Why you should Invest only in Regulated Products?

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Investors are not aware that not all Investments they make are regulated.  We have seen many a times Investors investing money and when they face difficulty in getting back their money they run in to trouble.  Hardly Investors tend to make an Enquiry of the Product details and Regulation before Investing.

It is important for an investor to look at safety of the Product before investing.   While considering safety  one should aks pertinent Question of what happenes if there is a problem to their investments  and how best the grievance mechanism get Resolved? only looking at Returns and Investing is a dangerous method.

In Chennai we have seen in the past many un Registered NBFC Companies which collected deposits could not repay the money on due dates.  We have seen depositors struggling to get their money back.  Majority of them lost their Savings.

Investors lost their valuable savings by Investing in unregulated Products and not been able to recover their dues.  They spend more time in chasing for Return of Money after careless Investing.

Now also we find lots of chit schemes, gold schemes and some share schemes attracting Investors attention. There is so much amount flowing in to these type of Schemes and investors are refusing to learn from their past mistakes.

Investors should understand the risk before Investing  and just chasing Returns or only looking at present returns, Investments should not be made.

We have strong Regulators like RBI, SEBI and IRDA . So Investors should look for Products before Investing and who the regulator is?  Unless this is clear Investments should not be made.

Investors who Participate in the Chit Schemes run by Family and Friends have no Regulation.  May be the luck many a times it runs well few times. It does not mean Schemes are well Run.

It is dangerous to participate in such schemes. No one can Offer Hefty Returns today in a unregulated Product.  Investors should  Prune down their expectations.

The Recent case of Gold Scheme failing in Chennai is a case in point.  Any body can get in to trouble temporarily or permanently.  The case is should we take undue Risk?

What can an Investors do in the event a Shop keeper collecting money under a Chit throws his hands up?

Certainly not much can be done by an Investor since these Schemes are unregulated.

Whenever a Customer make a complaint asking for Refund of money problem starts in many cases.  The hard Savings are put in a Chit with a hope to buy Gold after a certain period.  But in between when problem crops up certainly nothing can be done.

Gold shops always say they give lots of privileges to chit holders with the attraction of certain advantage;  Investors put in their savings in a Chit not knowing it is an unrregulated Product.

Investor should know gold savings schemes are not protected either by SEBI or by RBI .  However Investors can raise the issue with ROC Provided the Collector of Money is a Company  registered under the Companies act.

Again we do not know how accounting is done by the Shops.  If it is is shown as a deposit collected then certain protection is there.  But if is is classified as advances then regulation is different.  Also the period of deposits decides the Case.  If Schemes come under 11 months Savings Schemes and matures on the 12th Month, customers are supposed to buy Gold in the end of 12th Month.  If Customer extends to 13th Month the Purchase of Gold the amount Out standing becomes unsecured Creditors.  Advances are not Regulated by RBI.

SEBI is trying its best to bring all Collective Investment Schemes under its Umbrella.  But these 11 months Schemes don’t come under SEBI,  customers should be careful and watchful rather than falling prey.

Consumer court is an Option if there are Proper documents to prove.  But how many Customers are able to pursue the Case in Consumer Courts.

Government has done well to bring in Gold Bond which is an excellent method to Invest.  Let us move towards Paper Gold.  Gold Investments is meant for protection.  Let us not over do by buying Gold  and keeping them in locker.

Gold Bonds ETF and Soverign Gold Bonds of the Government are excellent Products Regulated by SEBI and RBI.

Investors should always look for Products which are Transparent, Cost effective and well Regulated; Return alone should not be the motive to Invest.

Unless we learn this we will Continue to Suffer.  We keep getting Complaints time and again and nothing much will come out of Complaints or Investigation.

No Wonder SEBI may examine Crypto Currencies soon.  The Rising Popularity of Crypto Currency and the increasing demand & entities looking at raising fund through Initial Coin Offerings has attracted the attention of SEBI.   This issue will be known as ICO (Initial Coin Offer).  But at the moment it is not under the purview of SEBI.

Let us hope Investors become wise before parting their Money.

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