Investment, Insurance and Real estate: Common Investor's view

For around last 7 years I had several good/bad experiences in shares, real estate,  insurance and other investments. From all this experiences, I thought of coming up with this article, to keep other people inform of avoiding investments that won't serves its purpose.

Stock Market:
When market ran from 7000 to 20000 level,many people made lot of money in any share that
 they invested. But now days markets hovering between 15000 to 20000 level its better to avoid the
 Share investment this is why

1. Market now days don't run on fundamentals but rather on Sentiments and manipulations: Companies like L&T, Infosys which were the best now days don't seem to be profitable anymore. I know people who invested in Real estate companies, Tanla Solutions, Kingfisher, Satyma, etc now suffering losses in Lakhs.
2. Constant Monitoring:                                                                                                                   In today's situation you need constant monitoring of your shares to make sure that you don't suffer heavy losses.I lost almost Rs 15000 in a day in shares like infosys who's price fluctuated Rs 200 in a day. Remember you have to watch your shares daily, you cant just invest and forget about it for years, months but not even days. 
3. Avoid playing in Futures and options.                                                                                           I lost around Rs. 35000 in a day and also made Rs. 50000 in a week. But at end of day you will always loose more than what you have earn and this is not just my experience but every colleague of mine has the same story to tell.
4. Internal tips and recommendations:                                                                                              Only invest in shares if you get internal tips from trustworthy source, otherwise don't. Stock   market recommendations by News channels, web sites and Brokers rarely hit right and there main purpose is to manipulate small investors
5. Common investor has mostly lost money or not made any profit for last few years only people who have gained is Big investor or FIIS as these are the people who drive the markets. We are just he nemo fish easily fooled by market directions, Stock recommendations and other manipulations.
6. Mutual Funds fetch low/no/negative returns:                                                                  Remember that unless stock market is doing good, no fund based on stock market will do good no matter how smart is the Fund Manager. Me and my colleagues have gained around -10 to +10% from stock market investments from last few years with investment from best reputed Fund houses. I invested in ELSS funds some time back for some tax gains, but there are definetly better tax investments outside.  
7. Invest in Markte Low's:                                                                                                                 Invest in next Market bullrun when it will go from 20000 to 25000, but you may never know that. One way is mark some good shares current price and wait till market falls and then make your investments in the above shares and allow Market to recover to make some good profits.

Gold:
Gold is know for beating Inflation and its has been a recommended investments by Ancient folks. So investment in Gold is must

1. Physcial Gold comes with security risk:                                                                                  Buy physical gold only necessary enough to satisfy the Gold cravings by your loved ones. With gold prices hovering at Rs3000/gm keeping gold at home and even wearing it has big security risks. Losing gold ornaments at home, while traveling, or at any place is common now days.
2. Gold ETF is best:                                                                                                                         Gold ETF gives advantage of Gold investment with no security risk. So get yourself a demat account and put some % of your investment in GOLD ETF buying it online through your demat account. Gold ETF are easy to buy/sell, appreciate along with Gold and no need to worry about keeping it at home/safe place. 
3. Physcial Gold difficult to sell in difficult times:                                                                   Especially gold ornaments is difficult to sell when you need money. To get best deal you will have to sell at the Store from where you purchased, you need to have receipts, you only get check (no cash payments) and price fetched is less than market price and they deduct Ornament making charges. But Gold ETF can be sold any day when the market is open without hassles and no price deductions, you pay only transaction charges which is less.

Real estate:

Real estate is either you buy it as your first home or investment prespective

1. Buying First home is never expensive:                                                                                         Buying a Flat as first home should be the first important financial decision of your life. Don't worry about current prices and delay  your decisions, because at some point of time you will have to buy the property and delaying may result in paying more money for same property. One of my friend was getting a property at 15 Lakhs in 2008 as he felt it was expensive he delayed it and ultimately bought a similar property in 2010 at 32 Lakhs. Now his property is worth 45 Lakhs in 2013. So decide your budget get your first house/flat.
2. Land is better than buying a Flat.                                                                                               If you are getting a good deal on Land in the same area where you are looking for the Flat go for it. A normal 2bhk Flat in Pune city goes 45Lakhs and above, a piece of land around 1000 sq ft in same area will cost around 20-25lakhs and if you construct a good Bungalow its cost 10-15 Lakhs for constructions of 1000sqft. Owning a Bungalow is always a luxury then Flat, because Flat is again a shared property with Individuals from different backgrounds and tastes.
3. Amenities should be the last factor:                                                                                         Don't think of Amenities when buying a Flat, the only useful amenity that I have seen in most of the schemes is the Children play area and Club house (for small functions). All other amenities are costly to maintain and hardly used, so are ultimately dumped by the Housing society members. So don't invest extra amount in Luxury scheme with lot of amenities but invest in some decent scheme which has good Apartment layout, location (living cost), water and other basic Amenities.
4. Diversify:                                                                                                                                               If you have budget for Luxury scheme then diversify your buying into land and Flat. Let say you have budget of 65 Lacs, then instead of buying one single Luxury Flat for 65, put 45-50 in Flat and invest 20 Lacs in decent Plot. This will turn out to be best investment and Financial decision of your life. To reduce your cost of Flat one can look into buying a resale flat in a decent Society and location
5. Land and House is a great investment.                                                                                       Land/House/Flat (second) is a great investment as you can get it on Loan and value of real estate increase with time. Also House/Second flat can be rented out to generate a source of Income. Rentals are best way to beat inflation, with inflation your rents increase so you have a tool to make sure your income match inflation.
6. Bank Loan reduce risk:                                                                                                             Buy a property that has been financed by a Bank as Bank ensures the property is clear of any legal or other issues.
7. Be Cautious, go by the book:                                                                                                      Buying a Land involve a good advocate/get it from trusted source. Land investment is great but should be take care of following thing.
1. Reputation of person/builder
2. Clear title/papers, get 7/12 from the govt office and check it.
3. No Loans.
4. Any reservations, future development
5. Involve a good lawyer right from start.

Insurance:

Insurance should be treated as risk cover for your life and health and you should never look it as Investment or for Returns.Don't mix insurance and investments.

1. Health Insurance:                                                                                                                           Buy a health insurance to cover  your parents and your family. With increase in medical costs it really important to have health insurance, otherwise any Hospitalization in the family and your financial health will get reduce by several thousands to Lacs of rupees. If your company provides insurance check if your parents can be included in the cover as this is the cheapest method to get cover for your parents. Getting a separate health cover for your parents is expensive due to there ages and health condition.
2. Term insurance as Life insurance is the best option:                                                                   Term insurance is pure Life insurance, it assures that your family gets the benefit incase of your death . Though it doesn't give any forms of returns it has advantages of low premiums for higher risk amounts and covers all forms of death. For  75 Lakhs cover an individual following are the premiums
•     Term insurance        Rs 12,000
•     Endowment policy   Rs 2,30,000
3. Avoid Endowment and Money back policy:                                                                         Endowment and Money back policy though gives surety of some interest/bonus along with return of principal invested they are not good as Life insurance. In above case for 75lakh cover one has to pay additional Rs 2,10,000 for Endowment policy. Same amount if invested in Gold/Land will fetch your multiple returns then Endowment policy.Most disadvantage of Endowment/money back policy is they don't cover all forms of death and have exclusions for death due to Terrorist attack, natural calamity, insured person fault and other. Term insurance on other hand covers all death forms including sucide(after one year).
4. Cancellation of Policy:                                                                                                                   Incase of cancellation of Endowment/Money back policy before term will fetch amount less than premium paid till date and all the bonus/interest is all lost. This is point no agent or company explains only when I had a situation to cancel my Insurance policy I came to know.

Let me tell you that I am not a Investment guru, but someone who has learned in it hard way and knows how it hurts when things go wrong.So all those folks who didn't find Investments gurus talks profitable, need some Investment common sense from a Common Investor above is the stuff for you.

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