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)