Another year has passed by and as we reflect back ( how many of us do ), we find repeating the same things again . History repeats and we’re condemned to repeat it.
Is it so… in all cases ? Well the key to unlock this is in our hands.
Lets start the new year with the resolutions which will hold us in good stead.
1. I will make a budget of my expenses for the year
2. I will save atleast 20% of my take-home income
3. I’ll invest the savings generated from my take-home income in financial instruments I understand
4. I’ll invest based on the principles of:
• Time Horizon
• Risk Profile
• Liquidity of the product
• Asset allocation
5. I will look at insurance and investments as separate products
6. I will cover my risk adequately
7. I will take care of my health and devote atleast 30 minutes in a day to this.
8. I will invest 30 minutes in a month to look at my :
• Bank Statements
• Investment Portfolio Status
• Budget viz-a-viz Actual expenditure status
What is noted is not something new, the basic fundamentals being reinforced.
The point I want to make is, if we get the basics right, there is only one trajectory for your wealth to go…. Upward…. Upward…and Rising.
We recommend keeping things simple and we follow the same maxim in our journey of Wealth creation and Wealth maximization.
I had shared this note on the 1st of January - 2010 and its time to reflect if we had carried out this exercise. The rules have not changed much. If one have not had the discipline in this regard, lets initiatie this in the year 2011.
Wishing a great year year ahead .
Saturday, December 25, 2010
Tuesday, August 10, 2010
Directions
We did expect robust results from the Indian Corporate for fiscal Q1'2010. And we were not disappointed on this front. Mid-cap and small cap shares have started outperforming the big guns and that was to be expected. Does it mean that those sitting on the sidelines, continue to stay in the sidelines. Just would like to share , do and follow what one understands best . At the same time, do try to understand the basic of equity too, which will give the alpha ,else, inflation will eat into your capital.
Based on the increase in the repo and reverse repo rates by RBI , banks have started offering higher interest rates (0.5 – 0.75%), to its depositors, making it close to 7.5% interest on a 1-year deposit. Looks interesting . But do understand – if you are in the top tax bracket, 33% of the interest income goes away in tax , which leaves little over 5% as residual income. Inflation currently is in double digits ( 10% +). So the real rate of return is in negative ( 5-10 = -5). In real terms, inflation is eating into your capital , without even one knowing about this fact. Do have an investment policy in place, to ensure that your wealth grows and not even a silent enemy ( like inflation) can reduce it.
Another small but important change which the Government is proposing is – Allowing foreign nationals to invest directly into Indian equity markets. The proposal is still in the planning stage. How will this change the existing scenario ? Well that is for a different post, at a later date .
As has been our earlier stated recommendation , continue the SIP’s and invest in stock specific shares .
Based on the increase in the repo and reverse repo rates by RBI , banks have started offering higher interest rates (0.5 – 0.75%), to its depositors, making it close to 7.5% interest on a 1-year deposit. Looks interesting . But do understand – if you are in the top tax bracket, 33% of the interest income goes away in tax , which leaves little over 5% as residual income. Inflation currently is in double digits ( 10% +). So the real rate of return is in negative ( 5-10 = -5). In real terms, inflation is eating into your capital , without even one knowing about this fact. Do have an investment policy in place, to ensure that your wealth grows and not even a silent enemy ( like inflation) can reduce it.
Another small but important change which the Government is proposing is – Allowing foreign nationals to invest directly into Indian equity markets. The proposal is still in the planning stage. How will this change the existing scenario ? Well that is for a different post, at a later date .
As has been our earlier stated recommendation , continue the SIP’s and invest in stock specific shares .
Sunday, July 11, 2010
Review - June'2010 Quarter and Outlook
One more quarter has passed . The equity market with all its see-saw is now at 17700 ( BSE sensex at close of 30th June) viz-a-viz the close on 31st Mar @ 17528. A return of less than 1%. In this quarter , we had wild swings and volatility based on the news emanating from Europe (It’s still not out of the woods) .
We had important developments in June quarter viz,
• The patch up between the feuding Ambani brothers
• The bounty collected by the GOI on the 3G spectrum auction and the broadband license
• The issuance of the revised Tax code, which will to an extend influence the way investing in equities is carried out
• The price of 10 gm of gold crossing Rs. 19,000 and more swings expected
• The fuel price de-regulation
• The hiking of the bank rates by the RBI
Though the Indian market also moves in line with the World markets, the opportunity of growth lies in India - the alpha for higher return. Just as the 70’s /80’s /90’s were the period of growth in America/ Europe/East Asia, this is the time of India. The next 2 decades are ours and with the huge domestic market, the growth is here . And equity as an asset class-needs to be a part of the investment portfolio .
Stock picking is the mantra and the virtues of patience, control of greed are also required to ensure that wealth grows.
Outlook for the next quarter(s):
• The Government will bring in few more deregulations ( Good in the long –run)
• More see-saw in the equity markets
• More news ( good / bad) from the European zone
• Robust corporate results from the Indian companies
We had important developments in June quarter viz,
• The patch up between the feuding Ambani brothers
• The bounty collected by the GOI on the 3G spectrum auction and the broadband license
• The issuance of the revised Tax code, which will to an extend influence the way investing in equities is carried out
• The price of 10 gm of gold crossing Rs. 19,000 and more swings expected
• The fuel price de-regulation
• The hiking of the bank rates by the RBI
Though the Indian market also moves in line with the World markets, the opportunity of growth lies in India - the alpha for higher return. Just as the 70’s /80’s /90’s were the period of growth in America/ Europe/East Asia, this is the time of India. The next 2 decades are ours and with the huge domestic market, the growth is here . And equity as an asset class-needs to be a part of the investment portfolio .
Stock picking is the mantra and the virtues of patience, control of greed are also required to ensure that wealth grows.
Outlook for the next quarter(s):
• The Government will bring in few more deregulations ( Good in the long –run)
• More see-saw in the equity markets
• More news ( good / bad) from the European zone
• Robust corporate results from the Indian companies
Monday, June 7, 2010
Market Dynamics - The approach
The sensex had gone by more than 550 points on 10th May'2010,in a single day to close at 17,330.
Today - on 7th June'10, the same sensex has retreated down to 16,781 ( today’s fall – 336 points ) . In between , the sensex vacillated between 16,750 – 18,000.
In today’s market, we are stating that the possibility of a fall is more predictable than the rise. This is purely on account of the market being driven by forces of sentiment , as noted below :
The sectors on which we are bullish and are selectively buying include - Pharma ; Banking ; Education ; Auto ; Construction ; Heavy Engineering ; FMCG .
Telecom is one space we are avoiding (though we keep a watch on it )
The strategy for investing for Mutual Funds as shared in May’10 does not change and we did execute the strategy.
For equity, its still cherry picking and it’s the way to grow.
Happy investing ( albeit, with a bumpy and volatile ride).
Today - on 7th June'10, the same sensex has retreated down to 16,781 ( today’s fall – 336 points ) . In between , the sensex vacillated between 16,750 – 18,000.
In today’s market, we are stating that the possibility of a fall is more predictable than the rise. This is purely on account of the market being driven by forces of sentiment , as noted below :
- 10th May – the market gave a thumps up as the IMF and the other creditors put forth a rescue package for Greece.
- 0n 7th June- the market gave a thumps down , as rate of jobless in US grew more than anticipated; Hungary said that it could have a Greek – like crisis.
- In between these days, based on various news , the sensex vacillated, irrespective of the impressive results by majority of the Indian Corporates
The sectors on which we are bullish and are selectively buying include - Pharma ; Banking ; Education ; Auto ; Construction ; Heavy Engineering ; FMCG .
Telecom is one space we are avoiding (though we keep a watch on it )
The strategy for investing for Mutual Funds as shared in May’10 does not change and we did execute the strategy.
For equity, its still cherry picking and it’s the way to grow.
Happy investing ( albeit, with a bumpy and volatile ride).
Wednesday, May 12, 2010
What the Greek tragedy can teach us and the approach in the uncertain times
This is an article ( click on the click below) on the Greek fiscal crisis , ( which has been shared by the author in a simple and lucid manner) , and how it has reached to the state it has
http://www.dnaindia.com/opinion/column_what-the-greek-tragedy-can-teach-us_1380762
The same did not happen overnight, but was built up over time . We cannot be sure that the bail-out package will revive the economy.
With some positive news on the US economy front, we do expect the dollar to become stronger and a flight of capital from the equity market of emerging economies , including India.
10th May’2010, saw the highest gains ( 568 points) by the sensex in the last 10 months. We would recommend to be cautious. Those who have been investing in Mutual Funds, we would recommend that the gains and the capital invested till Mar’09, be moved to debt funds. ( This is an conservative approach and we could go horribly wrong in our Outlook, but atleast the hard-earned monies will not be taken to the cleaners)
Watch the market and then take the call to move into equity again. The SIP’s / STP’s currently in progress should continue ( to take advantage of value averaging) .
On the direct equity front, its stock specific and we recommend allocating a substantial portion of the corpus with a horizon of 18- 24 months.
Happy investing (but do not forget it will be a bumpy and volatile ride).
http://www.dnaindia.com/opinion/column_what-the-greek-tragedy-can-teach-us_1380762
The same did not happen overnight, but was built up over time . We cannot be sure that the bail-out package will revive the economy.
With some positive news on the US economy front, we do expect the dollar to become stronger and a flight of capital from the equity market of emerging economies , including India.
10th May’2010, saw the highest gains ( 568 points) by the sensex in the last 10 months. We would recommend to be cautious. Those who have been investing in Mutual Funds, we would recommend that the gains and the capital invested till Mar’09, be moved to debt funds. ( This is an conservative approach and we could go horribly wrong in our Outlook, but atleast the hard-earned monies will not be taken to the cleaners)
Watch the market and then take the call to move into equity again. The SIP’s / STP’s currently in progress should continue ( to take advantage of value averaging) .
On the direct equity front, its stock specific and we recommend allocating a substantial portion of the corpus with a horizon of 18- 24 months.
Happy investing (but do not forget it will be a bumpy and volatile ride).
Sunday, April 25, 2010
Investment Advise – Are you getting the right one
During the course of my meetings with my clients, I do come across interesting situations. The client , ( Mr A) has a bank account with a leading private sector bank and is one of the premium customers of the bank. Being a premium customer, he has a dedicated Relationship Manager (RM). The RM is the one-stop person who will help , guide ( in making investments and choosing the right product) and resolve the issues , if any.
Mr. A had a balance in few lakhs in his account , which prompted his RM to guide him to make an investment . In the past the RM had invested his monies majorly in NFO’s of mutual funds, which at current levels have not exceeded the Benchmark return.
Now, in one of my meeting with Mr.A, he had also invited the RM , as he had advised him to invest in a Savings Plan , exclusively for the Bank customers. On further questioning, it turned out to be an insurance product of one of the group companies and being sold in the grab of a savings plan. ( Do ask yourself , Is this is cheating ).
Mr. A has sufficient insurance and there was this product which was being sold as a Savings plan. And this was being sold by the RM, who is supposed to guide his client to make the most appropriate investment decision. And what we observe, is the RM guiding the client to make the investment, based on the bank’s target for the month , as against the clients needs.
There are many such cases and there will be many more cases , when dealing with RM’s. ( Let me also state that not all RM’s display the above traits. However, I have also not come across any RM’s who have not displayed the above traits)
Is there a way out?
Absolutely . Find an adviser who charges a fair fee for the advise and suggests investment advise based on the clients need and requirement. Moreover, he should be transparent and also declare his incentive on any product recommendations. Be willing to pay a fee. This would ensure that a wrong product is not bought, which has greater implications in the long run.
Happy Investing
Mr. A had a balance in few lakhs in his account , which prompted his RM to guide him to make an investment . In the past the RM had invested his monies majorly in NFO’s of mutual funds, which at current levels have not exceeded the Benchmark return.
Now, in one of my meeting with Mr.A, he had also invited the RM , as he had advised him to invest in a Savings Plan , exclusively for the Bank customers. On further questioning, it turned out to be an insurance product of one of the group companies and being sold in the grab of a savings plan. ( Do ask yourself , Is this is cheating ).
Mr. A has sufficient insurance and there was this product which was being sold as a Savings plan. And this was being sold by the RM, who is supposed to guide his client to make the most appropriate investment decision. And what we observe, is the RM guiding the client to make the investment, based on the bank’s target for the month , as against the clients needs.
There are many such cases and there will be many more cases , when dealing with RM’s. ( Let me also state that not all RM’s display the above traits. However, I have also not come across any RM’s who have not displayed the above traits)
Is there a way out?
Absolutely . Find an adviser who charges a fair fee for the advise and suggests investment advise based on the clients need and requirement. Moreover, he should be transparent and also declare his incentive on any product recommendations. Be willing to pay a fee. This would ensure that a wrong product is not bought, which has greater implications in the long run.
Happy Investing
Insurance – Saving Product – A sale gimmick ?
Only the other day, I received a call from the customer service team of a leading insurance company . The caller ( lets say Mr.X) , for a change , was cordial with a pleasant accent . X said that we have an excellent saving product. You only have to invest Rs. 30,000 per year , only for 3 years . And then after 10 years the amount will be redeemed at a return of 10-15% . Do let me know , when can I send my representative.
For the uninitiated this proposition sounds fantastic. One invests only Rs. 30,000 and that too for only 3 years and then one gets a return of 10-15%. Fantastic.
Have you noticed that nowhere in the conversation is the word “ Insurance “ mentioned. The pitch is “ savings products”. Is this cheating or a sales pitch ?
Moreover, there is also no mention about the upfront charges as in Premium allocation charge; policy administration charge; fund management charges. What about surrender charges ??? Did I say surrender charges . Lord save us .
Well financial products are sold and not bought. Buyers beware. Ask the right questions.
If one does not understand, ask , ask and ask .
For the uninitiated this proposition sounds fantastic. One invests only Rs. 30,000 and that too for only 3 years and then one gets a return of 10-15%. Fantastic.
Have you noticed that nowhere in the conversation is the word “ Insurance “ mentioned. The pitch is “ savings products”. Is this cheating or a sales pitch ?
Moreover, there is also no mention about the upfront charges as in Premium allocation charge; policy administration charge; fund management charges. What about surrender charges ??? Did I say surrender charges . Lord save us .
Well financial products are sold and not bought. Buyers beware. Ask the right questions.
If one does not understand, ask , ask and ask .
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