(This column was first published on Value Research India.)
This is the story of Mrs V. Now, because she lives in my neighbourhood, I’m not going to tell you her full name. The last thing I want is for her to bash me up with her handbag for talking about her on this evil thing called the internet, even though I’m only going to say good things about her. Hence, for my wellbeing, I’ll refer to her as Mrs V.
Mrs V is a smart, savvy woman. She has to be – she’s the Home Minister of her household, after all. She knows what’s best for her family and herself. She’s an intelligent woman who has figured out how to get the best out of her monthly budgets, without feeling like she’s compromising on any front. She does this well because she buys only the stuff that she and her family really need. This is a smart woman who doesn’t get seduced and lured by fancy advertisements of fancier products.
In fact, Mrs V is usually highly sceptical of any product or service that’s advertised and marketed aggressively. Itni ads kar rahe hain uska matlab yeh hai ki koi inke products le raha nahi hoga, is what she assumes. Now, she might not always be right with this assumption, but it does save her a lot of money that’d otherwise be spent on things that seem to be great, but have no actual value to her or her family.
The story of Mrs V ends here, but yours begins. Why can’t you be a lot more like Mrs V? No, I’m not saying you shouldn’t buy that expensive soap-kind-of-thing-that’s-called-a-moisturising-bar because Mrs V doesn’t buy it either, but you can definitely use her gumption when it comes to taking your investment decisions. Be an investor the way Mrs V is a consumer, is all I’m saying.
Now that the markets are in a widely-accepted bull run, fund houses and insurance companies are going to want to sell everything that they have to everyone who’ll look their way. The marketing blitzkrieg has already started, in fact. I’m sure you’ve noticed the hoardings around your city of a particular fund that’s named after a wild animal. There will be more of the same coming soon. New funds, old and resurgent funds, new insurance policies, myriad other schemes…there will be no dearth of financial products and services that will be pushed into your personal vicinity by way of ads, promotions and agents or distributors.
Not always, but definitely more often than not, the financial products that are advertised and marketed aggressively are the ones that have high revenue-generating potential for the company. At times, like in the case of the fund named after the wild animal, the company wants to take advantage of a current trend. This, despite being so obvious, is not as obvious as it seems to most investors. In most instances, the financial products that are advertised are not an ideal vehicle for a large part of the target audience.
And this is why you’ve to start thinking like Mrs V. Understand the nitty-gritties of a fund or policy or scheme before you sign on the dotted line. Make sure you’ve reviewed the product well enough to know its ins and outs. Don’t get lured by fancy words and ideas; don’t jump onto the bandwagon because it’s the trendy thing to do. Look for the things that are hidden at the back of the shelf, they’re usually more suited for you than the things that are desperately vying for your attention. Remember what Mrs V said – if it’s getting promoted heavily, it might be more profitable for them than for you. Keep it simple and be sceptical.