LTLR (Look, Think and Reap) Approach for your Investment

 Mr. Intikhab Chougule

This is a really good article written by Mr. Intikhab Chougule who is working as Associate Vice President with HSBC Group in India and has been a retail banker for past 11 years. I would request readers to read this article as Mr. Intikhab Chougule has very well shared his personal experience about an approach to the different Investment portfolios.

In the initial days of my profession in Banking Industry, I was very fascinated by few of my senior colleagues as they were always into meticulous planning of their investment. The priority was very clearly set, a good part of the earnings would always be put aside as savings for future commitment i.e. buying a house, marriage, retirement planning … etc. Initially I would find the entire exercise a little out of place as I had come from a telecom background and was quiet young, so life was all about having fun and splurging the earned money on the wants of today. But with time I realised how important it was to plan your savings.

In few years of my planning and execution, I was able to see success in quiet a few things in my life. There are always many options and ways around the things that you would want to procure or achieve in life. You have to simply sit back and think clearly as to what your want is and how you plan to achieve the same. This will have to be supported with a successful financial planning as that holds the crux of your want.

It will be an interesting exercise to take some time out from our busy schedule and do a simple comparison between the times that is being spent by our generation and the times spend by our parents. The comparison can be in terms of the lifestyle, professional options available or more interestingly a subject that can be more useful for us and that is the option of investments at those times and now.

In the times when most of us were growing up and our parents were busy fighting many battles of life, the investment options available to them were very limited. For investments, few options that immediately come to my mind are Bank Fixed Deposits, Government Bonds, Post Office schemes like National Saving Certificate, Kisan Vikas Patra, Indira Vikas Patra and the Monthly Income Scheme’s. Real Estate was considered more of a need based instrument by many and it was an investment for a long term. The investor of earlier generations used to buy Gold, but it was mainly for his personal use on occasion’s like marriages, festivals … etc, and was also at times considered to be the last resort of raising funds in the hour of need / financial difficulty.    

When we talk of economy today, the scenario has changed there has been major economic prosperity all over. Our part of the world is being looked as one of the most promising economy and with the robust growth rates that we have registered in last few years it looks very true too. Higher income levels and booming stock markets have led to more and more numbers of HNIs (High Networth Individuals). This also means the availability of huge investible surplus and a higher risk appetite with want to experiment and try new and exotic products in the name of diversification. This has resulted in emergence of new options and there are more products available like Equity, Mutual Fund, Insurance, Currency Trading, Gold, Real Estate etc.

Let us try and check few of our options in today’s time in more details:

Mutual Funds :

In past few years, Mutual funds have truly emerged as one of the most popular investment option preferred by the working class. The growth registered by few of MF schemes in the past has been simply terrific.  There are numerous MF schemes available and many different variants like Diversified, Sectoral, Floaters and Liquid etc. The most popular option used by many people in working class is Systematic Investment Plans (SIPs).

Direct Equity :

Individuals can invest in equity directly through a local broker or by utilizing the online platform of any large banks. Similarly, there is an option to avail the services of a reputed Broker/AMC and sign on the Portfolio Management Scheme (PMS) offered by them. For investors who are tech savvy, you can simply sign on with any online platform of a bank/ NBFC and on the click of a button you can apply for IPO or buy / sell shares of companies and need not worry about filling up forms or getting your refund orders back in time. Everything is instant now, right from applying for new shares to getting back your refund in your bank account. To decide on PMS provider one has to be careful though as most of them will talk about capital preservation with quality growth. They will assure the investor about good model and research-based advice and obviously about consistent returns. One has to then see whether they have process driven methods of capturing periodic gains and their performance history during volatile periods.

Insurance

Insurance was previously bought primarily for tax purposes and LIC was the only player in the market till few years back. Look at the options today; lots of private players have entered the market and are offering several choices. The schemes offered today by these players are packaged in such a way that investor looks at it not only from tax saving’s point of view but also as a retirement planning option. There are people who want to buy it only for life cover and would go for term insurance. ULIPs are hugely popular and sold as an attractive asset with Insurance/Retirement benefit.

Overseas Investment

RBI has offered an option for Resident Indians, one can invest upto 0.2 million US $ abroad in one name and minors are also included in this scheme. So if a family of four with husband, wife and two kids wants to invest abroad, they can buy real estate, stocks, derivatives, currency etc upto a total value of 0.8 million US $. This option primarily suits HNIs who would like to invest in global products. But they fully have to understand the taxation methods, systems, procedures etc.

Commodities :

A new avenue for investors in the form of Commodity derivatives has emerged; this is for the investors who want to diversify their portfolios beyond shares, bonds and real estate. Commodities may also offer potential to become a hedging tool if one has specific interest in a particular commodity.

Gold

In recent times, gold has appreciated and is considered a very safe bet for investment. In older times, the options available to investors were buying either gold jewellery or gold bars. Today you have many more options which have been refined and made easy for investors who want to invest in Gold. Few popular variants of investing in Gold are buying Gold Exchange Traded Funds (ETF’s) and Mutual Fund’s scheme’s which are more specific in investing into gold mining companies across the world.

Real Estate

In my opinion, this is the best form of Investment available to the investors. Now with Banks / Institutes willing to finance the property basis your earning capacity of next few years, buying of a residential real estate has become very easy. Investor has to do an analysis of his capabilities to invest and define the utilization of the investment over a period of time. Individual investors today, also have an option of investing in reality funds. A reality fund is an entity established usually in the form of a trust or a company for collecting funds from various investors (known as contributors) which then invest these funds in portfolio companies engaged in developing real estate projects with the objective of realizing profits from such investments with in a defined time frame. Options like buying stocks of Real Estate companies which are listed on exchanges and Real Estate Mutual Funds are also available with the individual investors.

As an Investor, I would like to take an approach which gives me maximum returns with minimum risk. But the million dollar question that requires to be answered is how many of us really have the inclination of checking our options and evaluating the same. To put the above in simple words, there are many options available and in addition to every option, there will be multiple sub-options.

In all honesty, not all of us will posses the competency of assessing the best options available and hence there can be an alternate channel that can be considered while planning our investments. Every investment sector today will have core people with the capabilities of assisting you with options suitable to your investment needs and risk appetite. There are

Financial Planners who will help investors to plan, budget, identify financial goals and suggest diversification keeping in the risk appetite of the investor. I personally feel that one has to enjoy his life and leave the rest to experts and more importantly trust them. If you can trust your doctor, lawyer, Chartered Accountant and follow their instructions then there are definitely huge benefits and mental peace if you follow your Financial Planner’s advice the same way.

I personally recommend that the approach one should adopt in life towards financial investments should be Don’t Measure yourself by what you have accomplished, but by what you should have accomplished with your ability.

Failure is not the worst thing in the world. The very worst is, not to try.

Source Submitted by : Mr. Intikhab Chougule who also contribute his articles on www.ikokani.com

Mr.Intikhab Chougle, is Associate Vice President with HSBC Group in India and has been a retail banker for past 11 years. He has completed his Bachelors in Commerce from Mumbai University and is currently pursuing his MBA with major in ‘Banking & Finance’. With a total working experience of close to 15 years in Mumbai, he has been an active member in social service in Mumbai for promoting causes like ‘education for girl child’ and promoting medical assistance for old and deserving people. He has also traveled to Malaysia, Paris, a part of UAE market for professional reasons and has acquired vast market knowledge about investments and business approaches adopted in different markets.

He believes, it is very important that we must return back to the community what we have earned and learned from the society and hence is willing to extend his support to the people who would want to seek his expertise in setting and achieving their financial goals.

He can be reached on his e-mail : intikhabchougle@hotmail.com