Today I was speaking in a college in Delhi University on the risk aspects of trading in speculative
markets which could be equity, commodity or currency.
It was interesting to note that majority of the participants were afraid to invest their money in equity markets, leave aside trading. Majority of them felt that they would lose their money and were mostly investing in fixed deposits or debt funds.
I asked them as to the conditions which will make them ready to invest in equity markets, what criterion
do they want and which if I am ready to provide would they invest in equity markets.
Their first answer was that they want is that they should not lose money and their capital should be intact and then they should be able to get a better return then fixed return. On later asking more, they said their major concern is of loss and if someone can guarantee them a product which takes care of their capital, they are then willing to invest.
I gave them a suggestion which was that if I show them a product and they invest in it. I made a hypothetical product for them, I said fine you invest an x amount say 100 thousand rupees or one lakh rupees in that product, after 3 years, if the value of investment goes down below your cost price, then you are guaranteed the money back without any loss to you. Plus you will get a nominal interest of say 5% per year. Also, if the value of investment goes up to double then you will get double the return.
All were very happy and they said it is a win win situation and that everyone can invest in such a product where their capital is safe and secure and if market goes up they get return. For that matter a lot of them were interested in investing in Gold and they said that if someone can promise them that they will have a loss after three years, they would invest.
Well, I explained to them that such products are available in financial markets. They are called structured products and their are plenty of wealth managers offering such products to their clients. If you are interested in them, you may approach them.
No one had heard these products and so I see a huge potential for such products with such clients. And mind you these audience were all such who could easily afford such structured products. I find it quite strange that such educated people sitting in New Delhi are not aware of such products which shows that there is a huge scope of such products in India. Or it could be also that such people have been taken for a ride earlier, so they do not trust these wealth managers so are not even ready to listen to such products. They assume that the sellers are ready to cheat them on a small premise.
Structured products can be easily made for investing in Nifty, Gold , single stocks or a basket of stocks.
It is a win win situation for buyer as well as seller.
Please leave your comments below to start a healthy discussion so that the sellers as well as buyers of structured products can gain from this knowledge.
If you are a seller of structured products, your comments would certainly invite the buyers and if you are looking for such products to buy, then give your comment below so that sellers can approach you.