In a special programme, for the second-year management students of Centre for management, Bandra (Mumbai), Sucheta Dalal, trustee, Moneylife Foundation and Debashis Basu, editor & publisher of Moneylife magazine explained to the students on how to avoid financial traps and invest in the right products. Many have little idea of how to invest safely and smartly which is very important at such a young age in life.
Youngsters usually fall prey to schemes promising easy money. Ms Dalal spoke about the dubious schemes like QNET, Pearls, Citi limo, Japan Life which could be clubbed to category called then Pyramid scheme or chain money schemes. These schemes claim to provide extremely high returns luring the unsuspecting savers. She explained that one should keep it simple and should invest in just a few products—products that are safe and well regulated. “There is no guarantee that you will not lose money, but it is safer to invest in products that have regulatory oversight”, she said. One should be extra cautious, while dealing with your banker as well. Ms Dalal narrated to the packed audience incidents where “relationship managers” have taken genuine and educated customers for a ride. She explained how to be safe with one’s money and the several ways one can lose large chunks of one’s savings.
She also spoke about the various internet scams that are usually after your money or your identity. She talked at length about phishing and vishing on the internet that traps the gullible public and robs them of their hard earned money. She also explained how usurious are the rates charged on credit card outstandings.
Mr Basu described the rules for smart investment. The best way to start investing safely is by planning your finances, he said. He stressed the importance of planning for the long-term and the power of compounding. Inflation is the permanent risk and is difficult for one to avoid. He explained how inflation erodes our wealth which can overcome by investing in blue chip companies and equity mutual funds over the long term. He also informed the participants on how to look at each asset class and identify the risks involved. According to him the most seasoned of the investors focus a much or more on risk rather than returns. Mr Basu showed the audience various routes one can use to invest safely and smartly. To a younger audience consisting of post graduate students his main emphasis was to save at least 20%-25% of their salary and invest at 85% of it in equity mutual funds regularly.