Invest like a Kohli, not like a Dravid.
The culmination of the Indian T20 extravaganza, the IPL, has just given way to an exuberant victory by the Kohli-led young brigade in England. But, why are we talking cricket when we are supposed to be discussing money? It’s quite simple actually — to grab your attention as in this country, and there’s nothing better than cricket to draw your eyeballs and change your investing perspective.
We’re well into the 21st century, but our investment methods still tend to be outdated. We know Dravid’s beautiful straight-batted defensive shot will not help us weather the in-swingers on a rather dusty pitch, but we aren’t doing much to change that.
Enough of the wordplay? Let’s get straight to point.
With a burgeoning population of about 130 crores, savings to nominal GDP ratio bordering around 30%, a rapidly evolving financial market, and a progressive regime, India has all the ingredients that make an economic superpower. But we’re still no-where close to becoming one, and the fundamental reason for this is the lack of equity penetration as a viable investment asset class.
Only 1.5% of the country’s total population invests in capital markets, compared with almost 10% in China and 18% in the U.S., which is a clear indication that we are lagging behind in our investing sense. To put things in perspective, if, in 1979, we’d invested INR 100 in gold, it’d be worth around INR 3,000 now. The same amount invested in fixed deposits would fetch us INR 2,600 rupees. Now, if the same amount was invested in equity, the investor would be sitting on a hefty INR 29,000.
Investing in equity effectively channelizes our savings to companies that find the most effective use of our funds in furthering their organizational goals in return for a handsome ROI. An ROI that can certainly help any investor quadruple the returns that he or she makes on any alternative asset class, weather the inflationary storm, and optimistically, create wealth.
But what looks like a simple win-win equation doesn’t have many takers. The reason is simple — lack of education and awareness. For decades, people have branded equities as a risky proposition, and not without doubt. Savings deposits, fixed deposits, fixed income investments, and precious metals are touted as safer avenues. But, if done correctly, equity investments will top all of them. They act as better protection against inflation, provide capital appreciation, open up the scope for dividend income, ride a country’s economic growth, and save some tax as well.
Financial literacy is imperative, more now than ever before. The government is doing its bit, but that’s evidently not enough. About time, we take it upon ourselves to care and provide for our financial well-being. Well, the case is simple. Dravid is a genius, but about time we let him hang his boots. Kohli is roaring, let’s unleash him.
That’s all folks. Let’s meet next week for some more financial gyaan. Until then, Ciao!
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