Who can you trust nowadays? We have seen blue chip companies fall sharply in value on management concerns (Eg Sun Pharma). We have seen AAA rated companies default (IL&FS, DHFL). Big audit firms are being questioned and even rating agencies are under scrutiny.
Financial products that invest in public markets are affected by the fall in market’s trust. Your investments in mutual funds, PMS, NCDs and Bonds are all affected by the lack of trust.
Where do you go? You can never believe an annual report as auditors are under a cloud and you can never believe a credit rating as rating agencies are under a cloud.
Keeping your money in bank deposits do not help, as inflation eats away your savings. Physical assets like real estate too are tricky given issues with builders, liquidity and pricing. Too many individuals are stuck with EMIs, non delivery of assets and delay in completion of projects.
Gold is seen as safe but prices have stagnated for years and gold is a non productive asset.
Investing abroad is one option, but again trust is a big question mark in the developed world as well, as seen by the 2008 credit crisis that wiped out savings for many.
Sounds bleak but there is one thing that you can trust and that is knowledge. The knowledge can be yours, developed over the years, which is the best for you. The knowledge can come from a Knowledgeable and Trusted Advisor, again from relationship built over the years. Knowledge can come from other sources too, as long as you know where to find a trusted knowledge source.
Invest in knowledge, a cliche but worth repeating, and that will be the biggest boost to your savings.
Regards
Arjun
