Jaiprakash Gahlot, aged
51 is a senior eye-surgeon in New Delhi. He is associated with one of the best eye
hospital in this city and he loves gardening. His independent bungalow at Vasant Kunj and
two foreign cars speak a lot about his success and achievements in his career spanning 25
years. Apart from practicing medicine, he is actively engaged in child-care activities and
is a founder-member of a social child-care club. This club, a non-profit organization
fights for rights of street children in Delhi. Gahlot’s elder daughter is about to
complete her MBBS program from a medical college in Bangalore and his younger son
Dhananjay is yet to finish his XII. Jaiprakash earned a lot of money in his life and wants
to protect his wealth now. He was never an investor but now he is worried about his
son’s education and wants to allocate his resources for a safe future. His wife is
actively involved with the child-care club and also runs her own boutique.
Renuka : Jai's wife, Ipsita : Jai's daughter and
Dhananjay : Jai's son
Portfolio : Bank FDs: 50%, Bank Savings Account:10%, Mutual Fund: 10%,
Insurance: 10%, Real Estate: 20% |
Viral Sharma is a Sr.
General Manager- Opera-tions in a Public Sector Telecom Company in Delhi. He stays in his
company guest house at Kalkaji. He is 54 now. By qualification, he is an engineer and had
a good career growth. His son completed his graduation and is now preparing for IAS exam.
His daughter is yet to finish her plus two. Viral's wife Shanti is an active member of an
NGO and spends good amount of time with her social activities of adult women’ s
education in Delhi. Viral had two ambitions in his life. First, he wanted to give the best
education to his children and second, he wanted to construct his indepen-dent bungalow. He
started planning for his goals 10 years back and now, he want to give a final shape to his
dream. He purchased a land in Gurgaon 15 years back for his dream of having his own house.
Viral uses his office car for his conveyance. A couple of months back, he gifted a 110 CC.
motorbike to his son.
Shanti : Viral's wife
Portfolio : Bank FDs- 25%, Bank Savings Ac-count: 10%, PPF: 5%, Equities:
10%, Mutual Fund: 15%, Bonds and Company FDs: 20% Insurance: 10% Real
Estate: 5% |
It’s a Sunday
evening, Jaiprakash is waiting for his guest Viral. Jaiprakash wants to discuss some
important matters with Viral who has a fair understanding about planning and investment.
Viral always advocates that proper diversification of one’s investible assets is the
key to investment success-" spread butter on your bread"- that is how Viral
reflects his attitude towards investment. Today, Jaiprakash wants to know something about
diversification. Jaiprakash's pet dog ‘Bhutty’ is barking loudly; Viral’s
car must have arrived at the gate. ‘Namaste Viralsaab, namaste bhabiji’,
Jaiprakash greets his guest with a smile. Viral’s wife Shanti is a good friend of
Jaiprakash’s wife Renuka. Renuka shakes hands with Shanti. Slowly, they approach the
lawn. Viral starts the conversation ‘ Haan tho Jaiprakash babu, you look little
tensed, what happened? How is Ipsita doing? What about her marriage plan?’ Ipsita is
Jaiprakash’s daughter, studying MBBS in Bangalore. Jaiprakash takes a long breath.
Viral has really got into the subject. ‘Yes, Viral, I’d like to discuss
something in the same lines’, Jaiprakash replied to Viral. ‘Why don’t you
talk something about diversification; you are always fond of repeating "spread butter
on your bread". Viral laughed at Jaiprakash - ‘Yes, It is better than taking a
spoon-full of butter and dropping it at the middle of the bread. Also, you are exposed to
the risk of dry-bread in every second bite here.’
‘The idea behind diversification is by investing your earnings in various
types of investments and by diversifying within each type of investment, you will
not be badly affected if a particular type of asset suffers’, Viral finishes his
argument and reaches for a glass of water. Jaiprakash asks Viral "That’s fine,
but I’m not an investor basically because most of my savings are in bank FDs and
there is a little amount I pay regularly for insurance. That’s all. Once I saved a
good amount and purchased some Mutual Funds but now I do not know how much it has grown.
And, you know, I’ve got some land at Noida. So, I’m not an investor and how do
you suggest me to apply your ‘butter spreading’, i.e. diversification, in my
case". Jaiprakash pauses for a while. " Now, there are two-three concerns for
me", Jaiprakash continues. "First, Ipsita is about to finish her studies and
your bhabhi is asking me to plan her marriage next year only. Second, the higher education
of Dhananjay. He is completing his plus two next year. Third, I’d like to establish
my club as one of the best social organization in North India. I’m not expecting any
profit from this club but it will definitely cost me something on a regular basis. Viral,
I do not have any financial crunch but the problem is I’m really unable to accumulate
something, I want to really upgrade myself from this savings class to investor class and
build my portfolio. Suggest me something."
This time, Jaiprakash looks really serious about his plan. Viral starts " Let me
clarify some points Jaiprakash; firstly, you have already upgraded yourself from savings
class to investment class, may be, not consciously but unconsciously. Because, you
haven’t saved in a mutual fund but you have invested in a mutual fund and as you hold
some land at Noida that actually reflects your investment idea, as investment in real
estate is a long-term growth portfolio strategy. Secondly, you have already accumulated
some wealth. But, to put it very specifically, you failed to protect your wealth and thus
you are not experiencing the growth in your wealth. Wealth is very much there but you are
unable to experience it in a voluminous manner. Third point, you do not require investment
suggestion but you require diversification suggestion. Right". |