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EQUITY / STOCK MARKET INVESTMENT:

Mr. Gerard Colaco: The world’s best experts on investment are unanimous in their opinion that equity is the best avenue of investment ever invented for long-term growth. The problem is equity can also be used for speculation. When you see or hear of your friends, co-workers or acquaintances strenuously doing day trading, margin trading, etc., understand that these people are speculating and perverting this magnificent avenue of investment into an avenue of gambling.

You can invest in the stock market in two ways.

Mr. Gerard Colaco: Mutual funds are a hybrid way of investing in real estate, debt, commodity and equity markets. Instead of investing directly, you pool resources with other investors and invest.
As in the case of stock market investments, a lot of wrong advice is given in mutual fund investments, too. Very often, terrible products like new fund offers (NFOs) are sold, not because they are good for investors, but because mutual fund distributors earn maximum brokerage from them. Similarly, a lot of fads like sector funds are recommended, whereas the only two types of equity mutual funds worth investing are well diversified equity funds and index funds

Mr. Gerard Colaco: Knowing your possible needs like vehicle purchases, child education, family functions, vacations, etc., is always good. This prompts you to put aside some money for these requirements.

Finally, every citizen of India must have a passport, an income-tax PAN card, a driving licence and an election identity card. These are the four basic documents that establish you as a citizen of India. Indian citizens who migrate and obtain foreign citizenships would also do well to obtain an Overseas Citizen of India (OCI) card or a Person of Indian Origin (PIO) card.

Mr. Gerard Colaco: Property insurance too is not compulsory. If you have no meaningful property, you do not need property insurance.

A number of youngsters today, well qualified, landing jobs in India at a salary of approximately Rs 3 lakhs per annum. They may be working well away from their hometowns. Most reasonably good Indian companies provide them with comfortable accommodation. Such individuals have virtually no property and mostly live out of a suitcase. This is a classic case of not needing property insurance. Of course if they own a vehicle, insurance of that vehicle is compulsory under the motor vehicle laws.

Mr. Gerard Colaco: The financial plan of every individual and every family must be built upon a solid foundation of safety and security. Only after safety is ensured, do we venture out looking for higher returns.

When the risks of death, disease and damage to property are taken care of through regulated institutions, it is called insurance. Apart from this institutionalized insurance, every individual and family must have their own ‘private’ insurance in the form of a reserve of money to meet emergencies. Such a reserve is called an emergency fund.