The recent run-up in the equity markets has suddenly spread all surprises and smiles to the investor community. Although it would look too tempting to start investing in this market, lets take a step back and first lets clear off all that we were holding back in our portfolio as bad apples so that we can minimize our losses (and if lucky, we can make some small profits too).

1. ULIPs

I think this would be leading the pack. Simple reason being, 1st Aug 2009 marked the start of “No Entry-load” regime for investments in Mutual Funds. But commission hungry agents turned it into a “No-Entry” regime for Mutual Funds. They stopped selling mutual funds and suddenly turned to heavy selling (read mis-selling) of ULIPs from Aug 2009 to Aug 2010.

If you are one of the victims who was mis-sold a policy in this period, it is very likely that you are cursing the agent / tele-caller till today for the damage done to you. But now, your policy would have completed 3 years of lock-in period. Also, with the current surge in the market, you are most likely to recover your investment amount.

There is a possibility of some “Insurance-experts” advising you that the initial period of heavy charges is over and you should continue. But I would disagree with that. This is because, the charges in such policies from 4th year onwards are lower as “compared” to first 3 years. But they are still higher when you compare them to low cost peers. Thus, it is better to exit them and move on to low cost transparent products.

2. NFOs

Some investors have a myth that one should invest in NFOs as you get units at an NAV of Rs. 10. Whereas if you invest in an existing established fund, you have to invest at the prevailing NAV. Thus, the NFO appeared like a “value deal”.

Totally wrong notion, I would say !! Just because the NAV is Rs. 10 does not make it cheap or value buy. It is still going to invest in companies which have rallied. On the contrary, you don’t really have a track record to see its performance. Many investors are stuck in NFOs of various mutual fund schemes like Reliance Natural Resources Fund, HSBC Unique Opportunities fund, SBI Infrastructure Fund etc. which attracted investor money due to market buoyancy; But after that, investors are holding on to them even to recover their investment amount. Now these funds have just reached NAV close to their NFO price. So after a careful study, whether the fund fits in your portfolio or not, you may choose to recover your investment amount.

3. Illiquid Stocks

The sudden fall in equity markets in 2008 left many investors with holding stocks which went delisted. These were companies with poor corporate governance which did not find it worth to pay the listing fees to be able to get traded on the exchange. Thus, the investors had no other option than to hold on to illiquid stocks. The recent rally has seen many of those stocks reappear on the exchanges. This rally can be used to get rid of such illiquid stocks as this opportunity may not last too long.

The above might give an impression that one should stay away from equity markets to prevent losses. But actually the point is, our selection of wrong products cannot be the excuse for labelling the entire equity markets to be bad. It is like finding pearls in the ocean. Since you have found some crabs that bit you, doesn’t mean the ocean does not have pearls at all. All you need is hardwork, research and disciplined approach. A professional guidance can definitely act as a cherry on the cake.

We look forward to your feedback and comments on the above article. Please feel free to contact us on if you have any questions.
(The views mentioned in the article are personal opinion of the author)








  1. It took me some time when I started investing to understand NFO trap. Agents use phycological weakness similar to Rs 199 instead of Rs 200 to convince in NFO.

    Sirjee can you give more detailed (may be slightly easier also) explanation bursting this NFO myth.

    Nice article overall.

  2. Thanks for your valuable comments Sir !!

    I will make it a point to write about NFO in more detail.

    Thanks again for your visit and feedback. Looking forward to more in future !!

    1. Thanks for the compliments Bro !!

      Surrender fees drastically drops after completion of 3 years !! From 80% surrender charge to 3% surrender charge in some cases !!

      Although 3% is still too high a surrender charge, it is better to bite the bullet as leaving your money with the insurance company will create a dent much higher than 3%.

      In your case, since the policy has completed more than 5 years, the surrender charges would (hopefully) be zero.

      Thanks again for your visit and feedback !! Looking forward to more in future !!

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