
 
The S&P BSE Sensex closed the week that ended on 31st October at 27,866 (up 1,015 points or 3.78%), while the NSE's CNX Nifty ended at 8,322 (up 308 points or 3.84%). Last week, we had mentioned that Nifty and Sensex will struggle to make fresh highs. However, contrary to our anticipation, the benchmarks closed the week at their life time highs.
 
The indices on Monday however, opened higher and immediately fell. Nifty closed near the day’s low. Nifty closed at 7,992 (down 23 points or 0.29%).
 
On Tuesday, the market closed in the positive following the surge witnessed on the bourses at around 1.40 pm. Nifty closed near the intra-day high at 8,028 (up 36 points or 0.45%). Data from China's statistics bureau showed profits as China's industrial companies grew 0.4% last month, compared with a 0.6% drop in August.
 
On Wednesday market moved higher, in line with its Asian counterparts. Nifty closed at 8,090 (up 63 points or 0.78%). Moody's retained its negative outlook on  India’s banking system, citing high leverage in the corporate sector that may prevent any meaningful recovery in asset quality.
According to a latest survey by Nielsen, India remained the most bullish consumer market, while Italy became the most pessimistic.
 
NSE witnessed huge volume with the October futures and options expiry on Thursday. US Federal Reserve's statement at the conclusion of its meeting on Wednesday showed more confidence in American economic growth prospects and the Indian government announced relaxation of rules for foreign investment in property development and construction, these factors boosted the market sentiments and the Nifty closed at 8,169 (up 79 points or 0.97%).
 
Global credit rating agency Moody's Investors Service said that the Government of India and the Reserve Bank of India's recent economic, fiscal and financial measures will, if successfully implemented, sustain higher GDP growth and address some of the constraints on India's sovereign credit profile.
 
Strong stimulus by Japan fuelled a global rise in indices on Friday. Positive US economic data posted on Thursday also supported the current positive move. Nifty closed at 8,322 (up 153 points or 1.87%).
 
Fiscal deficit touched 82.6% of the budget estimates for 2014-15 to cross Rs 4.38 lakh crore at the end of September. During the same period of the 2013-14 fiscal, the deficit was at 76% of the budget estimates.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 
 

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Nifty, Sensex to head higher – Friday closing report
Strong stimulus by Japan today has fuelled a global rise in stocks, which should continue
 
We had mentioned in Thursday's closing report that the indices may try to push further higher. Today the benchmark opened higher and then continued moving higher for the entire session today.
 
Sensex opened at 27,439 while Nifty opened at 8,201. Hitting the intra-day low at almost the same level, the benchmark began its onward journey. At the close of the session the benchmarks hit their intra-day high at 27,894 and 8,331. Sensex closed at 27,866 (up 520 points or 1.90%), while Nifty closed at 8,322 (up 153 points or 1.87%). NSE recorded a volume of 107.74 crore shares. India VIX rose 0.22% to close at 13.2950.
 
The Finance Minister pointed out among other things that the senior officers of the Central Board of Direct Taxes (CBDT) should not lose sight of domestic black money keeping in view of its much higher magnitude, while speaking at a Review Meeting of Principal Chief Commissioners, Principal Directors General, Chief Commissioners and Directors General of Income Tax in order to assess and analyse the achievements of the Budget Targets for Revenue Collections for the Financial Year 2014-15. He asked the senior officers of the income tax department to make their best efforts to chase those sectors where the domestic black money is most prevalent. He said that the recovery of black money and taxes due thereon will also help the department in achieving its tax collection targets.
 
Favourable steps taken by the government for property development and the construction sector helped the market move higher.
 
Fiscal deficit touched 82.6% of the budget estimates for 2014-15 to cross Rs 4.38 lakh crore at the end of September. During the same period of the 2013-14 fiscal, the deficit was at 76% of the budget estimates.
 
Hindustan Construction (11.64%) was among the top two gainers in ‘A’ group on the BSE. The company could stand to gain on the exchange in spite of posting poor net profit performance in its September 2014 quarter over the year ago period.
 
Titan (6.39%) was the top loser in ‘A’ group on the BSE. The stock hit its 52-week low on Thursday. It posted a net profit of Rs 239.98 crore for the September 2014 quarter as compared to Rs 186.65 crore in the September 2013 quarter. Revenue increased from Rs 2,328.97 crore to Rs 3,593.07 crore for the relevant period.
 
GAIL (3.83%) was among the top two gainers in the Sensex 30 pack. The stock hit its 52-week high today. It posted a net profit of Rs 1,302.90 crore for September 2014 quarter as compared to Rs 915.67 crore for September 2013 quarter. Revenue has increased from Rs 14,002.45 crore to Rs 14,129.72 crore for the relevant period.
 
Bharti Airtel (2.26%) was the lone loser in the Sensex 30 stock. The company has posted good net profit performance in its September 2014 quarter over the year ago period.
 
US indices closed in the positive on Thursday.
 
Among economic data in US, US GDP rose an annualized 3.5% in the three months ended September, after a 4.6% gain in the second quarter, a Commerce Department report showed yesterday. Separate data yesterday showed fewer Americans filed applications for unemployment benefits over the past month than at any time in more than 14 years.
 
All the Asian indices closed in the green. Nikkei 225 (4.83%) was the top gainer.
Bank of Japan (BOJ), after a monetary policy review today, unexpectedly boosted its unprecedented monetary easing.
 

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