12:01 AM, November 19, 2013 / LAST MODIFIED: 04:28 PM, November 17, 2013

Penny Wise

Please don't put all your eggs in one basket

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By Nasreen Sattar, Former CEO, Standard Chartered Bank, Afghanistan

Many of us use more than one bank or non-banking financial institutions (NBFI) to invest our savings. I think it is imperative that we do so -- as the old proverbial saying goes 'Don't put all your eggs in one basket.'
With declining interest rates on deposits there are institutions that are offering very high rates on investments -- I know many who have been lured to move their investments from their current bank or NBFIs in the hope of getting better returns.
One wonders how can these 'institutions' offer such attractive rates if the others can't. It would be wise to do a background check before you intend to accept the 'offers'!
If you put all your eggs in one basket, when you are ready to sell them, and if anything happens to that basket, all the eggs will be gone. So it is always wiser to put the eggs in several baskets, for safekeeping.
Similarly you should distribute your investments into several banks of good reputation and NBFIs. Never get tempted by high returns – always remember high returns means high risks.
We all know what had happened to the share market – today many people have lost all their savings or most of it as they invested all their hard earned money into shares.
Greed is a powerful instrument and sometimes we tend to lose our sense of logic or common sense. I remember a few years ago when the share market was at its peak I decided to invest a chunk of my savings into it -- the first few months I started earning so much, I was very tempted to invest more.
Fortunately for me good sense and advice from banker friends prevailed and I refrained from doing so. The market crashed after that and still I lost quite a lot– it taught me a good lesson, never succumb to greed and 'earn less, but earn safe'.
'Putting all your eggs in one basket' also applies to so many day-to-day things. When applying for an entrance into a college make sure you apply to many so that if one fails you have back-ups. I have seen frustrated young people who have applied to one college and the disappointment when their admission was denied. There was no time to apply to others and therefore a whole year lost!
We must learn from our mistakes and refrain from temptations however, attractive they may be. Remember to keep your options open and not to rely on only one 'source'.

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