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POSTED BY ON January 26, 2011 1:57 pm ONE COMMENT
1. Tax saving – Most favourite pass time theme for Indian investors? If one has to pay more tax, that must be a good thing which normally means one is earning more from salary or investment returns. How much is the question? And does it worth the effort ie tax dodging?? No is the answer for most investors.
2. Guaranteed/Safe returns – Is there such thing as guaranteed in this world?? USA is now printing papers to pay their debt and trillions of dollars of it… There you go – guaranteed means paper returns!!
3. ULIPs – do i say any more about this mass wealth destruction!!
4. Endowment policies – ditto as above
5. PPF – must be good for all. Probably not good for all, but for some.
6. Thematic funds (Gold for eg) – do you want to play with fire!!
7. LIC – the only safe investment in insurance. Well guys, the ex CEO of the company has been giving away all your cheap money to big guys!!
Please add to the above list and enlighten investors/savers for a better/informed world.
Thanks
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I agree with most of your observations.
-ULIPs are the worst wealth destroyers. IMO, they may even underperform endowment plans (wink,wink)
– PPF is suitable for, should I say, 75% of the population (reasoning below)
– Thematic funds – yes they are fire. You ca use fire to make jewelery/burn houses!
THE MOST IMPORTANT THING PEOPLE HAVE TO KNOW:
It is worthless investing in FDs at 10.5% when your home loan is at 11%, Car loan at 14%, personal loan at 16% and credit card at, er, 25%. Er, how dumb is this!! Even PPF and investing in stocks are a bad option when any of the above loans (except home loan) are outstanding (exceptions are always there, like if you find a truly underpriced stock)
Just like corporations will invest money in any venture NPV>0 individuals must pay off the higher priced loans faster and then only invest in Stocks, MF and Debt[Homeloan is an exception, most of the time!]