{"id":11329,"date":"2017-05-12T18:06:01","date_gmt":"2017-05-12T12:36:01","guid":{"rendered":"https:\/\/blog.fundsindia.com\/blog\/?p=11329"},"modified":"2019-06-06T18:23:29","modified_gmt":"2019-06-06T12:53:29","slug":"3-investment-wisdom-avoid","status":"publish","type":"post","link":"https:\/\/www.fundsindia.com\/blog\/personal-finance\/3-investment-wisdom-avoid\/11329","title":{"rendered":"3 pieces of investment ‘wisdom’ you need to avoid"},"content":{"rendered":"

\"Avoid<\/a><\/p>\n

India has a rich tradition of passing down teachings and wisdom through oral communication. While in older times, it was sages passing down knowledge to their pupils, this tradition has now expanded to include everyone. Elders from all walks of life now pass on their learnings and wisdom to guide the next generation. They do so to help them navigate the world with ease and to live a safe, fruitful and prosperous life.<\/p>\n

They are often communicated to you by your parents or other elders in the form of advice and suggestions. However, well-intentioned as they may be, there are many cases where your elders\u2019 advice could actually end up being bad for you.<\/p>\n

In this piece, I\u2019m going to highlight three such outdated pieces of \u2018investment wisdom\u2019 that don\u2019t hold good anymore:<\/p>\n

Open<\/span> a FREE Account Now! <\/span><\/a><\/div>\n
    \n
  1. \n

    Physical gold is a good investment – Since time immemorial, gold has been coveted and prized as a \u2018valuable\u2019 metal. Even today, gold is considered to be a sign of prosperity. However, when buying gold you need to be clear on what you\u2019re buying it for – if it is for ornamentation, jewellery, coins and the like, then sure, buy away. However, if it is for investment purposes, financial gold is much more suitable than physical gold<\/a>.<\/p>\n

    Financial gold refers to instruments that derive their value from gold, and have gold as the underlying investment – but on paper. They are cheaper as there are are no making charges or wastage charges. You don\u2019t have to worry about storage and theft, and they\u2019re easy to buy and sell. Do note: Our experts recommend keeping your exposure to gold at around 8 to 10 percent of your investment portfolio. This will help you diversify among other asset classes so that one acts as a cushion when another under performs.<\/li>\n<\/ol>\n

      \n
    1. \n

      Real estate gives superior returns: Another favourite of the old-guard is real-estate. Many people harp on about how their property fetched them massive returns on selling it. However, what these people fail to note is a) the time period over which they \u2018earned\u2019 these returns, \u00a0b) the other costs over and above their purchase price that went into maintaining their property and c) comparing the returns of the same investment made for the same time period in other investments such as the equity markets.<\/p>\n

      If you factor these in, the returns don\u2019t seem as impressive anymore. In fact, the equity market has given significantly higher returns than prime locations in Mumbai<\/a>. The only reason people \u2018earn more\u2019 in real estate is the \u2018discipline\u2019 they show in holding on to their investments. Similar good investing habits – from proper research to the discipline to hold on – in equity investments could garner far superior returns. (You can also listen to our team talking about real estate and the myths associated with it here<\/a>)<\/li>\n

    2. \n

      Fixed Deposits (FDs) are the best way to invest: There was once a time, back in the 90s, when bank FDs were delivering double-digit returns – some as high as 12%. However, that time is in the past. Today, 3-year or longer FDs from banks such as SBIs have an interest rate of just 6.25% per annum before taxes (Source: SBI). After taxes, this comes down to just 4.3% for those in the highest tax bracket! This barely beats inflation, giving you scarcely enough growth to build any significant amount of wealth.<\/p>\n

      Open<\/span> a FREE Account Now! <\/span><\/a><\/div>\n

      On the other hand, mutual funds have delivered significantly higher returns. Long-term debt mutual funds as a category have delivered an average return of 9.8% over the three-year period ending May 11, 2017 (Source: Value Research Online<\/a>). Add to this the indexation benefits<\/a> that these funds enjoy, and your post-tax returns end up being significantly higher than those of FDs.<\/li>\n<\/ol>\n

      So, the next time someone pops up with one of these pearls of investment wisdom, make sure you take their advice with a large pinch of salt. Do your own research on what\u2019s the best investment option in the times you live in, speak to a financial advisor if required, and then make an informed decision on what\u2019s best for your money. Remember, old isn\u2019t always gold.<\/p>\n","protected":false},"excerpt":{"rendered":"

      India has a rich tradition of passing down teachings and wisdom through oral communication. While in older times, it was sages passing down knowledge to their pupils, this tradition has now expanded to include everyone. Elders from all walks of life now pass on their learnings and wisdom to guide the next generation. They do […]<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[66],"tags":[265,289,148,435,518,290],"yoast_head":"\n3 pieces of 'investment wisdom' you need to avoid<\/title>\n<meta name=\"description\" content=\"Sometimes, your elders\u2019 advice could end up being bad for you. 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