Let me share two personal stories, one recent and another from 25 years ago.

I have a relative who recently passed away at the age of 50 due to a heart attack. He had a very stressful job and was facing financial pressures as well. After losing his job, he found himself short of money, and it seems (though I don’t know for sure) that he thought an easy way out of his financial troubles would be to trade in the stock market.

He lost his savings and sunk deeper into debt. I am certain that all these stressors took a toll on him.

The second story is even closer. This is the story of my own father, who passed away around the same age as this relative. I have shared this story here. He lost money with a plantation company, and when I visited their office, I was told that the money was gone. I can never forget this episode in my life.

Have a Heart

I recently posted a tweet when a bank in the US collapsed

If one invests in a ‘teak’ company or in the stock market, the person may have some idea that they are taking a risk. However, when a depositor puts money in the bank, they are NOT putting that money in with an upside

I received a few replies back, saying that such people do not deserve to get their money back if they did not analyze the bank’s financials before putting their money in. I have analyzed banks for 25 years and am sure that I know more about banks than these folks. Barring a handful of analysts or insiders, no one, including the top management, can tell you with certainty that the bank will not fail.

You have to be a heartless !@@### (insert your choice of word here) to make this statement.

I have been very numbers-driven throughout my investing life. However, there are areas in life where I draw a line. The safety of a person’s life savings is one of them. You can never understand the despair of a person who has lost his life’s savings

Implicit trust

There are vehicles such as bank FD, government debt, Debt mutual funds etc which have an unwritten safety/guarantee implicit in them. If you make every depositor or investor read the 100 page prospectus or study 10 years of financial statements, the system will come to a grinding halt

Our world works on implicit trust and not everything can be driven by contracts or due-diligence. Do you check the safety certificate of a plane or its maintenance manual before boarding a flight. We implicitly trust the system to make flying safe for us

If a plane goes down, we don’t blame the passenger for it

Even if you don’t consider the humane aspect, you will realize that if you do not the guarantee deposits, the whole system will collapse

Don’t believe me? read about the banking failures of last 100 years and you will understand why regulators and government rush in to protect depositors. Hint: they did not in the 1930s and that led to the collapse of the US economy

Are more regulations the answer

There are a lot of regulations from SEBI, and these keep growing by the day. My partner, Kedar, carries all the burden, and it is tough to keep up. However, considering the number of bad actors and terrible advice on social media, I personally think that’s a small price to pay (for people like us)

Bad faith investment advice and get-rich-quick schemes are not harmless gimmicks. They cost lives and destroy families.