Why most of the Indian are not Smart Investors?

I was recently creating a project for Welingkar Institute as I have joined MBA distance learning program. I was watching videos of various industry experts, professors, entrepreneurs, alumni etc. Some entrepreneurs have shared their experience, how they started their businesses and made it successful by innovative, integrative and strategic management then I came across one of the videos of Prof Raj Kumar and explained about the topic Savings vs. Investment.

Prof. Raj Kumar is expert in the field of Investment, Fund Management, Wealth Management etc. He has explained how Indian are good savers but bad investors. We all have been told to make saving since our childhood but no one has ever explained where to invest the money smartly.

When we invest money we never consider the inflation growing around us. Inflation increases at the speed of at least 9% per year. If my this year spend per month is Rs. 10,000 then I will have to spend around Rs. 10,900 next years and in the next following year I will need to spend Rs. 11,881. In this way the spending is increasing year by year.

Live Example: If Mr. Arun saved Rs. 100,000 in 2006 and didn’t invest and kept money at home idle then the Mr. Arun’ saving after 10 years i.e. in 2015 would be Rs. 38,742 (if inflation rate is 10% per annum). Suppose we have Rs. 100,000 in hand and if don’t invest then we are bearing a loss of Rs. 61,000 in ten years. This is why we need to invest our money smart to cope up with inflation.

Year	Money Depreciation
2006	INR 100,000
2007	INR 90,000
2008	INR 81,000
2009	INR 72,900
2010	INR 65,610
2011	INR 59,049
2012	INR 53,144
2013	INR 47,830
2014	INR 43,047
2015	INR 38,742

How to Invest Money Smartly?

We need to find various ways to earn smart returns on investment every year. We have to start investing money now onward to gain a future benefit from it.

Ways to invest money:

• Fixed Deposit
• Real Estate (Land, Homes)
• Life Insurance Policies
• Kisan Vikas Patra
• Public Provident Funds
• Gold
• Mutual Funds
• Equity Markets

Things to be Remember while Investing:

• Your ROI on investment should be more than Inflation Rate (10%) i.e. if you have made a FD of Rs. 100,000 at (9% per Annum) and if inflation rate is 10% then you are actually getting a 1% loss.
• Don’t invest borrowed money
• Don’t invest in fake schemes (Returns more than 20% per annum)
• Do invest in long-terms savings plan if you are 20+
• Do invest in short-terms savings plan if you are 40+
• Try to get ROI greater than inflation rate
• A penny saved is penny earned (Quote by Warren Buffet)
• Don’t take loans if not needed
• Don’t use too many credit cards (credit card debt may affect credit score)

Conclusion:

Prof. Raj Kumar has greatly explained how to invest to cope up with future expenditures. If we start investing for future expenses then we wouldn’t need to depend on others when we are aged and need medical expenses. Start investing when we you are young then it will provide you great benefit when we would retire.

Source: http://www.anuraggolipkar.com/finance/why-most-of-the-indian-are-not-smart-investors/

Difference Between Traditional Thinking And Integrative Thinking?

“Integrative thinking is a discipline and methodology for solving complex or wicked problems”

– Roger Martin

Integrative thinking was originally invented by Mr. Graham Douglas in 1986. Whenever there is opposite thinking there is integrative thinking.

Traditional thinking is nothing but the way things are done as told by someone else. Integrative thinking is much different than traditional thinking. Traditional thinking uses either or approach while Integrative thinking follows only and approach. When a problem arises someone will always follow the traditional thinking to solve problem in only one way while we can have multiple options in integrative approach. In integrative thinking we find various solutions of the same problem and then apply it accordingly to solve them. After doing the same thing through various methods we find the best solution which can yield the result in effective and instant way.

Example:

A person wants to study an MBA but he is working so he can’t afford to leave a job. He has to either quit job or forget MBA (Traditional Thinking). Person decides to join a part time MBA or distance learning program (Integrative Thinking) so that he doesn’t have to lose his job and he can learn MBA too.

Integrative thinking is a decision making process in which an individual balances tensions between opposing variables.

Live Example:

Brief: Lee-Chin was born of bi racial parents – Jamaican and Chinese. Lee-Chin had seen very hard times in childhood and he was an eldest son among nine brother and sister. Lee-Chin moved to Canada to attend McMaster University. He worked in many odd jobs after graduation like tele-caller, tele-executive etc.

In 1983, he borrowed $400,000 and invested in stock market and he bought AIC Limited, a tiny investment advisory firm in 1987. He followed Warrent Buffet‘s approach to hold ten, twenty stocks forever.

In 1999, AIC Limited owned assets worth $600,000. In the same year IT revolution took place into US‘ stock market and traditional stock market shifted to “tech stock”.

AIC Limited lost many customers and started losing many reputed clients because AIC Limited was operating on technology-less i.e. paper-based system. Company was going through serious losses and the stock price was also decreasing day by day.

Solution:

Lee-Chin had to think about the future of AIC Limited and many people suggested him to sell AIC Limited but he didn’t want to. A traditional thinker must have sold it but Lee-Chin belived in technological changes happening around him wanted to resolve it through integrative thinking.

Lee-Chin had to choose:

Sell shares to cover redemptions?

Diversity into technology stock?

or Stick to the strategy “buy, hold and prosper“? Hold this strategy.

He didn’t want to sell stocks to fund redemptions, but with the balance left with AIC, along with whatever he could borrow from banks, he invested in a grand old financial stock of Mackenzie Financial Corporation in his portfolio which he and his staff knew well. He transformed paper-based stock trading into paperless stock trading system. As a result stock price jumped from $15 to $18 over night.

In April 2003, AIC sold Mackenzie at #30 per share made $400 million handsome returns from it. In this way Lee-Chin had made is company profitable by integrative thinking.

We all have the integrative thinking but we don’t use it in our personal and professional life due to time constrain.

Source: http://www.anuraggolipkar.com/integrative-thinking/difference-between-traditional-thinking-and-integrative-thinking/