I have been asking this question for a very long time. And I have no answer.

When a person goes and drinks Pepsi he is destroying his health. When he gets addicted to some sugary shit like Kellogs cornflakes he is destroying his health. When he chooses to watch television he is destroying his mental and physical health. When he chooses a bad hospital he is destroying his health. When the bad doctor prescribes bad medicines he is destroying his health. When a woman chooses to use make up she is destroying her health.

However he does not save or invest ON HIS OWN.

He has to be sold a financial product. In most cases he is reluctant. He has to be cajoled to buying a financial product. Once he buys a product whether it is life insurance or mutual fund, he gets many well wishers as friends. They are all happy to tell him what to buy, why to buy, from whom to buy. Then they tell him that Endowment insurance is bad, you should only buy term insurance. They tell him how to select mutual fund schemes (these guys have no clue about how the industry functions, but about that later). Then they tell him how somebody has cheated him of all his savings and ruined his health. Great.

Now think of a person who has/ had kept all his money in a savings account / spent it. Assume that he did buy some 80C products and some bank fixed deposits and nothing else. He was introduced to mutual funds by an agent who got him to buy Hdfc Top 200, Icici Prudential Value Discovery, and Franklin India Flexicap. Let us assume he bought a ULIP paying a premium of Rs. 100,000 per annum and for a sum assured of Rs. 32,00,000.

Has it been too bad a portfolio? What if he dies in say 4 years time? does your answer change?

We have to understand that there are businessmen going about fulfilling a need. To do this they collect money, acquire resources, deploy the resources and start a business. Surely they are expecting a profit. They THINK they have a role to play and they are playing that role. Schools, colleges, factories, schools of higher learning, banks, ….all of them think they have a role and are playing it. Worse are those organisations which like parasites are funded by the government. In many cases, they are not answerable to market forces. However small service providers are. They run risks. Time, effort, process, costs incurred, and risks have to be compensated. Who does this? The markets.

Now this person who had only bank accounts should compare his portfolio to what he had BEFORE the salesman met him. He had NOTHING. No mutual funds, no life cover, no health cover. He had no nominee in his bank fixed deposits, he had no nomination on his company provident fund (he had nominated his mother but she had died long ago), …

Is HE the client better off? who brought him to that position? does that guy need to be rewarded? those are the questions.

Now some baboo(n) says he has been mis-sold a ULIP. Great. At least he has life insurance!

So what subra says about an efficient portfolio is NOT APPLICABLE TO this guy. He should be happy with what he has. He should thank the IFA who brought him to that stage.

And if he did buy the wrong product, he should go back home. He should buy unpolished brown rice, rock salt, wheat (and grind it to flour), organic vegetables (preferably grow them), ayurvedic medicines, put his children in a vedic patshala, …etc. before cribbing.