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.
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.