Download Empowering the Retail Investor

Empowering the Retail Investor
Ajit Dayal
Chairman,
Quantum Information Services Limited
Your money matters!
• Household savings,
+23% of GDP, Rs
5,533 bn (US$ 118
bn)
• Corporate savings,
+4% of GDP, Rs 895
bn (US$ 19 bn)
• Government savings,
- 1.1% of GDP, minus
Rs 253 bn (minus
US$ 5 bn)
July 7, 2003
100%
80%
60%
40%
20%
0%
Households Corporates
PSUs
-20%
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Money flows into shares and
debentures declining.
• Household sector put
less money in
financial assets
• Within financial sector
the household sector
put less money in
shares and
debentures
20.0%
15.0%
10.0%
5.0%
1982-86 1987-91 1992-96 1997-01
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New products and channels for your
investment flows
• Directly into stock markets
• Mutual funds: equity, debt, balanced
• Insurance policies: new companies, some
product changes
• Bank deposits: new banks, new products
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You make people rich!
• Mutual funds control approx Rs. 1,034 bn,
(Rs 103,400 crores) a 1% average fee to
the fund manager gives the AMC revenues
of Rs. 10 bn (Rs 1,000 crores) every year!
• Trading volumes of avg Rs. 40 bn (Rs
4,000 crores) per day generate broking
commissions of approx Rs. 26 bn (Rs
2,600 crores) every year!
July 7, 2003
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Do they make you rich?
(Sensex)
6,000
5,000
4,000
3,000
2,000
Jul-93
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Mar-95
Oct-96
Jun-98
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Feb-00
Oct-01
Jun-03
6
At the very least, do they provide you
with a service?
• Educate – help make an informed decision
• Discuss alternatives that benefit you
• Advise, based on your situation, not theirs
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Scams, scams, and more scams….
•
•
•
•
•
•
•
Murarka Finance, 1987
Mazda Leasing and Mehta, April 1992
Morgan Stanley Mutual Fund, April 1994
tMt = TNT, 1999 – 2000
Mastershare and UTI 1988 – 2002
??
You choose the alphabet, there is a
“scam” around it…..
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Programme, GIWA
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Greed: Two hands to clap!
• The financial “services” industry wishes to
make quick money,
• Investors wish to make “quick” profits,
• Greed on both sides
• Invest, do not speculate!
• The regulator will try to help you but will
fail! – by definition has to fail (SEC in USA,
SIB in UK, SEBI in India)
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Programme, GIWA
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Therefore…
• Keep your money at home, under a
mattress?
• Step out into the world with realistic
expectations – don’t be greedy
• Select a product or advisor that works for
your long term benefit, not for a short term
return or fee
• Buyer beware!
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Programme, GIWA
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“Tip” of the day…
Information => Power
+
Discipline
+
Patience
=
Returns
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Programme, GIWA
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