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PERSONAL FINANCE

Not all eggs in one basket ous reasons why people bank with is offering you more interest rate than
Never put all your eggs in one basket. NBFCs, cooperatives and small banks the prevailing market rates, you should
Of late you have been trying to consoli- in their proximity-it could be close to view it with a pinch of salt. While bank-
date and have just one account to have ones place of residence or work or in- ing with someone offering interest
better control of your spread. Mind it, it terest rates on deposits may be higher. rates higher than larger banks, exam-
limits your safety and insurance spread. Human greed is the factor on which ine your risks. If you’re buying deposits
As such all-high value customers and unscrupulous elements function and so from corporates and NBFCs, pay atten-
other depositors who have more than a do some small banks. However, higher tion to the credit rating of the company.
lakh as deposit should invariably more risks may be attached to a higher inter- Institutions are there to make profit
than one account in different banks. Try est rate. and not working for charity.
to diversify your investment and keep As the RBI says that when someone Avoid companies that do not have
many options open. Your money is at an “A” rating because of the higher risks
more risk in smaller banks and other of delays in repayment or default. As
financial institutions. Instead of putting Human greed is such, don’t put more money into a high-
all your in saving bank deposits or FDs the factor on which er-risk option than you can afford los-
in a bank, invest in mutual funds, equi- ing. This also requires an examination
ties and other investment possibilities. unscrupulous elements of one’s risk appetite at every life stage.
That will provide you regular returns and some small banks Don’t trust the friendly employee or as-
sans long-term capital gains. You may sociate of an NBFC or bank. It could be
also explore investing in government function. If someone a marketing trick. Understanding the
securities and post office schemes. various risks associated with banking
offers more interest and investing is essential to financial
High interest, higher risks rate than the prevailing stability. It’s your money after all, and
Risk is absolutely fundamental to in- you need to be careful about whom you
vesting. But as an investor, you have market rates, you entrust it with. It is your money and you
to figure out just where risk really lies should view it with have to be alert about it.
and what the differences are between
low risk and high risk. There are vari- a pinch of salt LETTERS@TEHELKA.COM

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