How the HNI invest
Imagine somebody referring me to Rahul Dravid, Saina and Prakash Padukone and asking me to invest their money! I would have spoken to them and found that
a) they had a lot of money in LIC policies and
b) they had a limited earning life and a long living life
c) even after retirement they would have some expenses on lifestyle, gym, health which was far more than ordinary mortals.
What would have I suggested?
a) since you already have a lot of endowment plans, you do not need any more term insurance
b) do a SIP in an index fund
c) keep about Rs. 50L in a short term bond fund
sounds simple right?
I would have been ripped apart (like I am going to now) by the IFA community (and the financial media) for under performing Franklin, Hdfc, Icici Pru, Mirae, Motilal Oswal by a mile for a long time.
What would have I told the client:
look chief, this is simple. You work extremely hard to earn money, and during your PLAYING life my ONLY JOB is to protect your capital – principal and inflation. I am sure that I would have achieved that objective. Even if somebody had checked out his portfolio he would not have been able to find fault.
AFTER their playing careers (Prakash and Rahul) I would have sat with them and said let us slowly shift from Index fund to managed funds, introduced them to a couple of friends who are venture capitalists (if P and R do not seek higher returns with peripheral capital who will). I would have explained the risks – and before that secured their lifestyles with 30 year Gsec giving them cash flows enough to sustain their lives.
I would have had quarterly discussions and annual reviews, and taught them that they should say NO to products beyond the basic products.
I really do not know the facts of the case, so I am not commenting, but imagine the stress for the Indian golden girl Saina. At least R and P are not in their playing days, so the stress will not speak on their performance. I hope Saina’s amount lost is not enough to impact her performance. If it does impact her performance, THAT WILL BE THE REAL LOSS.
God bless them – all the 3 are people I just love. I hope their money is recovered, and they now stick to indexing. Preferably in a world weighted index.
Rakesh
Nice article, Guess it did impact Saina’s performance. She was knocked out of All England open in the first round yesterday.