Red Alert- Few mistakes that I commonly observe with fellow investors

Red Alert- Few mistakes that I commonly observe with fellow investors

In the last 6 months we  had two seminars and four of them in last 18 months.
After every seminar I am inundated with phone calls WhatsApp messages and emails.
It is very encouraging to see each time people taking interest in in the future however I am also amazed to see the kind of mistakes  people have made before they attended the seminars.
The objective of this write-up is to point out the mistakes that I am seeing randomly but consistently with most of the investors.

1. First issue is about investing from a savings account. Since most of the people reading this article will be NRIs I need not remind them at all the Investments must take place place from either there NRI account or NRO account.
If they have been NRIs for one or two years they must have their n r e and nro accounts in place and must close down their savings bank account.
There has been a very complex case where a person is the first holder in a folio but is investing from his wife's savings account , the funds into which are flowing from his own NRI account. This is not only untenable but also a grossly inefficient way of planning ones finances.

2. Second issue which I have commonly observed is having too many folios in the same fund house and for the same scheme. This is normally happening if you are investing through some Bank where the relationship manager keeps changing and every time you wish to invest in the same scheme he or she creates it under a different folio this creates gross complexity of your Investments.
Hence please remember that if you have ANY number of funds under 1 AMC then you need to have only one folio if the first holder of all the plans is same.
In case you you have investment in the same AMC from NRE and NRO account,  in that case only you need to have different folios.

3. Another common thing I have observed is people having invested far little money but into too many funds. Since you are one of the  higher salaried people you can start with just one fund in the beginning and need to have not more than 5 to 6 funds distributed across 3 to 4 AMCs. As a Thumb Rule you can continue in this way till you have a total Corpus of about 50 lacs. Then if you feel you can increase 1 fund  for every 10 lacs. With time you will realise that it’s not really beneficial to have more than 8-10 Equity Diversified funds.

4. Next case very commonly which I have found is people investing mostly in the NFOs(New Fund Offers) and closed ended funds. This obviously is due to the miss selling by agents or distributors.
So please remember not to invest in any NFO or a closed ended funds. Also avoid sector funds. There are plenty of well reputed open ended funds funds, diversified equity funds which have excellent track record over a period of 10,15 and even 20 years.

5. Another instance is of people who are familiar to me having a very poorly constructed investment plan. Some of the people who are known to known to me for years , talk to me and consult me in such a  way that I assume that they are looking after the finances properly.
However after few years I normally and commonly find that not only have they invested wrongly but also created a corpus far less than should have been expected with their financial well being.
Please understand just by being my good friend your finances will not start improving unless you plan yourself.
As you know very well I do not make open recommendations. Hence after taking the consultation from me you must look for a professional distributor through whom you should proceed to make a well constructed portfolio. Familiarity in these cases causes your loss.
I consider myself as a humble teacher who just passes some information that I possess. What you make of that information will depend entirely on you.

I have created various forums like Whatsapp group called Finance at Sea ; Facebook Group called Kaushik’s Finworld and my own blog called holisticrajeeve.blogspot.com. Apart from this I write for Marineinsight.com .

All these forums provide you with a platform to make your queries and also assist new investors get something out of your experiences.

So please avoid these pitfalls and build your own secure future at your own pace and comfort. There must be no one between you and your money- as I often say.