Uno Momento

Whats the first thing that comes in your mind when the word Invest is uttered? There are
two broad categories of respondents one group which sees it as Opportunities to generate
wealth, while the other sees it as some kind of rich mans game where the common man has
little to no chance of wealth creation. If you are among the latter, well, you are not alone.
In a country like India, where only 5% of the investors in the Indian Financial Markets are
Domestic, the rest are Foreign Institutional Investors (FIIs). Out of the 5 per cent, less than
1.5% are retail investors compared to 10% in China & 18% in the United States. Only 2 per
cent of the Indian household savings find their way to the Indian financial markets while an
average of 45 per cent of household savings in US are invested in the Equities and other
financial markets!
But the question frequently asked is why invest in financial markets when you seemingly
have safer investment avenues in the form of Bank FDs? The answer to this is the obvious
possibility of higher return, however, what one doesnt get is that your Bank FDs even as
may seem safer do not help much as long-term investments, for the fact that their
purchasing power gets beaten down by inflation and tax earned on Interest! In other words
what your planned `1 crore retirement corpus may seem to have value in 2016, may
possess a significantly lesser value by 2046! To further understand your net returns, have a
look:

(The December 2015 inflation rate of around 6.32% is due to extrinsic factors like crude oil price)

And its not just the retirement, the cost of education and healthcare gallops ahead of normal
inflation rates and need to be planned while investing in safe avenues. If you want to beat
inflation by a margin, you have to take calculated risks.
And finally coming back to the Risky debate, did you know that that only 1 lakh of your
savings is insured? This limit has not been revised since long. As an investor you should
also know the worst case scenario in case something untoward happens. I am not saying

that they are completely unsafe, but the rising instance of non-performing assets (NPA) in
some banks is a major cause of concern. NPAs are like bad debts in a business which are
unlikely to be recovered.

So what now?
One would be nave to think that any XYZ investment scheme be it a deposit or a fund would
be risk-proof, and even for those with very less probability of getting risk, the corpus after
getting the expected return would not be enough to beat down the continuous inflation in
education & healthcare, making an entire effort seem futile! What one needs to do at this
stage is to take Calculated Risks where there is a very rational allocation of investment
including debts and equities. Moreover, a clear thought process should go behind in
selecting these investment schemes with stellar analysis of the respective schemes keeping
in mind the investors risk appetite, time horizon, and investment goals (retirement,
education, housing, marriage etc.)
For starters, one of the most rational approach is the S.I.I. (Save Insure Invest)
Approach:

For more understanding of this approach, check out the coming blog posts!