The T-20 investment path – The Indian Express

Today, we do not have the patience to watch five-day matches. Those who swear by Test cricket are from the older generation. Much like the same generation which still goes in for savings in inferior bank deposits where returns are 2.75 per cent in a savings account or 5 per cent in a fixed deposit. The younger population sees the futility of these instruments as the economics does not gel. Everyone wants instant gratification, and why not, because even if you manage 5 per cent on the deposit, you could lose a third as taxes, which makes a mockery of such savings. Quite clearly, banks don’t give us anything significant as a return. The alternatives are more tempting.

The cult of savers has changed into investors. They are looking for a good return and willing to take the risk. This is a major change we see today. Crypto exchanges assure you that they are safe. But it is the exchange that is safe, not the value of the coin, which will be driven by the market. The equity boom is on, and all the unicorns have delivered excellent results. Newspapers are full of founders of startups with beaming smiles as they enter the big league of billionaires. Today, no one is talking about investing in the Nifty companies. It is the new age start-ups that have seen the market nod in appreciation even if the ventures are loss-making. It is just like cricket. We remember who won the World Cup or the IPL or the Challengers Cup but may not recollect when India played West Indies or Bangladesh in a Test series. The stadia say it all, with audiences entering in larger numbers anywhere in the world as the format of the game becomes shorter.

There is a new wave of savings and investments in the country that is evolving quite fast. Bitcoins have given amazing returns; the Sensex at 60,000 is what we like to be a part of. We don’t want prodders like Dravid on the field but Kohli, Jadeja and Pandya are delights to watch. That’s why bank deposits are no longer on our plates. Interestingly, banks today are discouraging deposits with low rates as this is the only way they can manage their balance sheets. There are few deployment avenues and paying 5 per cent interest to savers and investing the deposits at 3.35 per cent in the reverse repo auction is a sub-optimal game.

One would have also noticed that there are no advertisements by banks on deposits. They do not want them. Instead, there are several pullouts on home loans at 6.5 per cent or auto loans at 7 per cent. One could never have dreamt of getting loans at such low rates. It sounds unbelievable but is true. You are not told to save for tomorrow but to borrow more for satiating your immediate needs.

From equities, there has been a swift shift to cryptos, which is still a grey area. The regulators/government are wondering what to do. The issue will be discussed in the winter session of Parliament. But investments have been made and there is no stopping this global wave. Making money on a currency that has no underlying asset like a metal or other currency and is traded on faith is unique; especially Bitcoin, whose originator is not known by face but by just a name. But people have ascribed a value to the currency and finally, in a market, if there are thousands who believe in the value, it gets subsumed.

If this has not been quite intoxicating (the World Cup matches also had relentless doses of surrogate advertising for liquor and tobacco, which came as innocuous water and fresheners), there is another door to a new kind of gaming where you make money by making teams and following the matches. You pay to enter this game and the spoils are partly kept, the rest are distributed to the gamers after paying taxes. The law was first silent, and then confused. But it finally accepted gaming as a skill. Logically, soon we should be able to bet on matches too, if all this is in order.

Cricket formats have engendered passion, and not just from the point of view of the game. But have they also fostered a change in the format of holding onto money, where savings get transformed to investment and risk appetite changes from conservative to aggressive? Will this change? Probably not, in the near future, as long as conventional deposits continue to give inferior returns.

The writer is an independent economist