I personally never invest in mutual funds or in insurance linked investments. Not that they are all bad or anything, I have just realized that they are just too expensive for a smart investor and they are extremely easy to outperform. I had made the mistake of doing this in the past when I was new to the world of investing, but then later realized that they weren’t useful to me. Mutual Funds have several costs that are all derived from heavy duty advertising in the mass media, fancy offices in the most expensive locations and inefficient distribution.
I don’t like investing in assets that are heavily marketed and advertised. No wonder in the past I skipped all real estate IPOs and now too am going to skip all the ones which are lined up. I can guarantee that almost all of them will cause investors to lose money.
If something is going to make you rich, it is not going to be marketed to you. It is your job to pursue it and benefit from it. When I started investing in gold personally at Rs. 12,000, it wasn’t advertised to me, nor was it pushed down my throat by aggressive financial salesmen. I invested in it despite most of the media and analysts speaking against it. I remember how a Mutual Fund manager told me that gold is a worthless piece of metal that does nothing. I hate arguing and simply like to wait for time to prove who is right and who is wrong. Arguing just creates a lot of negative energy and wastes time. It is so much better to have a good laugh and enjoy yourself. Gold is going to rally, because people know what is going to happen to the US dollar, Pound and Euro. If you have any of those, now is the best time to convert them into rupees.
Another thing I don’t like about Mutual Funds is that we have no say in what they do. Let us say I would not like my money to be invested in overpriced real estate IPOs, can I stop my Mutual Fund manager from doing the same? Even if I want my funds managed professionally, I would like to have the flexibility to guide the direction and nature of investments. There have been cases where a Mutual Fund belonging to a big business house, kept investing in other group companies in order to artificially boost stock prices, in spite of knowing that those companies had no fundamentals. Many common people can’t afford homes is because these real estate companies keep raising cheap money from institutional funds and banks. Once this stops – the bubble will burst. India’s biggest bubble today is real estate.
Let us see the performance of MFs since the beginning of the crash, how many of them gave you returns in excess of 100% last year? Had you put your money even just in the index, you would have got returns over 100% (Sensex went from 8,000 to over 16,000). Since most people are not well informed and lack knowledge, they get delighted when they get 50% returns from an equity mutual fund – not realizing how much they are losing and not asking questions. What happened to the remaining 50%? Where did it disappear?
Worse than mutual funds are insurance products pretending to be investments. We all know what happened in America when people ‘invested’ their retirement money into insurance. Insurance is meant to protect your car in case of an accident or is meant to provide you with some money in case you fall ill. It is in no way meant to make you rich and create future wealth. It is better to keep your money in bank FD that is fully under your control rather than invest it into confusing investments with no transparency. As a kid, I remember how our family had to literally beg and grease hands to get our own money back from an insurance company.
I didn’t like that and am glad I had that experience, because it taught me a lot. Take a simple health insurance, life insurance or car insurance policy and you remain the boss. Every year the insurance company has to run behind you for your business, on the other hand if you commit to them for twenty to thirty years with some complicated investment plan, you become their slave.
I believe we are all God’s children and are all meant to live life like kings and not slaves. Ignorance and a lack of knowledge is what unfortunately make millions of people continue living like slaves.
Now is a time to accumulate cash – and keep the war chests filled with cash.The talks about an economic recovery in America are simply ways to brainwash the masses. Once the crash starts, it will time to capture assets being sold in distress. Some of the biggest banks in the America, UK and Europe will soon collapse. They will offer us an excellent opportunity to create wealth.
Keep smiling and making the most of now!
Small Can Always Outperform Big-Do You Agree?
P.S.: Since It Is Children's Day. I Just Thought Of Giving Away A Few Copies Of Happionaire's Money Game. Tell Me Why You Or Your Child Want It - And A Lucky Few Will Get Their Copies!