The event ( general election results)  is over and the euphoria got tempered . A 1000 point rally in the Sensex could not be sustained and the end of the day , the Sensex closed with a gain of 250 points. What is the next step ?

Will advocate simple investing strategies.

Equity is your choice, only if the horizon for investing is 5+ years. And  regular investing is the recommendation.  

Do give a thought.......................................

The Nifty of 2014 ( 7203 on 16th May'2014  )  was higher than  the Sensex of 2004. 

So will the Nifty of 2024 be the Sensex of 2014 ( 24121 on 16th May'2014)  ???? 

We do not want to speculate ... But do give a thought.

 

Election Results , Market and Direct Equity Investments

Equity Investment is a wealth creation vehicle. Events ( results of General elections) which drive the expectation are a part of the market mechanism. Short term gains or losses and euphoria need to be tempered. 

We are in for the long haul. Asset allocation across companies and time horizon  is what will make the  wealth grow. 

A recent exercise was carried out where in investment of Rs. 1 lac ( spread across 5 scrips of Rs. 20,000 each ) carried out in Apr'04 , generated an annualized return of  ~ 27%. ( The value on 19th Apr'2014 was Rs. 11.50 lacs). This is without considering the dividends declared over the last 10 years.

The 5 scrips were - ITC , Tata Steel, Reliance, Crisil and Bata respectively.  ( Don't be surprised that Tata Steel and Reliance were underperformers in this period , with alpha being generated by the rest).

The 10 year period saw a boom, negative growth, optimism returning , again pessimism.... and now a sense of euphoria.

Let's invest in stocks to generate returns in excess of Bank FD +  2% and not let events drive our decision making process.

Investing is a process and lets continue the process.

It's the same philosophy which is guiding our investment methodology.

Risk Management and Risk Aversion

How will plan to invest ? Do you consider risk , in your investment strategy ?

If so, is it  risk aversion you are looking at  or do you want to manage the risk.

Sharing one of my articles- Risk Profiling - the key to asset allocation.

The link below :

http://www.financialexpress.com/news/risk-profiling-key-to-right-asset-allocation/1183877/0

New Year Resolutions - 2013

 Introduction

One more year has passed  into history . At the end of every year and beginning of the new year, we all strive and resolve to do things which we feel are integral and important. As the new year begins, lets resolve once again and make a promise to ourselves , our children , our families and more importantly our dreams and aspirations.

Get ,Set, Go

Let’s start with  the basics.

1.    I pledge to save 15% ( if not 20%) of my net salary every month – Pay yourself first.

2.    I will invest the savings into products  I understand

3.    I will make a budget of my expenses and review the same every month on the – 5^th of the month  or the Ist Sunday of the month ( By setting dates, you are being disciplined and also taking responsibility )

Once the basics which is the fulcrum on which the wealth creation is set, we can go forward to securing it , which will be :

4. I will take care of my heath and will allocate minimum 30 minutes in a day  in this activity , no matter what.
5. I will take care my risk adequately in the following manner:
1. Life Insurance – I will revisit my life insurance , ( which you should relook as ‘life style maintainece  cost’) , and will use Term Plans to get myself, as a chief earning member of the family adequately covered, if not covered.
2. Health Insurance – Calamities does not come with advance notice . I will revisit my health insurance and understand the ‘ wordings ’ of the policy issued . Also to augment my overall life style needs will augment the company provided health insurance with  an additional personal health insurance cover
3. Other Insurance – If you are a self employed professional, will revisit the Personal Accident Cover. Also , will revisit the home insurance policy, if any.
6. I will look at investment products  and insurance products separately. Insurance is risk management and investment is wealth creation .

Now that you have set the basics and secured it, lets pledge on the operations part of the resolution

7. I will set aside 30 minutes , every month , say on the 5^th of the month or Ist Sunday of the month and review my bank statements , to check if any unknown transactions are not reflected .
8. I will check my investment portfolio ( remember , not a review only check ) to know the status of the investments and its current value.

Now that you have the house in order and set the house rules, another aspect  which is found missing is to be done and which is very important – Inform and share with your family member ( it could be your  spouse , your brother, your children, anyone whom you trust with), the details of all investments , assets, liabilities, so that even when you are not around, things move seamlessly.

Well planned is well began . And well executed is the reward for all the planning.

Wishing you all a great year ahead and Happy Investing 

 

Goal Based Investing

Can you predict the weather ?  Well. Seems, the investment climate is again - where to  forecast the weather is filled with peril. The year – 2012, began on a gloomy note, but  the month of January saw the Sensex rise by 10.68% over its previous month close. And then it was volatile and in May’12 fell by over 6%  .However, the YTD return as of Sep’12 is a staggering 20.78%.

This yo-yo in the equity market, would make anyone very apprehensive.

Shared my views on the investing methodology to be followed in the volataile environment .Click on the link below:

http://www.financialexpress.com/news/with-volatility-the-new-normal-patience-is-key/1010436/0

September - Is this the beginning of the rally or a bubble ?

The policy announcements in US and India in September and earlier by ‘ Super’ Mario ( the ECB Chairman) have rallied the world markets. The ‘sentiments’ in the equity market have sparked optimism. But then, the political equations can never be   foretold. There is a dichotomy between politics and economics   The pronouncements by the ECB and Fed Reserve points  towards one thing , as of now – the QE ( Quantitative Easing ) , or in layman terms – the printing of notes will continue to spur growth. 

Our take is that – in the long run ( well , the definition of long term , in this context is blurred and do not want to take any guess) , the world economy can go in a tailspin. But , right now, the rallies will definitely make you paper rich ( Remember, its only when you sell and realise your gains that you make a gain).

With the CRR cut and more cuts expected later, long term debt products should deliver attractive returns.

 So the strategy will be again simple .

·         Have a goal based investing strategy .

·         Get your asset allocation right.

·         Believe in your strategy and have patience.

Also make periodic sells to realise your gains.

Do understand, investing is today is a core activity.  Understand the product  / asset , before investing and once invested , have faith and make your gain

Wealth Creation - A journey and not a destination

A journey begins with a small step and then as you go along, you reach the destination, you first wanted to reach. But then a human being is a different animal. He’s not satisfied. He wants more, and that too quickly. He’s greedy. And then a new journey begins for a newer destination.  So enjoy each of the journeys

 The goal will be different in  each of the periods :

Say till you are 22 -24 years, you are building the  basic skills, wherein you study and get the various degrees.

Let me try to put a framework n this journey / destination :

·         Age  25-30 – Early days, new money , enjoying the money, fulfilling the basic needs – moreso,  consuming more rather than saving .

·         Age  30-35 – You realise the need to save and accumulate some monies. ( Marriage, kids, emi’s all come in play)

·         Age 35-45 – You work crazy to accumulate assets .

·         Age 45-50  - You realise you have to accumulate more, as inflation is eating into the assets and the new gadgets and lifestyle looks too good to lose.

·         Age 50 – 55 – Again work crazy  and invest for retirement.

·         Age 55 onwards – Ponder as to how much should I save for a retired life.

The above may not be true in all cases.

Wrote a piece on retirement in Financial Express . Do check the link

http://www.financialexpress.com/news/cash-flow-key-factor-in-planning-for-retirement/1000689/0

In today’s world, one thing which we you need to understand is that each one of you need to be financially literate. Do understand that its your money and you know the best. ( the product manufacturers, the brokers, the intermediaries are all enablers who needs to be used only as a guide for wealth creation)