Invest, Invest, Invest !!!!!!!!

CRUDE PRICES AT 142$/BARREL !!!!

INFLATION CROSSES 11% MARK !!!!

US UNDER RECESSION !!!!

INDIAN ECONOMY UNDER SLOWDOWN !!!!!


These news headlines are making frontpage news all throught this year. Now, in this tough situation if I'm going to talk of investing, I know people are going to laugh at me, and particularly If I'm talking is investing in equities. Thats a big NO NO. Dalal street? not a safe place anymore. Last year, around this time, it was more like everything you touch is gold scenario, but now things are more like everything you touch is dust. I knew some fellows who used to spend most of their working hours on online trading portals, their coffee time discussion used to be all about how they made big money trading stock, giving stock tips to friends supported by their logic and news flows. I always used to wonder if it was all that plain and simple. BOOM !!! there a came a day somewhere in mid January of this year, the whole pile of dreams and expectations of these so called "stock market gurus" came down like a pack of cards. The markets are just moving in one direction from there on - DOWN. So all through this year, I havent heard these guys talking about stocks at all, its more about IPL and Euro cup. I just had a chat with some of these guys asking them why arent they sharing their wisdom anymore. There were mixed reactions. Some dint want to talk about it, some still had some reasons to support their buys, and some are still in denial saying this is just a phase which would pass by. There were 3 kind of expressions I could see on their faces, one of fear, one of hope, one of disappointment.

The above paragragh doesnt really tell what message exactly is my title conveying. Its simple - Invest. Everyone knows what this means, everyone have been doing this, and everyone will keep doing this. However, in reality, investing is a very complex word. It works differently for different indivizuals, perceived differently as well. Most of them treat their insurance premimums they are paying as investment, for some it means real estate or gold, and for few others its putting their money in stock market, but what most of them do is just get into one of the above and thats where they lose. They fall and suffer, nevertheless, lessons are not learnt. Its always like if this doesnt work lets try something else. The golden rule by which all financial planners swear by, dont put all your eggs in same basket, is always ignored. What one got to chose is setting goals and planning their investment using different asset classes, may it be gold, real estate, equity, fixed income bonds, fixed deposits, etc., so that the end of result of all this is when one of these dont work your whole corpus is not totally destroyed. Have a realistic plan and stick to it.

The Party Spoiler

I just talked about the way most of us save our hard earned money, by dumping them at a place which we think will save us in case of our financials needs. This is what I call the great Piggy Bank Concept that most of us follow. Even though you save in a real bank, I still term it as a waste, oh ya I remember the interest rate factor, even then I stick to my statement. Now, let me just list some of the party spoilers that could badly dent your savings and in turn your living.

Just as an instance, say, you want to buy something which costs Rs. X. So you divide the money into monthly instalments for a period of time and start depositing it in a bank. Now, you discuss your plan with your colleague who tells that the price of the item may be hiked but you smartly tell him that you have taken care of all that thinking about the interest the bank is going to give. Finally, the day comes when you withdraw your savings and go to buy that item, but soon you discover that the price of it now is Y and its much more than X + x; X is the original cost some time back which is same as the amount you saved and x is the interest you earned on it. The result, you cannot afford it. There you go you have just experienced the influence of what is called as inflation in technical terms which most of us ignore. This is one of the monster that eats up your savings. This is the same monster your mom keep talking about, the rising prices of commodities and consumer goods.

Inflation is one of the major party spoiler for someone who keeps accumulating money in a bank as his value of money gets eroded as the time pass by which will lead to a compromise in the life
style just to get the cost of living down.

The Piggy Bank Concept II