Simplus

Mr. Gerard Colaco: Some aspects of investment have already been touched upon. For example, an emergency fund is in some ways an investment. However, its objective is more insurance oriented, and we therefore do not consider an emergency fund to be part of our investment portfolio.

Mr. Gerard Colaco: Parking has two aspects. One is emergency funding. The other is pure parking. You are already familiar with the concept of an emergency fund.

An example to understand what is meant by pure parking. Suppose you have sold a real estate property for Rs 40 lakhs. With this money you want to buy another piece of real estate. You do not know whether you will be able to get a satisfactory unit of real estate in a week or a fortnight or a month or 6 months. But, the moment you identify a satisfactory real estate asset, if the price is right, you will want to conclude the deal immediately. So, the period of your investment is highly uncertain. The investment must therefore be very liquid and be readily available when you require it.

Mr. Gerard Colaco: The first purpose, for which people may invest, is for emergency funding and/or the parking of funds.The second purpose for which people invest is to earn regular returns.

When we talk of regular returns for resident Indians, we generally speak of avenues such as:

Mr. Gerard Colaco: A study of the history of growth investments clearly reveals that there are only two avenues of these investments that have consistently beaten inflation over the long-term. These avenues are equity and real estate.

EQUITY / STOCK MARKET INVESTMENT:

Mr. Gerard Colaco: The world’s best experts on investment are unanimous in their opinion that equity is the best avenue of investment ever invented for long-term growth. The problem is equity can also be used for speculation. When you see or hear of your friends, co-workers or acquaintances strenuously doing day trading, margin trading, etc., understand that these people are speculating and perverting this magnificent avenue of investment into an avenue of gambling.

You can invest in the stock market in two ways.