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FDs, mutual funds, shares or what? An investor’s dilemma


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It is a well-established fact that investing and trading are two different processes and for the amateur investor, long term investing makes more money than short term trading.

By Anupama Bhargava, 

“Looking for a bride who is fair, slim and beautiful. She should be traditional yet modern. She should be working but should also look after the family”

A typical matrimonial advertisement in a newspaper would look something like this. In a country where people expect their spouses to have the ultimate qualities, it is not surprising to see them expecting the same from their investments. They want it to be safe, give good returns in all market cycles, beat inflation, save taxes and many more if it has to qualify as a good investment. Choosing a good investment is like choosing a life partner; one wants everything in a single package!

Given the variety of available investment options, an investor’s task becomes even more difficult to choose the most suitable one. Add to this the ‘tadka’ of ignorance, herd mentality (choosing what your friend chose) or looking for quick means to get wealthy; and one has the perfect recipe for a disastrous investment.

We have the glamour of investing in share market on one hand and the staid boring Fixed Deposits on the other. Should one jump on to the exciting but dangerous ride that crypto-currency promises or rather stick to safer havens that an investment in gold promises. Are mutual funds the “sahi” ones or is it the more sober insurance plans that would help one meet their financial goals. The task of an investor is fraught with uncertainties and certainly not easy.

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In the digital world, investing is easy. One can open zero charge Demat accounts that open up immense possibilities for an investor at the touch of a button, at practically no cost. All one has to do is open an account, chose an instrument and click; and voila! The investment is made. As easy as it is to ‘invest’ your money, it is easier to lose it on ill-informed choices that people are bound to make in search of making a quick buck. If it was easy to make money in the stock market, everyone would be rich.

It is not uncommon to hear about people losing their hard-earned savings on investments that neither suited them nor were understood by them. Recently, when the “dogecoin” fever was high, investors, especially millennials wanted a piece of the action that the cryptocurrency offered notwithstanding the immense risk that this investment presented. One could find Instagram influencers promoting these get rich quick schemes and the uninformed investor following these ‘role models’. Consequently, dogecoin lost 75% of its value in a month.

Makes one wonder, is investment really about growing your savings on hot tips or following trends or is it more to do with understanding your risk quotient, personal financial goals and other factors that can only be assessed through a more human approach. Is it convenience, cost or return that should be the criteria for choosing an investment or should it be the comfort and suitability to one’s unique needs?

We turn to an architect to design our house, we need legal advice to settle our disputes; so, it’s surprising that when it comes to investing, we don’t hesitate to invest on hearsay or generalized options. Shouldn’t an investor rather look for quality personalized advice when considering growth of their savings rather than depending on incomplete information garnered from a coffee shop conversation or an Instagram reel? Google could have answered your architectural questions too but you need an architect to do it right! Good advisory comes with a cost and an investor should be ready to shell out the same.

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Mutual funds offer an investor the convenience of investing online, accessibility to professional management at low cost, flexibility of investment modes through sip or lumpsum, liquidity to exit, choice as per requirement and risk profile. Each mutual fund investor gets access to these benefits, irrespective of the ticket size. The tight regulations by SEBI which govern mutual funds make them highly transparent. Each mutual fund document even comes with the mandatory warning “mutual fund investments are subject to market risk. Please read the offer document carefully before investing”

Makes one wonder why investing in direct equity (shares), futures and options or crypto currency do not carry such advisory! For the uninitiated and also for the more seasoned, shouldn’t these investments come with a warning, given their highly volatile nature? Are these investments not “subject to market risk”?

It is a well-established fact that investing and trading are two different processes and for the amateur investor, long term investing makes more money than short term trading. Yet, when the markets are on an upswing as they are now, it is not uncommon for even the beginners to jump on to the riskier options, giving little cognizance to their risk appetite or financial goals. Volatility is a function of the market and what goes up will surely come down one day and when it does, it is important to be ready with the safety valves in place.

For a more mature investment environment that is transparent and enables an investor to make an informed choice, changes are required. As an investor, one should choose their investment options carefully based on needs, risk profile and financial goals. It is not a good idea to chase returns without taking the risk into consideration. The regulator too needs to step up and educate the investors on the various investment options, their inherent risk and behavior. Only then we could move towards a system that is beneficial for all.

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Only then can the investor dilemma be resolved!

(The author is a Financial Strategist and is a certified financial Planner actively involved in spreading awareness on personal finance amongst investors. Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Follow them on and

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