In this post I would like to share some insights on the journey that many of us go through while investing.

If you are employed, it all starts with your first salary. Your employer would like to credit your salary into your bank account and there you are at the bank to open your bank account. The experience of a self employed person may also not be any different – it would start with the savings or current bank account. This is the starting point.

As time passes, each one of us go through our own paths in the world of investments. I would like you to reflect on you own journey in the investment world. In this journey you would come across a lot of opportunities – some that you benefited from and some you let go. Some investments did not go well. Some turned out to be great though that was not the intention when you started with it. Real Estate would be a good example of that. In the investment world we categories all these opportunities into three broad categories:

Physical Assets: This include Real Estate, Gold and other precious metals

Protection: This includes all kinds of insurance (including pension plans)that you would have bought.Insurance helps you tide over the risks associated with dying too early while pensions help you tide over the risk of living too long!

Financial Assets: These are broadly classified into Fixed Income (or Debt) and Equity (or stock or shares). I will prefer to use the terms Debt or Equity/Stocks as we go forward.

Huge variety of debt instruments are available in the market. Bank Fixed/Term Deposits, National Savings Certificates, Public Provident Fund (PPF), Post office Monthly Income Scheme, Debentures, Bonds, Tax Free Bonds, Infrastructure Bonds, Company Fixed Deposits and so on… You can either invest in these products directly or invest through mutual funds. Debt or Liquid Funds are examples of investing in fixed income instruments through the mutual fund route.

When it comes to stocks, you have a choice of over 4000 listed companies of which around 2500 companies are traded on a regular basis. You can invest in these companies directly if you have an equity broking account or through equity mutual funds. Mutual funds that invest into stocks are termed as equity mutual funds. Some of you may have also set up an Systematic Investment Plan (SIP) in an equity fund.

There are several other products that get structured for sophisticated or High Net Worth Investors like Portfolio Management Services (PMS) or Alternative Investment Funds (AIF) and so and very few of you would have exposure to such products.

All of you are somewhere on your investment journey. Some of you may be still at the starting point viz. investing only in Bank Fixed Deposits. Some of you would have invested in a few other instruments like PPF or Mutual Funds. Though I am keen to discuss equity investing, I realise that it may not be a bad idea to do a quick review of your current investments. In order to do a review, you need to list down all your investments and summarise them so that we can identify the big gaps, if any. A summary would look as follows:

Physical Assets: Real Estate (Rs….); Gold & Precious Metals (Rs….)

Protection: Life Insurance ( Rs….); Health Insurance (Rs…..); Pension Plans( Rs…..)

Fixed Income: PF/PPF (Rs…..); Debt  (Rs…..); Mutual Funds (Debt/Liquid) (Rs…..)

Equity: Direct Equity (Rs….), Mutual Funds (Equity) (Rs….)

In my next blog, I would be sharing with you on how you can  review your current investments. Cheers!