A new financial year - time to take stock and review

We start a new financial year today and wishing all a successful year.

I used to be in the retail business for  several years and the end of the year was busy "taking stock". The habit continues - taking stock, reviewing and planning for the year ahead. Just sharing some thoughts.

The Nifty has moved smartly from 7216 on 10.2.16 to close at 7738 on 31.3.16. However, the index is down almost 9% for the year. FIIs have re entered the market in Mar 2016. However, their net sales last year have been about Rs. 45000 crores In 2015-2016, Domestic institutions  turned buyers with a record net purchase of about Rs. 80000 crores last year. There has been a sharp rise in equity MF inflows and we now have greater than Rs. 2500 crores of SIP every month.

While we do have an eye on the market, what must be of prime importance to us is our goals and the movement forward we have made towards our goals. We only encourage investing with a specific goal in mind and every investment must be aligned to our goals.

The beginning of a financial year is a good time to review how we moved forward and ask a few questions

• Do I have adequate life insurance? Have I adequately protected my family in the case of an unfortunate event?
• Do I have sufficient medical insurance?
• Have I created an emergency fund and is it adequate?
• Have I noted down - yes, written down each of my financial goals?
• What is progress of my movement forward towards my financial goals?
• Have I done a review of my portfolio? Many of us have portfolios too cluttered with old funds, too many stocks, other investments all made haphazardly in the past which makes it difficult to monitor and maintain.

I do stress on writing down goals. This makes us read the same regularly and review. "Goals that are not written down are just wishes." ~ Fitzhugh Dodson. Write down or record your vision of financial security. Create both short-term and long-term goals. Once it is written down, you will be able to plan and translate them onto action. Else, it is just like a new year resolution and life just ambles on.

Beware of the investing noise:

Have seen investors get thoroughly confused with differing approaches of various commentators on TV and other media. Investment noise is the constant drumbeat of extraneous information that we are subject to every day via the financial press, internet and even colleagues. Handle this and learn to ignore and filter the information. 

An interesting advertisement was issued by an AMC recently which showed a good message about lumpsum investing and using SIP for long term. Am giving the image of the same for your reference. 

Do contact me to know more about how mutual funds work.

To end, some Mutual Fund Statistics: Source Value Research:

It is interesting to note the 5 year SIP returns that mutual funds have given us. Multi-cap funds have given a median returns of 13.12%, with large caps and mid cap returns being 8.7% and 20.7% . Past returns may not be replicated!