If you are wondering why I keep repeating some of these things, it is simple. I keep meeting people who make such basic, basic, basic mistakes in investing, that it is painful.

I met a person earning Rs. 400,000 a MONTH being asked to take a Rs. 700,000 loan, BECAUSE the interest is tax deductible. His own money is lying in the SAVINGS bank account earning 3-4%. The adviser of course is the CA who files the tax return.

Another person who came to meet me has been conned into buying 10-11 life insurance policies – at a premium of Rs. 800,000 per annum. The sum assured? Rs. 90 Lakhs. When he took a ‘loan’ for buying a house he bought a term insurance – single premium for a period of 20 years. He is likely to finish repaying the loan in about 3 years time (total loan period of 7 years). This means this is ALSO a bad product.

Another person wrote in to say that he has taken critical illness cover – and was not sure what all it covers. My take on any critical illness cover is simple. Show it to a doctor (preferably a specialist who understands underwriting or at least a family doctor) and see whether it is worthwhile. I am not at all impressed with the language and exceptions. Damn scary.

Investment lesson 101: Choose your adviser carefully. Set your goals – write it down. Incorporate into your Investment Philosophy. Implement the plan. Monitor your performance vs. the index / the best fund managers…..