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Managing money: How to find a jewel of an investment
Published on Mon, Nov 03, 2008 at 15:54, Updated on Mon, Nov 03, 2008 at 16:30 in Business section
Tags: Wealth, Investment
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You can make the most of your money. The trick is to constantly hunt for opportunities to create wealth.
Opportunities exist everywhere. All it takes is to think 'out of the box' and cash in on the right opportunities at the right time.
Here are some real life examples that show how a slightly different approach can go a long way in helping you find that jewel of an investment!
1. He bought real estate in the prime location of Mumbai!
South Mumbai is known for its exorbitant property prices. However, there are some pockets in South Mumbai which are available at one fifth to one tenth of the highest prices. I met someone who decided to buy a tiny piece of real estate (a 100 square feet room in an old dilapidated building for around Rs 5 lakh) in one such area, that was likely to be developed shortly.
The outcome: This building would get into re-development sooner or later. Whenever that happens, as per laws prevailing, he will be entitled to a room of minimum 100 square feet and up to a maximum of 250 square feet. All he has to do is wait patiently for a couple of years.
The advantage: As per the prevailing scenario, the new building would have a rate of Rs 10,000 per square feet. If he sells at that time, he stands to get about Rs 10 lakh to Rs 25 lakh, depending on the size of the room he gets. There are enough buyers in that area, so liquidity is not a problem. Even In the worst case, he will have a property that will appreciate gradually. Besides, he will also get rent from the builder if and when the building goes into reconstruction.
2. They invested in companies with a demerger plan
During the last two years, there were announcements of demerger of companies. Whenever a demerger takes place, free shares are issued to existing shareholders of the demerged entities.
Investors holding shares of such companies made twice as much from their existing investment, in a short span of time (around six months).
Some examples are TV18 and Network 18, Indiabulls and more famously, the Reliance demerger. Even in today’s market conditions, you would get returns that are equal to at least five times your investment if you had invested in Reliance, prior to the demerger.
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