INVESTOR WORRIES AND SOLUTION Kamlesh Tripathi IIMS Bareilly
“ INVESTMENT IS THE SACRIFIES OF THE CERTAIN PRESENT VALUE FOR THE UNCERTAIN FUTURE”
The three legs to stand on the financial stool are:
Why are you saving ?
Why do you want a lot of money ?
When do you want this money ?
1.Inflation has crossed 12 per cent.
2. Interest rate are rising.
3. Individuals with home loans are struggling to cope with higher equated monthly installments (EMIs) and simultaneously deal with inflation.
A financial planner had an interesting episode to narrate. He had recommended an equity allocation of 25 per cent to a client and suggested that 75 per cent be placed in debt. The client felt that the allocation to equity was to high. His fear was that 25 per cent of the portfolio would be in “Speculative investment.” But the advice of the financial planner prevailed.
This took place in 2002
Five year later, when this vary client’s public provident fund (PPF) matured, he wanted to put the entire amount in stocks. Suddenly , the stock market was not speculative in his mind, but a great place to earn fabulous return. Fortunately, the financial planner once again prevailed.
In 2002, when the sensex was around 3,200 levels, inflows into equity funds were Rs 4,517 crore. In 2007 , when the sensex was in the range of 14,000 to 20,000, inflows into equity funds totaled Rs 1,07,189 crore.
WHO ARE THE PEOPLE WHO WOULD PANIC IN SUCH A MARKET ?
Common Financial Mistake
a) Putting all eggs in one baskets,
b) No Monitoring of a portfolio,
c) Inability to invest,
d) Lack of awareness of risk taking ability,
e) Ignoring liquidity needs,
f) Unrealistic expectation ,
g) Not having a strategy, and
h) Not investing systematically.
2. Secondary Mistakes
a) Retirement is for away. Is it ? My children will fend for me,
b) College education is cheap,
c) Buying consumer goods and non productive assets on credit, and
d) Not taking responsibility of investment.
Don’t try to time the market
There are three things you should be absolutely clear about:
You do not know when it is “safe” to get into equity.
The wrong assumption that it is alright to change your assets allocation guidelines.
Your gut level feel about the end being near is a good recipe for disastrous investment decision.
You will be rewarded for staying cool
It is not easy to step back for perspective when you are gasping for air as your portfolio- value plummets.
Three Predominant emotions that rule the market:
2. Greed, and
Not every beaten down stocks or sector is worth buying.
“ Winning Formula is probably a more conservative mix that’s mindful of heightened volality”
Now is a good time to consider equity
“ It would be wise to look at the experience of renowned investor the late sir John Templeton . His investing mantra was simple buy at the point of maximum pesimism”
Does investment in gold is really beneficial
The Global credit crisis has left investment feeling drained and devoid of investing option. In such trying times gold offers a glimmers of hope.
In order to be successful in the equity market, investor's should divide there portfolio between “Held for Trading” and “ Held for Investment” .
Are greedy banker’s to blame for this crisis, is to much complexity in the financial world the real problem,or
Is it the government run regulatory system that have failed.
“ There is no co-relation between making a lot of money and keeping a lot of it”.