Combining insurance and investment is tricky

Those looking for international diversification should opt for investment options which have high liquidity.

“My best investment so far has been in agriculture land,” says Yashish Dahiya, CEO and co-founder of PolicyBazaar.com, an online insurance aggregator.



Before turning entrepreneur, Dahiya worked with First Europa, a global online insurance broker, as CEO. He has also worked with an online travel aggregator ebors.com as Managing Director. Excerpts from an interview:



How much do you regularly set aside for investments?



Ideally, a person should be investing close to 30 per cent of his salary. My case is an exception as my family is abroad and I end up paying high education and tuition fees. I still try and invest as much as I can and keep only about 15 per cent of my pay cheque for personal expenses.





How has your allocation to different asset classes changed over the years?



During the initial stages of my career, the focus was cost reduction through home ownership. After that, it shifted to creating a second source of income which also serves as a means for earnings after retirement — rental properties. Finally came the low liquidity, high growth, low risk opportunities like agricultural land or commercial properties.



How have you built your insurance portfolio?



A good insurance portfolio should consist of term, motor and health insurance.



While motor insurance is compulsory, term and health insurance is dependent on your personal requirements and the number of dependents you may have. Since my family is based in the UK, they have already been provided with basic life and health cover there. In India, I have a medical insurance policy and a motor policy for my car.



Do you advise combining one’s insurance and investment needs?



Combining insurance and investment can be tricky so I would suggest avoiding it unless a person has complete understanding of the product. Many investment-based insurance products can be quite complicated and have a lot of hidden costs. My advice is whether insurance or investment, it’s always best to go with simple products or those that are what they say.



Have you invested overseas?



My only overseas investment is a house in London where my family is currently living.



What is your advice to those looking for international investments?



There is a lot of stability in developed markets, so investment opportunities for an individual, if available, should definitely be considered. My advice to those looking for international diversification is to opt for investment options which have high liquidity. This is to avoid any difficulty that may arise due to long distance trading.



What has been your best and worst investment so far? What lessons have you learnt from this?



My best investment so far has been in agriculture land. This was because the location of this property was in an area where development was imminent. My worst investment, on the other hand, has been the Expedia stock back in 2006. I feel this was not a sound decision because single stocks, even when one has an understanding of the sector, can be very volatile.



Though I understood the online travel sector well, I made a bet which went wrong.









>vardhini.c@thehindu.co.in

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