Review of Indian President Portfolio by Me
Few days back, when our President Pratibha Patil declared her assets, Money Mantra Magazine asked FPGI team to analyze her portfolio from Financial Planning perspective.
Given below is the portfolio declared by president and review given by me:
President Portfolio
President Pratibha Patil have movable and immovable properties worth over Rs 2.49 crore.
She has a house in Amravati district of Maharashtra worth Rs 39.60 lakh and a 3.82 hectares farm house worth Rs 9.82 lakh. She has inherited 3.57 hectares agricultural land worth Rs 7.81 lakh from her father in Jalgaon and another land worth Rs 20 lakh in Dhule district.
Patil had purchased two agricultural plots of 1.19 hectares and 1.49 hectares in Jalgaon district in 1997-98 worth Rs 3.64 lakh and Rs 2.90 lakh respectively.For immovable properties, the President has primarily relied on traditional modes of investment like fixed deposits, PPF, gold and bonds of infrastructure companies.She has fixed deposits in various banks worth Rs 68.80 lakh, investment worth Rs 29 lakh in Rural Electrification Corporation Limited bonds, Rs 4.71 lakh in Post Office Savings Scheme and Rs 12.60 lakh in Public Provident Fund of the State Bank of India, according to the property statement of March 31, 2011.She has gold jewellery worth Rs 31 lakh and silver articles worth Rs 69,134 as well as Rs 16.33 lakh in her savings bank accounts, besides Rs 1.87 lakh cash in hand.As far as the share market is concerned, the President has invested only Rs 21,775. She has also invested Rs 66,640 in Sanjivini Savings and Investments Limited.My Review
Assets declared by our President have reiterated the fact that Indian investors are still hesitant to trust equities for wealth creation.
If we look at madam’s investment, them maximum share has been lying with FD,REC and PPF. Barring FDs which might have a very short period,REC and PPF are long term investments on minimum five years with fixed interest payout.Even the entire corpus lying in FDs will not be required in the short term.
What has clearly missed out in the President portfolio is the asset allocation approach and a clear understanding of various asset classes.
She needs to identify her goals and the return required.When investing in product like REC in the long term, where interest offered may not be more than 6-7%,she has forgot inflation which might limit the real return to 1-2%.This much return is not enough to create wealth.
Although i never got an opportunity to advise any politician but seeing the portfolio of our President,I personally believe that they too are in need of good financial planners.
You can view the same from the magazine here: