Are you investing your hard-earned money correctly?

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Are you investing your money correctly?
Are you investing your money correctly?
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Sukhdeep Singh

Sukhdeep Singh

Write Something To Right Something

Passionate about playing with words. Sukhdeep is a Post Graduate in Finance. Besides penning down ideas, he is an expert online marketing consultant and a speaker.

Dusk to dawn, we are running behind one thing and that is money. And, people say money cannot buy everything, especially happiness.

But, honestly, in 21st century, it is all about your bank statements; be it any phase of your life, should you have a bank statement with more than six figures, a big car, a big house, and a few foreign travel visas on your passport, you don’t need to speak a word. Your financial will say it everything for you and will say it loudly. But, having a king-size life is not an easy thing and you have either have to be exceptionally lucky or exceptionally cunning. “If you cannot dazzle them with brilliance, baffle them with bullshit,” they say. But, most of the time, this one-liner is used by the people who lure us to invest our hard-earned in their bogus schemes. And, like idiots, without investigating the authenticity of those plans, we invest our hard-earned money.

Indisputably, our investment decisions are based on the uncertainties of uncertain investment world; where most of the time we have to rely on the information available. For example, in the case of a share, we have to rely on the annual statements of the company or in most cases, we have to blindly the brokers. Admittedly, we do not have a crystal ball and at the same time, we cannot trust on the judgments of our financial advisers. Bad investment decisions can ruin your life and two main reasons behind that one wrong decision are – trusting your adviser more than your own acumen and lack of knowledge. In the first case, you should never forget that for your financial adviser, it is all about his commission and not your interest and in the second case, it is because you are investing in something, where you own expertise is zero. Besides, there could be many other things, where investing money is better known as void ab-initio (wrong from the beginning). But, a little attention given to this decision (of investing money) can save you from a lot of panics. Here are few areas where you should always think twice before investing.

Bogus Schemes – Chit Funds

Without naming anyone in particular, 99.99% of these chit funds schemes are blunders. No one on the earth can fulfill the promises of doubling your investment unless they reach their own target through you. Explore the history or Google, so far in India only, there are 12 major chit fund scams. These chit funds, no , they promise a better repayment amount (better than bank interest), but in most cases, they are fraud. Reminds me of most recent Ponzi Scam, where Mamata Banerjee (Chief Minister – West Bengal) requested people of Bengal to not to invest in chit funds. She clearly indicated that government is not responsible for the growth of chit funds and not responsible for paying back to the investors.

Multilevel Marketing Scheme

These are another solid business model examples of wrong investment. I have heard of numerous MLM programs who ask people to build a chain of buyers. The whole idea behind MLM networking is – grow the chain for your growth. In the beginning, they offer huge benefits and the only reason is – setting up your mind, in order to make you stay in the game. Once the chain is developed, they start playing tricks like how much more members you need to introduce to have a better deposit in your bank and so on. In short, it is you who putting your money and time in their business and helping them making millions. And, in terms of returns, it’s always peanuts. Do not fall into their pyramid scheme traps while investing your hard-earned money.

Property Investment

Next up is – investing in property. Most of us believe that investing in property never disappoints. But, this is not true, especially, if you have no knowledge of the sector. Investing in property is not a right decision if you don’t anything about the secrets of this market. Ask yourself, do you really know the exact worth of the property or it’s just a market rate that you were told about a few days ago? Before buying a flat, house, agricultural land, or commercial as investment, check your knowledge about the property registrations, governmental dues, authority approvals and licenses, no due certificates, disputes, Development and other associated charges, builder authenticity, size of apartment, construction area, list of banks financing that project (in case you are to buy a flat from a builder, who is promising you possession after a certain time), total cost (including all government charges) and most importantly, the future prospects of area. In addition, before signing up an agreement, do not miss to check your financial worth (in case you are going for a loan). Once you have definite answers for all these, only then you should invest in property.

Private Financer/Financiers and Private Money Lending Schemes

This mode of investment is becoming increasing popular these days. People are investing their money with private financer/financiers, who further lend money to prospective borrowers. Their returns on investment are based on high interests paid by the borrowers. But, there are huge chances of bad debts and these private lending bodies are not under any legal obligation of returning your money back. You must understand that if you are investing a sum of money with them on a specific rate interest and for a specific period of time, they have several reasons to deny your interest payments. Should it be the worst case, they may even refuse to repay your main amount and the best part is – most of them are under no legal obligation and are illegally operating, despite a ban imposed on them by a government. Just to have a few extra bucks on your money, you willfully donate your money to the culprits. Therefore, never invest your hard-earned money in these schemes.

Stock Market

No doubt, people are making good money from investing in shares and debentures. But, being from a finance background, I know, most of the buyers are not aware of the intricacies of this market. Be it sales person, sub-broker or broker (now know as financial planners or wealth managers) are there to confuse the investors with ‘bull and bear’. I have been in contact with many of these, and to my wonder, 70% of them I found were completely blank about the basic stock market trading principles and rules. Most of them are not even academically qualified for the purpose. They are just experimenting with investors’ hard-earned money. Before you invest in stock market, you must learn the basic of this market; all I want to say is, if you know nothing, no one is going to tell you anything.

Not to say, but most of the time, it is we the people who are wrong with our investment decisions. Just for the sake of a few extra and easy bucks, we take chances; illegitimate chances. I am not emphasizing investing money in the banks as Fix Deposit over investing in something that can promise you higher returns. But, if you know nothing about the secrets of investment and you are going to rely on someone’s advice, it is better to rely on something that government takes responsibility of. It is okay that you might make fewer profits, but at least your money is safe. “Something is always better than nothing,” they say.

But, in case you know the game plans, and you are sure that your investor cannot fool you, then the sky is the limit.

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