Investors learn how to be safe with their money along with the rules of smart investing

After successful seminars at Gurgaon and Bengaluru, Moneylife Foundation together with Indiabulls, held its first seminar in Chennai on Saturday. The day-long programme, "Investor, Empower Yourself", was addressed by Sucheta Dalal, trustee of the Foundation, and Debashis Basu, editor & publisher, Moneylife magazine. Both focused on the dos and don'ts for savings and investments that most people either don't know too well, or unfortunately don't care about too much these days.

Ms Dalal began the session with a word of caution for investors to stay away from scams and fraudulent schemes like Speak Asia, and not to be lured by deceptive e-mails. She explained about the hidden costs and interest payments associated with credit cards and such other products. "Saving money is as good as earning. Stay away of these fraudulent schemes and companies, do your homework," Ms Dalal said.

Ms Dalal said that it is always best to check the credentials of a company or the broker, or product on offer, before investing one's hard-earned money. This involves verifying the registration with regulators like the Reserve Bank of India, the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority. "I don't say that having their authentication is a guarantee against losing money, but it is safer," Ms Dalal said. She also talked about the importance of wills and nominations, and explained the process of working this out.

Mr Basu described the rules for smart investment, like choosing the correct mutual funds and such other financial products. He also gave a brief presentation on the subject of gold, explaining how the value of the yellow metal was related to the movement of the dollar, and he asked investors to understand this co-relation properly before deciding to invest. "This is because gold is not a company which automatically gives returns. You have to buy and sell gold to get money," he said.

Mr Basu also explained the importance of choosing the correct portfolio, instead of going for hyped-up products or big names. "If we look at their track record, we will see that most of these fancy schemes and products have failed to outperform the market. It is better to be wary of them," he said.

During the discussion, one participant suggested that the deposit insurance should be raised to Rs5 lakh. Another participant wanted to know why structured products should not be banned. There was a lively discussion on the mis-selling of products.

Sachin Chaudhary, director and head of Indiabulls Housing Finance, made a presentation on the housing market and critical aspects to consider when buying property. "Whether you are a home buyer or an investor, it is better to understand how mortgage works, and what you should and shouldn't do about it," Mr Chaudhary said.
He pointed out that with developers under financial pressure these days; buyers have an opportunity to strike good deals. Like if, about 20 prospective buyers could get together, they could bargain for as much as 20% discount.

Mr Chaudhary advised home seekers not to be attracted by freebies such as modular kitchens, as builders get these items in bulk at low rates and add this to the cost. But these do not add to the value of the flat. "Lavish complexes attract high maintenance charges. Many of those who have gone into lavish complexes are regretting it after discovering these hidden charges," he said.

He also advised investors on how to deal with rising interest rates. He suggested that one should keep the tenor of the loan the same and increase the EMI. Most borrowers make the mistake of keeping the EMI amount the same and increasing the repayment payment and end up paying more money.