Investor’s Investment
Knowledge
I still see in our
country that people do not have financial literacy. They do not know the proper
process for investment. They still believe in fix deposit, purchasing land or
LIC policies etc without any knowledge of any investment objective. The worst
thing is that they still believe LIC endowment policies are the best option for
long term investment. There are need for each investor to know about the investment
product in detail in which they are going to invest.
For example in most
of cases people who have LIC policies do not know about their risk cover and
expected return at the end of tenure. It is my personal experience that 90% of
policy holders do not know about their sum assured and expected return. Only
they know about that premium amount which they are paying every year. They even
do not serious about to know about inflation and real rate of return. Many
investor invest in land for short term period like 6 months or 1 year without
any idea of capital gain tax and liquidity.
The proper way for
investment is that first, you should clear about your investment horizon after
that check whether your investment will beat the inflation. After deduction taxes
and adjusting inflation what will be your real rate of return? These type of
question should be answered by your financial adviser or company agent.
Please keep in mind there
is huge difference between company agent and financial adviser. Financial
adviser will help you plan to your investment and future goal in realistic and
prudent way. Other side the agent will be more interested for their commission
only. The agent has not much concern about your hard earned investment or your
future goal. Their main objective is to take your sign on the form, collect the
investment amount cheque and get the commission in their pocket.
The agent, only
advise you about the product for a one particular company. In other side the financial
adviser will suggest you the best option available in the market. The reason
for this that the adviser do not work for any one particular company.
My suggestion for all
of you is that when you plan for your investment, please never go after
emotional advertisement and you should have fair idea about liquidity, time
frame, inflation, real rate of return and your future goal of investment. It is
responsibility of all advisers and agents that they should give the proper
detail of financial product to the investors.
If you have doubt about investment
product and want more information regarding investment or you need investment
services, feel free to ask us. We also conduct the seminar on investment and
financial planning. If you are interested for conducting seminar in your city,
just drop the mail.
Warm regards,
Arvind Trivedi
Certified Financial Planner
