“Buss Naam hi Kaafi hai” might be an impressive punch line for our favorite actor or to promote some product, but when it comes to making investment decisions, go by what Shakespear says, “What’s there in the name ?”
Although there have been numerous arguments for regulation to be made for the nomenclature of the financial products, so that the common investors are not cheated. But as smart and aware investors, we cannot let the companies take us for a ride, till the time the regulator does not take any decision on the same.
The most misguiding nomenclature is for the ULIP pack. A “Smart Kid Plan” doesn’t ensure (or rather certify) your kid to be smart (you don’t even need his certificate, do you?) Nor does a “Young Star or Young achiever plan” make your kid a star or an achiever. A “Headstart Plan” does not necessarily give a headstart to the kid, and neither would a “Child dream plan” can assure to fulfill his / her dreams.
The nomenclature for all this plans is to hit at the emotional aspect we have towards our children. The companies and the agents canvass the client targetting their sentiments for their kids and convince them to such an extent that “If you really love your child and want to do something for this, then only this plan can do that”.
Agents !! Please give me a break. Just because I love my child, does not give you a liberty to take me for a ride. What you are trying to sell me as a child plan is basically a ULIP ( Refer to my article “Look Before ULIP” for more details on ULIPs). By now, I am very well versed with the dark side of ULIPs, thanks to media. I know how to plan for my child. Yes, I understand, that in order to beat inflation, I will need to invest in equities. But, that does not mean, that the ULIPs or the child plans (just because the names suggest so) are the only options available with me. I can very well create a well diversified portfolio by selecting 3-4 good funds and starting an SIP. I will take a term insurance for myself to take care of my insurance needs. This way I will secure my child’s future even if there was some unfortunate mishap to take place. By this way, I haven’t got any fancy name for my plan but I can make my child smart, star, achiever with my own plan.
When it comes to misleading names, mutual funds come at no exception. The “Balanced Funds” are not really balanced (The word balanced gives a picture of a 50:50 equal proportion of debt and equity to a layman investor).
The “monthly income plans” do not give you assured monthly income. So those who are retired and thinking of MIPs analogous to MIS of post office, this is a wake up call. Although MIPs are debt oriented hybrid funds, targetting capital protection, it can be a good alternative for your fixed deposits. It cannot be the right product to provide you monthly income for your routine expenses, especially when you are retired and dependent on that income.
In case of a health insurance , a “Cashless” facility need not be actually cashless. At times, you might be required to pay to the hospital from your pocket and later get it back, once the hospital receives an authorization from the health insurance company.
The point I am trying to make here is, please do not get carried away by the name. There might be much more to read into the product, than what is apparent by the name. Although it is a generic perception that the name would be a reflector of the nature of the product, the truth might be different. On the contrary, this perception of the investors is used by the companies to name and market their products to attract investors.
We look forward to your feedback and comments on the above article. Please feel free to contact us on saurabh.nidhiinvestments@gmail.com if you have any questions.
(The views mentioned in the article are personal opinion of the author. The readers are advised to use their own judgement and consult their investment advisor before making any investment decisions.)
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Prof. Saurabh Bajaj is an Author, Mentor, Motivational Speaker and Wealth Planner.
He has done his MBA from Narsee Monjee Institute of Management Studies (NMIMS) Mumbai, one of the top 10 management institutes in India. He holds the prestigious FRM (Financial Risk Manager) degree awarded by Global Association of Risk Professionals (GARP), USA. Till date, there are less than 15,000 professionals in the world, who have been honored with this degree. He has also been awarded CFGP (Chartered Financial Goal Planner) Certification by AAFM (American Academy of Financial Management).
After his MBA, he joined J P Morgan, the second largest Investment Bank in the world. He has worked with J P Morgan as Risk Analyst for more than two years.
Prof. Bajaj also holds an Advisory certification awarded by AMFI (Association of Mutual Funds of India). During his stint at Bombay Stock Exchange, he has handled Investment Management and Treasury operations of the BSE Corpus. He has set up an entrepreneurship venture in the field of Wealth Planning and Investment Consulting under the name “Nidhi Investments” and holds the profile of CEO.
Prof. Bajaj sits on the Expert Panel of CAClubindia.com and MBAClubindia.com as Investment Expert.
He is actively involved in investor education through his blog www.professorbajaj.com which has a readership from 78 Countries all over the world. His articles are also regularly published in caclubindia.com , mbaclubindia.com , totalca.com , charteredclub.com, bankbazaar.com and lawyersclubindia.com .
He has been awarded the title of “Best Article Writer” from caclubIndia.com in Jan 2012 and has been selected amongst “Top 5 Technical Writers” from all over India in Feb 2013.
He has been invited by various TV Channels like SPIN TV, CNBC TV18, UTV Bloomberg Etc for programs like "Expert Advice" , "What Markets Want ", "Budget Analysis" etc.
He has been invited by Several organisations like Lions Club, Rotary Club, Agrawal Welfare Foundation, Rajasthan Mandal, Agroha Vikas Trust, Union MF, UTI MF, Arthamitra Gurukulam, Vidyalankar Institute of Technology etc for expert lecture on "Smart Investing", "Life is A Celebration", "Financial Freedom", "The Digital IFA" etc.
He was ranked 8th Merit at All India level NMAT which got him selected for MBA programme at NMIMS, Mumbai. He did his MBA with Capital Markets as his specialisation.
Soft Skills has become an inevitable part of every selection process and teaching learning process these days. The students from small towns and tier II cities, in spite of being talented and well equipped with technical skills, are seen struggling in the selection process. This is because of their lack of exposure to these soft skills. Mr. Bajaj has a zeal for training candidates to develop these skills and has been imparting the same on since last two years. This zeal and passion inspired him to set up his own firm called “Knowledge Circle” which aims to train candidates for soft skills.
Till date, he has trained more than 5000 participants from over 220 organizations across various fields of soft skills.
He has been associated with MSBTE (Maharashtra State Board of Technical Education) to conduct Soft skills training workshop for the faculties of Polytechnic Colleges in Entire Maharashtra (Mumbai Region, Pune Region, Aurangabad Region and Nagpur Region) since last 8 years.
He has also been associated with ICAI (Institute of Chartered Accountants of India) for training CA Students on various topics related to Communications skills, Group Discussions etc.
He was invited by Fr. Agnel Polytechnic College, Vashi for a motivational workshop for faculties. He was also invited by Vivekanad Polytechnic College for "Communication Skills and Email Etiquette" training for non-teaching staff.
Apart from these, he has conducted “Capacity Building Soft Skills workshop for Faculties” at ITI Gunj, ITI Pusad, ITI Digras and ITI Umarkhed. This was the first ever soft skills workshop for faculties in the history of ITI’s in Vidarbha. He was also invited by Shivaji Education Society to conduct similar Soft skills workshops for the faculties and office staff of Shivaji Junior College Pusad, Shivaji High School Pusad, Shivaji Vidyalaya Belora and Shivaji Vidyalaya Bhojla.
He has conducted training workshop on “Effective Presentation Skills” for the relationship managers of HDFC Mutual Fund, Andheri Branch, Mumbai.
He has also been invited at College of Management and Computer Science, Yavatmal, College of Dairy Technology, Warud, B N College of Engineering, Pusad, B D College of Engineering, Wardha, College of Engineering and Technology, Akola, Dr.N.P.Hirani Institute of Polytechnic, Pusad etc. for the Guest lecture on “Developing Interview Skills”.
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Nicely written article. I specifically like the portion of ‘Child Plans’ as it helps me comming out of guilt feeling that I did not purchased a chlid plan for my kid but went for SIP in a good mutual fund.
Its really time someone to check on these misuse of names. I guess if regulatory is not doing much such blogs are needed to educate people. Cheater are most affraid of educated people (note: educated does not necessarily mean literate).
Thanks for your valuable comments sir.
And I firmly believe in wearing slippers to protect your feet than expect that someone should cover the earth with a carpet. So better to keep ourselves updated.
And I also fully agree that educated does not necessarily mean literate. Its time all the literates become a little more pro-active and educate themselves.
Thanks again.
nice …..gud job prof sahab…keep this gud work up……
THanks Pooja for your motivating comments.
Please do keep visiting this space for more such articles.
what’s thr in reply with words.
now it’s time to act smart.
think twice before making any of the investment
Very True Sir.
Thanks for your visit and feedback. Looking forward to more in future.
Very well said Sir G….
and thanks for timely giving us a wake up call that don’t follow the name or hindi me ek kisi purane ad ki badi achi line yaad aa rahi h ki…
“DIKHAVE PE MAT JAO APNI AKAL LADAO”
line ka sahi arth samjha diya sir g apne many many thanks and yes waiting for next article sir g….
Thank you so much Giriraj Bhai for your valuable Comments.
Yes indeed I believe that “Dikhave pe Mat Jao, Apni Akal Lagao” and these articles are an effort to make the investors aware and not get fooled by names.
Thanks again for your visits and comments. Look forward to many more in future.
nice article bhai g
jaago grahak jaago
Thanks Bhai ji.
Looking forward to more visits and comments from you.
Again a new Rabbit coming out from the Hat of Professor Bajaj!!!!! 🙂
Your blogs are very interesting to read and also educate people. Keep writing so that educated illeterates like us will try to become literate..;-)
Hope your blogs provide other people an idea to share their knowledge too… !!!
Great work.. Keep it up.
Thanks for your valuable feedback.
Looking forward to more visits and such valuable feedbacks in future.
This article reminds me of ex SEBI chief Mr. Damodaran – “Informed Investment Pays”….
Investor Education is the only way to develop the markets.
Thanks for pointing out the dark side of Insurance sir.. looking for many more like this from you.
Thanks for your valuable comments Varun.
I fully agree that investor education is the only way to develop the markets.
Just one thing, I was not trying to point out the dark side of insurance. Rather I was trying to point out the mis-selling practices about insurance.
Thanks again for your visit and feedback. Looking forward to more in future.
Nice Article, but Sir, this practice is also prevalent ( for ages ) in the Pharmaceutical Industry for AGES. LIVOGEN, LIV 52, GASEX , HAZMOLA to name a few, are the brand names given by Pharma Companies to promote their products. The names are similar to the ailments they intend to focus on
Prof Ravi Chhabra
Dear Prof. Chhabra,
Thanks for your valuable comments. I do agree with you about the misleading nomenclatures being practiced across industries. But not being an expert in the pharma field, I would better not comment on the same being done by Pharma companies. But in case you are an expert in this field, I would definitely request and suggest you to bring such facts to light in interest of the larger audience.
Regards
Prof. Saurabh Bajaj
health insurance should only be taken from reputable companies, you really don’t want to get it from fly-by-night companies :’-
Absolutely right Sir !!
And when we talk about fly-by-night companies, why only health insurance ?? I would say we shouldn’t buy anything from such companies, as there would be a maximum possibility of getting cheated.
Thanks for your visit and feedback. Look forward to more in future.