Managing your money

Wealth Management
at Regular Weekly Meeting of Rotary Club of Calcutta on 20.07.2010

The speaker clarified at the very beginning that his talk is not about
wealth creation, but all about guiding and making people disciplined
in wealth management.

The fundamental challenge is to use the time horizon of investment
to optimize our investments. We need to first manage timely
investment. Equity investment in long term is appreciable, but very
risky in short term.
Fixed return investments actually deplete our wealth, as it gives
lesser returns than current rate of inflation. It doesn't help in wealth
creation at all. But still there are many people who swear by FD.

Wealth Management is fundamentally about keeping an eye on our
financial goals and beating inflation, growing & preserving wealth,
protecting family & thereafter transferring wealth from one
generation to another. This is the simplest formula.

To grow wealth over time, one has to take some rational, short,
medium and long term risks. Boom - Recession -Bust - Recovery
(a typical cycle).

It is important to plan for financial requirement when the time of
funding higher education and marriage is to be planned well in
advance, hi wealth creation, one needs to buy more when markets
are at the lowest. 80% of the
results of our wealth creation is dependent on where we have
allocated our assets. Best hedge against uncertainty is to
invest in Gold but not many people thought of buying gold when
Lehman Brothers & Macro Economics collapsed.

Preserving wealth and protecting our family is of primary concern.
Creating and growing wealth is fine, but preserving wealth is
difficult as there are many excuses to lose the wealth.

Certainly not to put money in Fixed Deposits as the returns are
lower than the present rate of inflation.

Investment in family business is to be made only when it is going
through a low phase, otherwise it is not a wise decision.
But what happens in reality is just the reverse. When business
is doing well, there is no need to invest. Actually it should be
done during lean period, as every business goes through up's
and down's.

Diversify our wealth into different stocks & bonds-use this as a
risk management tool - fund houses, funds, style of investing,
different sectors, global funds, derivatives for hedging and
protection, insurance to protect our family.

Regarding transferring wealth, it is important to note that having
created, grown and handled wealth over a long period of time,
it is critical that the transfer of wealth happens in a manner which
is hassle free. Always prepare a 'Will' or form Trusts' to hedge risk,
as the future is uncertain and unpredictable.

Lastly, the financial market is now focused towards Emerging
Alternate Asset Classes other than traditional Equity, Debt,
Fixed Deposits, etc. are - Global Equities which has international
exposure, Gold, Real Estate Venture Funds, Private Equity
Venture Capital Funds (invest generally in unlisted stocks),
Art Funds, etc.

Thank you.

Author's Name: Dr. Dipak R. Sarbadhikari
Contact address: Click here
URL of
Updated: 08 Aug 2010

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