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Select your best investment XI
2007-01-22 10:15:38 Source : Moneycontrol.com
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Should Laxman be in or out? What to do with Sehwag? Pathan or VRV? Dhoni or Karthik or both? How long will Tendulkar continue? What about the sometimes-in-sometimes-out Kaif and Agarkar? And the newcomers like Robin Uthappa, Rohit Sharma, Cheteshwar Pujara, Piyush Chawla, etc. knocking on the door?
Surely Vengsarkar and his selection panel have some tough work to do to choose the potentially winning combination.
Well as they struggle with their selection, I hope you have chosen your investment XI carefully and correctly. Listed below are 14 probables from which you can select your playing XI (the list, of course, is not comprehensive and you could select others too whom you consider as likely winners).
A. The batsmen
They are your return-generators (scorers).
1. Balanced Funds – They are the Dravid of any investment XI. They provide both stability and good returns. Backbone of the team, they will protect the team during the tough times (bear market) and produce big scores when the going gets good (bull market).
2. Bluechip companies / large-cap funds – Like Tendulkar & Yuvraj they have proven their worth. You can expect big scores (high returns) consistently from the large-cap funds / bluechip companies. They will be an integral part of any playing XI.
3. Mid cap companies / funds – They are the growing stars like Sehwag. They can make big scores very quickly, but are not very dependable. So you need to watch out for these from time to time.
4. Sector funds – They provide quick fire returns and then fade out. If you get them into your team at the right time, you can score big totals. Remember Kaif and the famous Natwest Trophy win. Infrastructure is hot right now. Sugar was the favourite some time back. Who’s next? Maybe FMCG or Pharma.
5. Debt options – You will need someone to play a long steady innings like Laxman in your team. Post Office MIS, Fixed Maturity Plans, NSC (National Savings Certificate), KVP (Kisan Vikas Patra), SCSS (Senior Citizens Savings Scheme) etc. are some of the debt options, which will provide stability to the team.
6. Bank fixed deposits (FDs) – Out of contention for some time due to poor scores (low interest rates), bank FDs have made a great comeback like Ganguly. With the interest rates not expected to go down in the near future and the tax-benefit recently granted, bank FDs will form part of quite a few playing XI.
(Also read - Bank FDs or Debt MFs : Which is better? )
7. Real estate/Real estate funds – Real estate has had a great record in the domestic sector, but not convenient for the mass-market due to high initial investment, low liquidity and lots of paperwork. Now expected to make debut soon in the form of real estate mutual fund. Watch out for this new potential star on the horizon.
8. Gold / Gold funds – Again, great record for gold both in India and internationally. Like real-estate funds, gold funds are soon to make a debut and can walk into any investment XI based on their performance so far.
B. The wicketkeepers
They have the dual role to play – Save tax (runs) and also generate returns (score runs).
9. PPF (Public Provident Fund)– So far one of the best investment options to play the dual role of saving tax and generating ‘tax-free’ returns. However, with the Government contemplating to make the withdrawals taxable, PPF will lose some shine.
Have you read - PPF Investment – A word of Caution
10. ELSS (Equity Linked Savings Scheme) – Backed by the booming Indian economy, this has become one of the star performers like Dhoni. Good keeping (tax saving with just three years lock-in) and great batting (excellent returns).
C. The bowlers
Their job is to protect your corpus (total).
11. Term insurance – We live in highly uncertain times. Both natural and man-made disasters are a serious threat. Therefore, it is important to protect the family (team) from any such unfortunate events through a Term Insurance Policy. Highly economical like Kumble, they are a must for practically every investment XI.
12. Mediclaim policy – Health problems are very common, just like injuries to fast bowlers (remember Balaji, Nehra, Zaheer?). So you need a group mediclaim policy for you and your family, just as you need a group of fast bowlers – Zaheer, Pathan, Sreesanth, Munaf, Agarkar, VRV, RP Singh etc. - who can replace each other as and when the need arises.
13. Assets’ insurance cover – You need to protect you home, household items, vehicle etc. thru’ suitable policies, which are all economical and very effective as Harbhajan.
14. Bank Account / Liquid funds – Emergency can sometimes throw the team off-balance. You need to keep some money say equivalent to two - three months’ of your monthly expenses in savings A/c or liquid funds so that they are easily accessible and also give small returns. Maybe like Powar who can bowl well and also score a few runs while batting.
You will note that there are some notable omissions like moneyback, endowment, pension and ULIP policies:
· Moneyback and endowment are a drag on any team due to poor scoring track record and must stay out.
· You need to pursue with ULIP (Unit Linked Insurance Plans) for very long to produce results and this affects the team’s flexibility. So they also preferably stay out.
· Pension has a great potential, but its’ present form (structure + tax benefits) is not very encouraging. If policy changes for the better, pension can make it to the list of probables.
So that’s the list of probables available to you. Study the state of your pitch, opposition, weather conditions etc. (investment objective, risk appetite, time horizon etc.) and choose the ‘most suitable’ playing eleven.
Wishing you the best for your world cup & beyond.
The author, Sanjay Matai, is an investment advisor and can be reached at sanjay.matai@moneycontrol.com.
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