Sensex’s Expensive, Try Investing In Rickshaws

It’s quite tempting to invest in Bombay Stock Exchange Sensitive Index but we know that Sensex is an expensive venture. The number one rule in doing investments is: invest what you can afford to lose. So far, what you can afford to lose isn’t enough to make it big in the investment realm. Do you think the financial barometer of the Indian stock market would appreciate your contribution?

Investing in the likes of Sensex is impressed with overwhelming risks. To be successful, you must have the winning psychology. You have to know when to keep going especially when the going gets tough. Also, you have to step on the brakes when you need to make a stop. The euphoria could make you greedy. The risks could make you fearful. And these traits could make or unmake you as an investor.

If you are a novice in the investment industry and you have limited capital, might as well try other economic ventures. Opening a Mazda Protégé 5 car truck parts isn’t a bad idea. But how’d you like to invest in rickshaws?

To stress, if you invest in mutual funds, it could give a return of around 20% to 30% annually. Rickshaw investment, meanwhile, could give you 12% to 84%. Imagine the difference!

“Almost 47,000 people have taken loans from us for purchasing a rickshaw so far,” said Chandrashekhar Ghosh, founder and chief of Kolkata-based microfinance institution Bandhan. Ghosh believes rickshaws are worth investing in. The company has 411 branches across the nation and gets about Rs. 46 crore monthly to serve 76,000 new people each month.

Bandhan, a registered institution, offers loans, usually paid back in a year, at an interest rate of 12.5% annually and also gets bank funding.

Typically a Rs. 5,000 rickshaw costs Rs. 5,625 under Bandhan’s scheme. The offer is open only to women because they are deemed more creditworthy. But women can borrow on behalf of men.

On the other hand, the owner can pay Rs 125 weekly and pay off the loan in 52 weeks to an institution like Bandhan as against Rs 125 to Rs 245 that a puller would pay as rent to the dealer.

Hindustan Times reported:

There is no formal avenue for the average investor just yet. Smart operators are doing it quietly at high rates while microfinance institutions are offering much cheaper loans to do the same. But there is definitely a fortune at the bottom of the transport pyramid for those who care and dare.

A cycle rickshaw with its various components put together costs around Rs 5,000. The owner needs to get a passing licence from the local municipal authorities, which in Delhi costs Rs. 50 per year. It costs Rs. 400 per month to maintain a rickshaw while rent for enough space to place a rickshaw in a godown would be about Rs. 300, Delhi’s rickshaw pullers say.

A rickshaw puller pays roughly Rs. 25 to 35 per day as rent to the dealer, which on a monthly basis works out to Rs. 750 to Rs. 1,050. A one-time charge of Rs. 20 is all that a rickshaw puller needs for a license, something that is rarely used anyway.

“I make about Rs. 120 a day from which I pay off the rent,” said Mahesh, a rickshaw-wallah in West Delhi’s Subhash Nagar.

A rentier makes anything between Rs. 50 to 350 per month on a one-time investment of Rs. 5,000. At this rate, the return can be anything between 12 to 84 per cent per annum, although the reality is likely to be towards the higher end. However, dealers who lend cycle rickshaws to the poor deny they make so much profit.

“Rickshaws do not run throughout the year,” said Suresh Kumar, a West Delhi dealer who rents out rickshaws.