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A Crorepati's Misfortunes

The KBC connection makes Sushil Kumar a good story, but it doesn't sound so different from what supposedly sensible savers and investors do every day

Some time back, there was a news item about a man, named Sushil Kumar, who had won ₹5 crore in the Kaun Banega Crorepati (KBC) show but is now looking for a job. Though Sushil Kumar has denied any such development, this is just the kind of news that everyone loves. Other people's misfortunes are very enjoyable to most people. Like it or not, a lot of people resent those who win at contests and lotteries. The misfortunes of someone who appears to have got a lot of money for answering a few questions are surely a good occasion for feeling smug and saying 'I told you so'.

However, there are two reasons why the reality is a little more complicated. One, the said KBC winner didn't do badly, and two, most of us who invest actually don't make choices that are better than his. Firstly, despite the gloating headlines, it's clear that the erstwhile quiz wizard hasn't actually become a pauper. Instead, what has happened to him is roughly equivalent to what many who think themselves to be sensible do.

It doesn't look like Sushil Kumar has wasted the money he got. Of the amount that he got after taxes, he has bought a house, bought some agricultural land and helped his brothers set up some sort of businesses. What he doesn't have is an income. The assets that he has acquired don't leave him with any money to meet his regular expenses. He hasn't wasted his money. Instead, he has deployed it randomly, mostly in real estate, without any thought about the actual needs.

Frankly, the KBC connection makes Sushil Kumar a good story for the media, but to my ears, it doesn't sound so different from what supposedly sensible savers and investors do every day. People who have a lot of money don't articulate their likely future needs; they keep deploying it in feel-good real estate or in assets that neither align with their real needs, nor even beat inflation. No one writes about their financial misadventures because they are not a rags-to-riches character from a TV show.

I'm sorry if I sound like a stuck record, but this cannot be emphasised enough. Saving and investing without some amount of planning and projections can be quite useless. It can easily lead you to a situation where you have worked hard and saved and yet you cannot enjoy the fruits of having done so because of illogical investments. As it happens, real estate is often the biggest culprit here. We are unable to get rid of this psycho-cultural hangup about property. People continue to believe that any real estate bought at any price, even with borrowed money, will always turn out to be a good investment. This belief is so deep that even when they are stuck with palpably bad pieces of real estate, they refuse sell, firm in their belief that eventually it will turn around.

The other big problem is the inability to see equity as the right asset class for long-term investments after retirement. Between the mathematical certainty of inflation versus the illusory safety of fixed income deposits, safety will always look attractive and yet inflation will always win.

In practice, there are many more ways to go wrong if one doesn't plan and doesn't make even a minimal effort to make some realistic projections. Eventually, given his background, Sushil Kumar will manage to come through. However, I'm not sure if so many who read headlines about him will do better.