Who moved my million?

 

 

Rejoice! It’s a TSI cover story on money; and here, inside the next few pages, lie the solutions you were waiting for all your life, solutions that’ll electrifyingly catapult you within the year to your first million (or perhaps your second, and your third too), your first condo, your first luxury car, your first upper sleeve vacation, and your first introduction to the world of caviar and champagne, right!?!!..... Umm, right, and wrong!

Right, because logically speaking, if you were to most diligently follow the strategies listed in the following pages, without coming up with innovative Einsteinian investment techniques of your own, you’ll peacefully get spanking close to what we’ve promised you...your million!

And wrong! Because many of us financial Sylvester “Rocky” Stallones believe that investing is a boxing match, where one can unbelievably earn through that one killer punch, that one ultimate smash, that one golden hit, to become overnight millionaires! Well, haven’t we heard such stories so many times over? That neighbour who ended up earning lakhs because he bought those shares in time. That friend who now drives a luxury car from the killing he made on the house he’d bought. That relative who keeps telling us to invest in the same chit fund he’s invested in, because he’s made loads out of it...

If you belong to the belligerent second category, take heart, you’re attempting something that Warren Buffet, the sparkling CEO of Berkshire Hathaway, confirms he does most of the time! In his address to his shareholders this year, this 77-year-old powerhouse mentions a classic Ronald Reagan quote as being his most favourite at work – “It’s probably true that hard work never killed anyone – but why take the chance?” Being the third richest man in the world ($52 billion gives that rank to people), and being a shrewd strategist who believes in having the world’s most intelligent brains work for him (and his money), Warren can well afford to boast about his non-working status. Unfortunately, too many of us take this strategy to heart, and do what we do best – namely, depend on the most intelligent brains of our world (friends, relatives, office colleagues, neighbours, the car driver) – in deciding our investment options. The only knockout punch in this boxing match that you’ll ever remember is the one before you pass out... permanently! In today’s world of increasing expenses, EMIs, expenditure on children’s education, combined with a new paradigm of the non-existent job security, the only sensible way to secure your – and your family’s – future is through sincere, diligent, well-researched and better informed decision making, rather than through seat-of-the-pants strategies.

And for your benefit, TSI went to the experts, some of them the world’s most renowned. And what did they say on what is a ‘sound financial strategy’? Here’s a snapshot sampler... When we caught up with arguably the world’s top financial guru, Marc Faber, he commented, “Of all three asset classes – equities, fixed income, and cash and cash equivalents – equities have historically provided superior capital appreciation over the long term. In fact, equities have outperformed every other class of financial assets over almost every long-term period, regardless of the starting year. The only obvious exception was in the early 1980s when the return on bonds benefited from the abnormally high interest rates that prevailed in that decade!” A top Indian financial honcho of similar national reckoning, Rana Talwar (now the CEO of Yes Bank), supported this viewpoint, “While carefully considering the investment risk, they should note that over the long term, equities have consistently outperformed cash.”

If equity has such a hot-bod, what exactly are the specific dimensions one should look for? We went directly to the mothership of them all for advice, IDBI. While Shahina Mukadam, Head Equity Research, IDBI Capital Market Services, divulged to TSI, “My top three picks for 2008 are stocks in infrastructure, media and real-estate,” R. Swaminathan, the National Head of mutual funds, IDBI Capital, said, “The companies, which depend on the economic growth – infrastructure, capital goods, telecom, engineering and banking – are expected to do better. One can also be positive on power-transmission towers.” At the same time, the famed Dr Tobias Just of Deutsche Bank Research warned us, “While the ‘macro-story’ of an investment in India’s infrastructure is very simple – robust population growth, strong economic growth and significant backlog demand – investors must bear in mind that the returns are not risk-free.” On another level, when we questioned Dipen Shah, Vice President, PCG-Research, Kotak Securities, on what should be the top investment option for Indians, he commented, “Though I think equities will give good returns (and hence, should be one of the options), in my opinion, gold is another option.” A sentiment mirrored by Chintan Karnani, Director, Insignia consultants, who told us, “Gold over $1000 an ounce will be a reality; (though) there will be volatile movements in 2008, which can result in gold falling to $660...”

Think about it. The solutions are pretty simple. In straight words, the people you should go to and should follow are the experts, and not the ‘experts’ around us. Krishnan Sitaraman, Head, Crisil FundServices shared emphatically with us that investment decisions “cannot be made in isolation. These should depend on factors like the risk profile of an individual, his needs, his age, the corpus he has for investment...Proper financial planning should precede investment decisions...” Ponder on it for a moment, how many times have we actually had investment decisions preceding a belated rush towards financial planning? Uhh, perhaps too many.

This is the here and now of your future. The need is more than necessary; in fact, it is shockingly urgent! It is time you moved yourself both physically and mentally, took personal responsibility, believed in the competence of experts, undertook regular feedback and control methods for your money flows, and developed a vision for where you want your money to be five years from now, and 10, and 20! It’s time you started worrying about yourself, your parents, your spouse, your children, your tomorrow! It’s time you gave a new spin to Warren Buffet’s statement... “It’s probably true that hard work never killed anyone... Period!” You heard us right...Period!