Geeta is employed in one of the fastest growing segments of India's economy - household support services. She is a cook, a maid and nanny all rolled into one.
Unlike most women of her strata, Geeta's husband isn't a drunkard; he doesn't beat her black and blue and doesn't live off her income. That means she can, and does, save part of her income. But like most women of her background, she is illiterate.
In the past few months she has been scouting around for a scheme to put a few thousands she has been able to save. Banks have refused to open an account because she does not have a proof of residence - at least not the kind RBI mandates.
Recently an insurance agent introduced her to a dream investment. A scheme where she can put just Rs 30,000 in three years and get Rs 16 lakh after 20 years - an annual return of 25 per cent. For the safety of her hard-earned money, the scheme, she was told, was floated by the Life Insurance Corporation of India (LIC).
It was a half-truth that even literates can be fooled with. The scheme is indeed from LIC, but the institution isn't assuring any returns - and rightly so. Last heard, she hadn't put her money in the scheme, because she smelled a rat.
Geeta has a sixth sense that many educated and prosperous Indian's don't - double check on any investment scheme that sounds to good to be true. The consequence, as our cover story estimates, is a loss of at least Rs 10,000 crore a year to retail investors. That's bigger than any financial scam, and is almost entirely self-inflicted.
Most Indians are penny wise consumers, but pound foolish investors. They haggle for smallest of purchases as consumers, but don't bother to cross question or spend five minutes in checking the fine print before making big investments. Preying on investor ignorance and imprudence are sales executives of financial products, driven more by the goals of short-term revenue than long-term relationship.
Investor education is the raison d'etre of this magazine. Apart from our features and cover stories, the MONEY TODAY insight is a section dedicated to educate readers of investment options across asset class - from stocks to real estate to financial virtues of home-cooked food! Starting this issue, we are adding more pages to this section. It's our humble contribution to building up an intelligent financial plan for you.
