Ask us: on investments
The Hindu
Q. Recently, my wife came across a close contact who is advising investing in an agro- company based
Q. Recently, my wife came across a close contact who is advising investing in an agro- company based out of Chennai. These kinds of companies are asking to invest amounts of ₹1 lakh/₹ 2 lakh etc. and are giving guarantees of 15% and above, plus investment back in one year. I have advised her against it because quick money is never true and easy. Is there a way for us to verify the genuineness of such schemes in India?
Prabhu
A. It is a good thing that you are being cautious with such solicitations. When you are investing in a company — the first thing you need to know is whether it is a company registered under the Companies Act and has the right to take deposits. If not, they have no business taking public money. Even if they show proof that they are allowed to take deposits, it best to avoid organisations that take deposits are not NBFCs registered with RBI. This is because when a deposit-taking entity is regulated by RBI, you have a ready regulator to approach when in distress. In the case of companies under the Companies Act 2013, such redressal often goes to a court of law. Next, check the credit rating of the company. For a retail investor taking risks in options with a rating of below AA+ can be risky. If the company or LLP is unable to produce these proofs, it is best avoided.
Q. I am 23. I want to earn in the stock market. I am currently unemployed. My parents gave me ₹60,000. Where and how do I invest?
Yuvraj
A. If you are new to investing, it is good to start at least a small sum in simple and good products like PPF. You can then learn a little more about money-investing by reading. You can consider reading books such as Let’s Talk Money by Monika Halan and You can be rich too: With Goal Based Investing (P.V. Subramanyam and M. Pattabiraman) to know the basics of money and financial planning.
You can go to mutual fund websites to know the basics of mutual funds. Once you understand this a bit, you can then try to read about how stock markets work and how to understand a company’s financials and business prospects. This by itself is a journey. If you want to do trading, it is best that you first understand the vagaries of the stock market before doing so.
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