Skip to main content

The need for capital protection in Investing

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

That there is no return without risk is not mere financial theory, but an investing reality

 


There is an old story about Mulla and his friend. The friend hides his bag of gold coins in a small pit in the garden. Every other day, he digs it up and counts the coins. One day, he runs back to Mulla to report that the bag has been stolen. Mulla tells him in his character istic style, "How does it matter? You weren't using the money anyway." Many of us like to treat our money the way Mulla's friend did. As long as it is there we are happy, even if it is lying unutilised and idle. Our obsession with the protec tion of our capital is harmful for wealth


The returns from investing can come only when the money is made to work When we use the money, we spend it when we let someone else use our mon ey, we invest it. It would be easy for all of us if investment choices were simple straightforward, and came with that one factor that pleases us—no damage to the invested capital. Many investors confi dently declare that they are not asking for too much when they insist on one basic criterion—that they get back their invested money. It is not possible to put the money to use and protect it as well and if we place it in a bag in our backyard like Mulla's friend, it will lose


Anyone who uses our money will build assets with it. The return from these assets will be used to provide us the return on our invested capital. Any asset-building activity is fraught with risk. If the finance textbook tells us that there is no return without risk, it is not mere theory, but a simple statement of investing reality. Anybody who uses our money, including the bank, is using it to build assets, and this activity cannot be done without taking risks.


The student who went to an engineering college and found that the promised job was not there at the end of the course, has also made an investment and is faced with the risk of low returns. The travellers who took the delayed aircraft, tourists who ate a less-than-satisfactory meal, and the people who found that they married the wrong person have all taken risky decisions. There is no rule book that would have helped them make better choices with predictable outcomes.


If we take risks easily when it comes to several critical decisions in our lives, why do we seek the unattainable capital protection in investments?

 

Behavioural have out that we are not too capable of making com plex decisions that involve a lot of vari ables. We simply use rules of thumb that make it easy for us. If the food smells good, we are willing to eat it without stepping into the restaurant's kitchen.


When it comes to finance, we run back to capital protection because the thumb rules we frame in our mind are broken too often and the promise of per formance is too far away in the future How financial assets will perform in the future is an unknown variable both com mon investors and experts grapple with all the time. Even the best-laid plans can fail; the best-managed businesses can collapse; and well-thought out strategies can misfire. When there is a deep fear of the unknown, we choose to clutch on to capital protection. It is our search for simple and easy-to-understand outcome that encourages us to seek capital protection from our investments. Next in line is the fixed rate of return. We term both these needs as 'minimum' displaying our need for anything that we can hold on to, given the complexities in the world of finance.


We are very prone to making errors when we operate from this eager position of seeking unrealistic simplification. We buy into tall claims easily. Someone who prints a brochure listing 'assured' returns is able to mobilise money and run Ponzi schemes. Investors trust these claims even more when the capital is returned as promised. The return of capital, complete and intact, is the sign of a good investment in our minds, when we have shut out all complexity. Fraud sters, therefore, play on this need. We also trust 'experts'. We think that some one else could have figured the complex world of finance, and if they also have track record of success, we can follow blindly. This fits in with our need for simple rules and visible performance.


Soon enough, we have exposed our selves as eager believers of stories that hold these ingredients. The thumb rules spread far and wide. 'You won't lose money in an IPO.' 'You should sell when a fund manager changes.' 'You should buy on a Monday.' 'You should buy before the budget.' None of these rules work consistently.


What is worse is that the unscrupu lous world of finance smiles on benevo lently when we are ripped off our wealth with false promises and premises. From trading portals that encourage specula tion, to distributors who tell us that our money will earn 15%, we, as investors have been exposed to organised lying and cheating. We make money for a short duration and then spend a longer period in complete remorse, having lost even more. We return to our comfort zone where we seek minimum criteria to in vest. It all sounds reasonable to ask for 'at least' capital protection after having lost a fortune with risky investments.


We would be open to understanding risks in investing if we are able to sift out the risk that is avoidable. In a world where we are not shocked by rampant unscrupulousness and fraud, where we are confident about the disclosures made to us, we are able to trust those who ask for our money, we may be ready to learn about risks. Until then, with each shock that we suffer, we will run back to the need for capital protection, however unrealistic

 

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...
Read more

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...
Read more

10 year NSC launched, all set to give 8.7 per cent

Invest in Mutual Funds Online Download Mutual Fund Application Forms THE government introduced a 10-year National Savings Certificate ( NSC ), which will earn an interest rate of 8.7 per cent per annum. The notification for the launch of the new savings instrument, 10-year National Savings Certificate (IX-Issue), 2011, has been issued, an official statement said. The scheme will come into effect from December 1, it added. Investments in NSC will earn interest at the rate of 8.7 per cent compounded semi-annually, it said, adding that on an investment of Rs 100, the depositor will get Rs 234.35 on maturity of the NSC. There is no upper limit for investment in the certificate, it added. The new scheme will give better returns along with tax benefit to savers. At present, the maturity period of NSC is six years and it qualifies for tax relief for investment up to Rs 1,00,000 under Section 80C. The decision to raise the maturity period of NSC has been taken on the b...
Read more

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
Read more

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now