Tuesday, May 01, 2018

How to avoid investment traps by Khalid A. Khan

35238008No. of pages : 129
Publisher : Chrysolite Media Pvt. Ltd
Published on : September 22, 2017
Book links : Goodreads  Amazon
Author links : Goodreads Twitter

My review


Financial literacy is one of the major causes of concern in a developing country like India. Not everyone is acquainted with the concept of how investments in the market works. Insurance agents, banking professionals and other financial advisors directly involve in making the people who have limited knowledge or no knowledge invest in products that doesn’t benefit taking into account the futuristic point of view while they earn hefty amount as commissions and create a fortune by fooling us into believing that the investments we made are intelligent.

Insurance policies are sold like hot cakes as the young employees have to show their tax saving investments to save them on their salaries.  Some also buy large home loans for tax deduction. The financial advisors always withhold information about how much commission they earn by selling these products. No doubt many of us lack skills regarding how the investment market literally operates. These agents turn this weakness to their chief advantage and sell products to boost their financial security when our financial security takes a backseat.

This is why SEBI was formed to regulate the securities market. Its main function is to protect the interest of the investors from wrongdoers. On a rating of 1-10, how much it makes the life of the investor easier? We need to ask ourselves.There are separate plans that doesn’t give commission to the distributors. Why do they not tell anything about it? The answer is known to very few.  Most of the salespersons, marketers and distributors of financial products only goal is to satisfy their own self and investors wellbeing is the last one they care about. Selfishness is in their subconscious or conscious mind and aggressively they try to sell these products in full speed.  

The author himself has invested in various products and was cheated big time. Because of this reason, he has taken an authentic effort to write a book to avoid investment traps by the readers. He is an engineering graduate but owing to amoral people, he took active interest in studying these subjects and acquired enough knowledge to educate us.  He says, distributors ignore good products that warrants the investors huge amount of incentives for it doesn’t make these people earn profitable commission. Is it true or false?

The value of Rs.1, 00,000 today is how much 20 or 30 years from now bearing in mind, the inflation? Do we know? The author has a valid point. We also need to be cautious and analyze the pros and cons before putting our precious money in any kind of investment. Just keeping the money in our house locker afraid of getting cheated is also stupidity. Undeniably, the author has a selfless attitude to help the readers avoid investment traps. Answers to questions such as the below are given inside the book.
  • Which insurance plans we can invest?
  • How to calculate our net worth?
  • Which are the most popular and attractive investment options considering the current survey in India?
  • Investing in mutual funds, stock market, insurance policies, fixed deposits, etc how can they be supportive?
  • Should we buy more properties like houses to secure our future and our loved ones future?
  • How to manage our expenses as an individual?
  • How many months worth of expenses should we keep as emergency fund?
  • How much money is needed to fund our children or future children's education for pursuing master's degree assuming the period 2038-2042?
  • What is CGAR?
  • How far we can trust the advice of the relationship managers?
  • If we depend on brokers, do we know the term, ‘Churning’? 
  • Do we have to carry our credit cards and cheque books everywhere we go?
  • How safe is to have faith in the ads?
'How to avoid investment traps' acts as a financial guide and it doesn’t turn us an expert. The figures does help to improve our life financially as a point of fact. My own judgment about the book is , it deliberately empowers us to make error free choices when it comes to investing. If we are not self-sufficient and are greedy in accumulating wealth, then this book is not for us. Living a life without stress involves not falling prey to investment traps and ignoring all things that separates us from becoming a good human. Going through this book helped me form a new understanding.

Asking the right questions to the financial advisor is a must if we opt for large scale investments.  The suggestions given at the end is exceptional and the final word by the author is correctly reasonable. Overall, I felt the book could have been improved a little more for everyone to perceive and if summarisation under each chapter were given, it would aid in making a difference in the mindset of common readers. In some pages, adequate spaces were not given (very lenghthy para) and it prevented me from concenterating a bit. The book is a non-fiction and contains relatively short number of pages, hence it hardly matters .

Rating 3.5/5

Excerpt 

To protect the retail financial consumers; unfortunately, there is no simple and one stop grievance redressal process or mechanism available in India as yet. In the current arrangement, there are multiple regulators and multiple forums;some of these are SEBI, RBI, the banking ombudsman, the insurance ombudsman, Insurance Regulatory and Development Authority of India (IRDA), and Providentt Fund Regulatory and Development Authority of India (PFRDA).

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