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Make Smart Investment Choices Today for a Better Tomorrow A smart move like asset allocation gives great results over a long period of time, without having to actively monitor or intervene in the investment process

By Anil Rego

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Over the years, the distinction between savers and investors has become increasingly clear. Savers accumulate vast sums of money. Investors are evolved savers, who use the money to earn much more than a traditional saver. As a country, India has been blessed with a high savings rate of 30%. However, investments have figured much lower down the priority order. Savings may have worked for previous generations, but in 2017 smart investments are the only strategy to stay ahead of the curve. Let us look at some smart investment options, which can herald a new and better phase in your life.

Asset Allocation than Just One Asset

Smart people know that all their investments may not perform at the optimum levels at all points in time. This is why they use smart investment strategies like asset allocation to divide the eggs across baskets like debt, equity, gold, cash etc. The last 10-15 years have taught us that no single asset will do great always. While equity worked great between 2003 to 2007, it was gold's turn in 2008, 2010, and 2011. Equity again did well in 2009, 2012, and 2014, while cash was king in 2013; the debt was superb in 2015 and gold shone in 2016. Instead of keeping money in equity, debt or gold at all times, the smart thing to do is to keep a little of each in all these asset classes. A smart move like asset allocation gives great results over a long period of time, without having to actively monitor or intervene in the investment process.

Use Term Insurance as Risk Protection Investment

Most of the financial investment options have a similar structure. There is an accumulation phase and there is a maturity phase. Be it a bank fixed deposit, equity mutual fund, or Public Provident Fund; your investments slowly build up over the years and become big. There is only one type of financial instrument where your investment can be INR 10,000 but returns in a year can be INR 1 crore. This is called term insurance policy, where the payment of just a nominal premium can get your nominee/family a huge gain. Ordinarily, it will take monthly investments of INR 10,000 for 20 years and earnings 12% annual return to get to INR 1 crore. But a term insurance policy can give the same amount i.e. INR 1 crore at any time if unfortunate death happens. By opting for a pure term insurance policy, you can ensure that your family is totally protected financially even if you are not around. If you have no financial dependents, you can avoid taking any term policy.

Deploy Your Surplus Money to Earn High Yield

Most of us are ignorant of the amount of money that lies in our savings account. The amount tends to become quite a hefty chunk after a certain period of time. This is one of the most common mistakes that young and old professionals commit. With your savings bank account interest rate having been slashed by a large number of banks, it is quite likely that many of you are earning 3.5% interest on this idle money. Liquid and money market funds can give you much better returns, without compromising on the safety and guarantee of the investment. You may get 5-6% returns compared to 3.5%. On a deposit of INR 10 lakh, 6% can earn you INR 25,000 more every year than 3.5%. So, the math is clearly in favour of moving out the excess money from your savings bank account to good alternatives that promise a better yield. Keep only your monthly expenses in the savings bank account, and move the rest across liquid funds of different fund-houses to get adequate protection.

Using these 3 smart investment tricks, you can build, grow and protect your money in a much better way. Such an approach will give you both peace of mind and financial well-being without any extra cost.

Happy Investing!

Anil Rego

CEO and Founder, Right Horizons

Anil Rego is the CEO and founder of Right Horizons, an end-to-end Investment advisory and wealth management firm. An MBA and CFA degree holder, Anil believes in the Contrarian approach of wealth management. His areas of expertise includes Corpus fund management, tax planning and end to end financial planning for both residents and NRI investors .

Anil has worked for Wipro as Business Planning and Merger and Acquisition Manager before starting Right Horizons in October 2003. RightHorizons has branches across Bangalore, Mumbai, Chennai and Hyderabad.

Anil has been a columnist in leading Indian newspapers. He also routinely answers queries in mainline publications and websites. He is also a Guest Lecturer with various business schools like ICFAI, ITM and Union Bank School of management. Anil has also served as member, Board of Governors, at IBSAF.


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