"Yeh Dil mange more" is
not just the slogan of a popular soft drink. It is as much the money
mantra of most Indian savers. Our outlook towards savings and investing is
driven by singularity.
Obsession with returns
Only one thing really matters to
us and we should be honest to admit it. Indian savers are obsessed with the
singularity of returns. Be it retirees, senior citizens, housewives or even
young millennials, we are all taught from childhood to get that little extra
out of our money. We are constantly told that we are conservative and yet
smart. And, taking that belief forward, we think that our chutzpah will
get us that extra returns all the time.
The advice was simple. "Steer
clear of trouble. Settle for less. Your job is not to save a bank from going
under. That is the equity investor's job. And, if the equity investor fails to
do her job, you get reduced to receiving just Rs 1 lakh, no matter how much
money you deposited. The downside is as much yours. That would place you almost
at par with the equity investor of a badly managed bank. Is that what you want
to be? Would you buy the shares of that bank?"
Nothing is risk-free
They still wanted me to say that
"All is well" and that things would settle. Truth be told, there was
an outside chance of everything being well. But, after the IL&FS crisis, we
are a very different country. And, I am not willing to believe that what RBI
did with GTB (Global Trust Bank) and Nedungadi Bank would be the default
option. The law does not bestow absolute rights of protection on a depositor's
money. It is limited to Rs 1 lakh. So, we simply can’t take the return of our
capital for granted. There are definite attendant risks involved.
The time has come for depositors
to think beyond the singularity of returns. Lower returns are a better choice
if they offer better certainty on the return of capital. The extra one percent is
simply not worth being the primary investment driver. Choosing to earn less
with better certainty and peace of mind are more holistic and sensible. I am
reminded of the ad slogan for the fixed deposits of a now-defunct south-based
NBFC, "Life is too wonderful to be spent worrying". How I wish
investors respect and value their peace of mind above their returns!
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* Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance