The Hindu Business Line : The pleasure dimension

We all consider `risk' and `return' while investing. But what about... pleasure? After all, since the ultimate goal of investing and making money is pleasure, why not mix in `pleasure' during the process of investing itself.

What is wrong with the `risk' and `return' preoccupation?

An exclusive focus on risk and return provides an incomplete perspective while investing. Even after thorough research and utilisation of professional help, returns of growth assets are largely unpredictable. Risk too is an abstract concept. While diversification helps to an extent, there is little that can be done to protect ourselves from unforeseen events. By adding the `pleasure' dimension, it forces us to diversify our investments and take a broader view of the investing world.

`Playing' with money

So how can we use investments to maximise our pleasure in life? Clearly, investing in our own home and its continuous improvement gives us the double advantage of capital appreciation and the joy of living in a nice space. Vacant land, especially in the suburbs, gives us the opportunity for a fruit and vegetable garden, a picnic spot or a weekend getaway, or space for any hobby of our choice.

By purchasing jewellery and art that we like, there is visual appeal and the pleasure of wearing and owning beautiful objects. Likewise, there are many avenues where we can indulge in activities we like and earn a bit of capital appreciation as well.

What to watch out for

But it is not all hassle-free. Many of these investments for `play' and `pleasure' involve low liquidity, high transaction costs, unreliable estimates of market value, risk of defective goods and title and considerable time, effort and cost to maintain these assets.

The right mix

Pure monetary assets such as stocks and bonds are highly liquid, have more transaction costs and are easy to manage. On the other hand, hard assets such as real estate and investments in personal items provide avenues for enjoyment but require time and effort. The key lies in tailoring our portfolio to include all these choices and have a balanced distribution that meets not only our financial criteria, but also matches our hobbies, time available and cash flow situation.

(The author is former CEO, Kothari Pioneer Mutual Fund, which is now part of Franklin Templeton.)

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