THE STORY OF COMMISSIONS AND OMISSIONS
One of my hobbies is to collect, collate and interpret data to get some sort of a story or trend into which humanity is moving on short and long term basis.
Today after reading a news item in which the employers of banks, insurance companies and wealth management companies (but not mutual fund companies) are incentivizing the exclusive foreign travels of their distribution network and employees promoted me to extract the data of aum under each industry.
The article that I want to write was in fact about the commissions but I am also going to give you some eye openers about crores of people like you who are called retail investors in common parlance.
Size of Indian Budget that finances the entire country--- ₹47,65,768 cr
AUM of MF industry- ₹58,91,160 crore. (Of which 58.1% is in equity mutual funds).
AUM of ENTIRE Insurance sector. - ₹54,63,414 cr
Total deposits in Indian Bank s- 201,00,000. Cr
( AS FRONT RUNNERS OF FUTURE INDIA YOU MUST GET INTO THE HABIT OF USING THE TERM TRILLION FOR ONE LAKH CRORE)
One of my hobbies is to collect, collate and interpret data to get some sort of a story or trend into which humanity is moving on short and long term basis.
Today after reading a news item in which the employers of banks, insurance companies and wealth management companies (but not mutual fund companies) are incentivizing the exclusive foreign travels of their distribution network and employees promoted me to extract the data of aum under each industry.
The article that I want to write was in fact about the commissions but I am also going to give you some eye openers about crores of people like you who are called retail investors in common parlance.
Size of Indian Budget that finances the entire country--- ₹47,65,768 cr
AUM of MF industry- ₹58,91,160 crore. (Of which 58.1% is in equity mutual funds).
AUM of ENTIRE Insurance sector. - ₹54,63,414 cr
Total deposits in Indian Bank s- 201,00,000. Cr
( AS FRONT RUNNERS OF FUTURE INDIA YOU MUST GET INTO THE HABIT OF USING THE TERM TRILLION FOR ONE LAKH CRORE)
Did you know that 88% of the equity investments in mutual funds is done by retail investor which includes small individual investors like me and the HNIs like you.
This is as opposed to only 16% of institutional investment ( domestic and Foreign )in the equity mutual funds.
Now furthering the discussion... 58% of the mutual fund outlay means 34.16 lakh crores OR ₹Tr are in equity MFs.
Taking a median expense ratio of 1.0% between regular and direct investments 0.34Tr₹ is the size of expense ratio that the AMCs collectively charge and distribute about 0.15- 0.30% to its distributors (depending upon the Tier cities) .
Now consider 35% of first premium and 5-10% of successive( of 54.163₹Tr) that insurance companies charge you , what do they do with that?
You guessed it right!!! That is the reason your insurance broker has a bigger car than you while insuring your life!!!
The lure is so strong that there are Insurance companies which have doctors, teachers, bankers ,tailors and even petrol pump attendants on private basis on their payroll.
A Seafarer from another WhatsApp group is so convinced with Ulips that he takes one policy every time he comes back from ship.
His insurance company has placed so much of trust in him that they have made him an insurance advisor. Now of course he is compensated handsomely for the premium that he pays for himself.
Now that you have understood about the insurance let us move over to banking which has almost double the amount of deposits then either insurance or MF sector.
We have been need to understand that our bank deposits and money from saving account goes to nation building And in return we get taxable and below inflation returns. The gratitude that the government shows to the depositors is so great that it even deducts the tax at source above the gigantic limit of rupees 2500.
What the bank does with this deposit of yours... I have already discussed this in my book And you can go over it again to refresh your information.
The whole idea of this small exercise of mine this morning is to make you understand how each and every person out there( and that may include mutual fund companies as well) Is out to lighten your weight of your hard earned money.
I don't think the article will have any convincing effect on most hardliners but at least I have done my job.
Before I leave I would like to mention that I have intentionally left out the topic of real estate and other government aided schemes which punish you equally for the money that you give to them for safe keeping.
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