tag:blogger.com,1999:blog-86041976439439273692024-03-23T15:45:38.756+05:30Invest MutualMahesh Mirpurihttp://www.blogger.com/profile/18443833461741689110noreply@blogger.comBlogger90125tag:blogger.com,1999:blog-8604197643943927369.post-64571325176238326832020-12-26T17:41:00.037+05:302020-12-28T09:52:29.635+05:302020: One big learning and some actionables<p> </p><p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Life is one roller coaster of a ride and the experience of highs and lows
are what add wealth to our lives. 2020 has been a remarkable year. An event which none could imagine, actually affected the whole world and
yet it has been a fabulous year of learning and adapting.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span>My learning in one line which elaborated below.</p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: medium;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span><b>Always be
prepared for the worst, while being optimistic about the future.</b></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: medium;">Simple line, but when I pondered on this, it has a lot of implications and actionables.</span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">We will
look at the first part of this – <b>Always be prepared for the worst.</b></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">Those most
affected by the covid virus were small businesses and their employees who lost
jobs or faced salary cuts. The General Manager of a large establishment with a
huge salary, found himself agreeing to get basic minimum pay as per Govt. norms
for the last few months and he was lucky. Many businessmen faced huge losses
and many salaried employees were out of a job. So, what are my learnings and actionables?</p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p>1. </o:p></span>Always,
always keep personal debt to the minimum – if at all you need to take on debt:</p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Debt is a
killer of finances and those stuck in EMIs due to buying expensive cars, phones
and even that extra flat they did not need have suffered the most. If you
cannot pay off that credit card fully every month, you should stick to using
debit cards only. Freedom is being debt-free. A corollary of this is - I observed this year that much of fancy stuff we accumulate, we do not need.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p>2. </o:p></span>Keep an
emergency fund AND use it for emergencies only. This is is self evident now. A black
swan event like the covid pandemic has only underscored the need to have an emergency
fund and to use it for emergencies only – not for personal consumption. Not to be touched when you
see a huge discount sale, neither for stock market trading. </p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">3. Have
proper life and medical insurance to safe guard your family<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p>4. In Investing</o:p></span>: <b>STICK TO ASSET ALLOCATION. It works!!! My favourite mantra!</b></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">I have always
emphasised on asset allocation and believe me it was the most difficult to
stick to this in 2017 when the market was simply rocketing up. The below 2
charts will show you what I mean.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">This first
chart depicts a 3 year lump sum return from 23.3.17 to 23.3.20 when the Nifty fell to a
low. A portfolio consisting 60% of a multicap fund and 40% of a short term bond
fund with yearly rebalancing did better than the Nifty 500 TRI. In fact was
positive when the index was negative <o:p></o:p></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_V3vXyObHREknca5_cGSkMCeE452wL5v1vBmEl8tbLWETgJhvgOr5Boy7Xpu34D7HjY9MU2HHgpMPuiwvuIwsJmToRe_chhLXJ_4T5nM_zMrdD_10krarOKopsYB82nriRfcNbr1__cZ_/s1512/ASSET+ALLOCATION+CHART+NO+1.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="487" data-original-width="1512" height="206" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_V3vXyObHREknca5_cGSkMCeE452wL5v1vBmEl8tbLWETgJhvgOr5Boy7Xpu34D7HjY9MU2HHgpMPuiwvuIwsJmToRe_chhLXJ_4T5nM_zMrdD_10krarOKopsYB82nriRfcNbr1__cZ_/w640-h206/ASSET+ALLOCATION+CHART+NO+1.JPG" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="color: red;"><b>THREE YEAR RETURNS TILL 23.3.20. ASSET ALLOCATION PAYS<br />Balanced portfolio was positive even at the market lows!!</b></span></td></tr></tbody></table><br /><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Chart 2 - same investment continued till 23.12.20 when the market is at a high.</span><p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0g09UcxuLLo1_n3Cfz3ZkXN79_c-UT3CGvzqB2EeyEgSx4RQDfZsGVIGWwWIEwMIkcBLwz-pCOEVx06muxc4p7U0xT5Ro5RcDIab_eSHajKDP3g-GcxZfzUJkunmFcnUC6O5CNO57EydG/s1548/ASSET+ALLOCATION+CHART+NO+2.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="511" data-original-width="1548" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0g09UcxuLLo1_n3Cfz3ZkXN79_c-UT3CGvzqB2EeyEgSx4RQDfZsGVIGWwWIEwMIkcBLwz-pCOEVx06muxc4p7U0xT5Ro5RcDIab_eSHajKDP3g-GcxZfzUJkunmFcnUC6O5CNO57EydG/w640-h212/ASSET+ALLOCATION+CHART+NO+2.JPG" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="color: red;"><b>BALANCED, ALLOCATED PORTFOLIO: LESS VOLATILE AND GOOD OUTCOME</b></span></td></tr></tbody></table><br /><br /><div><span style="text-align: justify;">This second
chart is very interesting. The same 60:40 portfolio was kept up till 23.12.20.
Inspite of the market touching new highs, the equity:debt portfolio has matched
up so far. This may change if the market shoots up but this chart shows how the
journey has been smoother. It takes discipline and strength to keep to an asset
allocation framework in extreme markets.</span></div><div><span style="text-align: justify;"><br /></span></div><div><span style="text-align: justify;">5. My final point under being prepared for the worst is to focus on your career and develop skills so that you do not suffer professionally in case of such events like covid. Keep learning. Keep equiping yourself. Your skill sets will help you. I cannot emphasize this enough. Seeing too many who are working from home, get distracted and say - "hey lets learn to make a living off trading stocks and options". Ill advised and remember, the source of your income is not investments in the beginning. It is your profession.</span></div><div><span style="text-align: justify;"><br /></span></div><div><span style="text-align: justify;">Being ready for the worst would mean that you are never shocked by any event and can bounce back quickly.</span></div><div><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><b><span style="font-size: medium;">Now to the
second part of the learning – Be optimistic, be positive.</span></b></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span>Human ingenuity
has overcome terrible problems in the past and hey, there is no reason we will not overcome tough situations in the future. Being optimistic helps when you are
investing in market related instruments. The market is certainly no place for pessimists, negative folk. A positive mind set made many
investors see opportunities and I personally know many who kept investing from
April and have made tremendous gains. Many others continued their SIPs which work
best in volatility. Below are two charts of SIPs. One 5 years SIP ending on
23.3.20 in the NIFTY 500 TRI gave a <b><span style="color: red;">NEGATIVE -8.7%</span></b>. The same SIP if continued
till December gave a <b><span style="color: #274e13;">POSITIVE 12.4%</span></b> annualised!!! Unbelieavable no?. This is the CAGR!! Just 9 months made a HUGE
difference. Look at the 2 charts below.</p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p> </o:p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2n3ZO69yCfruKg2dVFIYDDAkGW4C-_3-vJCQr5cUgTCJ8I7csiJyfXFMJ6CV6NQbpZRUEbEMDhUoVM8_3aQ7-x1NR63c6JYUtV94-aQ_GcsHL63W-1kMMNqj9pRpAgFszGkZSpNZ8oxSV/s1506/NIFTY+500+SIP+5+YERS+TILL+23.3.20.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="467" data-original-width="1506" height="198" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2n3ZO69yCfruKg2dVFIYDDAkGW4C-_3-vJCQr5cUgTCJ8I7csiJyfXFMJ6CV6NQbpZRUEbEMDhUoVM8_3aQ7-x1NR63c6JYUtV94-aQ_GcsHL63W-1kMMNqj9pRpAgFszGkZSpNZ8oxSV/w640-h198/NIFTY+500+SIP+5+YERS+TILL+23.3.20.JPG" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">IF YOU STOPPED A 5 YEAR SIP IN MARCH- YOU ENDED UP <b><span style="color: red;">NEGATIVE - 8.7%</span></b></td></tr></tbody></table><br /><p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p>If you had continued the SIP till December, the -8.7% annualised return has become <span style="color: #274e13;"><b>+12.4%</b></span></o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNODYJo4sLRdp7zIr0ZRif0CWw9c1HX9fPzTZy54f_f3jL1Yl5vvrfv7uI7LDeNjKUmayQRsXaXHAf1tFwNxQE2J-lvk7IttZultXmzTM0EJBIELxkus6uV13Wqh_exdZL-QyFJo71bPL_/s1526/NIFTY+500+SIP+5+YERS+TILL+DATE.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="502" data-original-width="1526" height="210" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNODYJo4sLRdp7zIr0ZRif0CWw9c1HX9fPzTZy54f_f3jL1Yl5vvrfv7uI7LDeNjKUmayQRsXaXHAf1tFwNxQE2J-lvk7IttZultXmzTM0EJBIELxkus6uV13Wqh_exdZL-QyFJo71bPL_/w640-h210/NIFTY+500+SIP+5+YERS+TILL+DATE.JPG" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>THE SAME SIP CONTINUED HAS GIVEN ANNUALISED 12.4%. THE VERY SAME SIP!!!</b></td></tr></tbody></table><br /><p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">Some
corollaries from BE OPTIMISTIC: </p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><b>Do not panic</b> when things are bad. Those who panicked and redeemed in the months after
covid struck have lost big!!! Do not stop SIPs and withdraw. Stay the course
when you have a plan.<o:p></o:p></p>
<p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><b>Do not procrastinate.</b>
I deal with many investors and a few have been dilly-dallying and procrastinating.
A delay can cost big. Guys who spoke to me from June on are still
deciding in December!!! The markets have seen a dizzying rise. And those who allocated when
the markets were down, certainly have a good start which gives a lot of confidence in one's investment journey.</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">In brief </p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">1. Debt is a killer. Live within your means</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">2. Keep an emegency fund and be prepared for the worst.</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">3. Have adequate medical and life insurance to protect loved ones.</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">4. Stick to asset allocation!! Have a process! </p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">5. Focus on your career and business and build skillsets. That alone will provide you the money required to grow wealth. DO NOT get distracted by your neighbour trading in options.</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">Being ready for the worst would mean that you are never stunned into inaction or impusive actions when events like covid happen. Being ready means you adapt with clarity of thought.</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">6. Be positive. A positive and optimistic attitude alone will let you see opportunities even when the going is tough.</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">Wishing you all a Happy New Year, filled with health and peace of mind....And Happy Investing</p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;">I am a mutual fund distributor and you can follow me on <a href="https://twitter.com/invest_mutual" target="_blank">twitter here</a>. </p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><b><i><span style="color: #cc0000;">Mutual Fund investments are subject to market risks. Read all scheme related documents carefully before investing.</span></i></b></p><br /><p></p></div>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-47280216743136970762020-11-29T14:12:00.003+05:302020-11-29T19:05:16.129+05:30Create your Serendipity as an investor<p><span style="text-align: justify;">Many of us downplay the role of “luck”,
“chance”, “karma” in our careers, our investing, our personal lives.</span></p><p></p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Where there is choice, there can be
conflict created by the choices. To invest now when the Nifty is at all time
highs or not to invest, to marry this person or not to marry…to quit this great
job and go for my own start up or not to….And there is a choice in everything. <o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Now, while we all have a free
will and an intellect to discriminate and take calculated risks and go ahead
with a decision, there are hundreds of factors our intellects cannot see or
consider in any deliberation. Yet we go ahead with a course of action. What
differentiates a calculated risk from a wild risk is this deliberation. Yet,
there is risk, always, of not getting a desired outcome.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Often, we see that our planned
course of action, our investment succeeds and sometimes there is <u><b>wild
success,</b></u> despite hundreds of things we could not see while deliberating. Wise
folk recognize the role played by <o:p></o:p>“luck”/“chance”/ “karma”.</p>
<p class="MsoNormal" style="text-align: justify;">I recently heard a very interesting
conversation between two brilliant and successful men – Mr. V Shankar, Founder
CAMS and Mr. G V Ravishankar, Managing Director at Sequoia Capital, in which Mr.
VS asked Mr. GVR to speak about something the latter had written in the context
of venture capital investing – “Create your Serendipity”. (Serendipity is translated
as Chance, Fate, Destiny, Luck). In short – how to create conditions favourable
for you to get lucky!!! <o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">The response from a very
successful man struck me and was insightful and in short was as below:<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Depending solely on chance for success
to come in your choices is like trying to win a lottery. One can create the
conditions for Lady Luck to visit and one can “manage serendipity”. This is said
in the context of his VC business.</p><p class="MsoNormal" style="text-align: justify;"></p><ol><li><span style="text-indent: -18pt;">Be
there, always. Be committed, have passion and be there to take decisions.</span></li><li><span style="text-indent: -18pt;">Make
yourself heard – to let potential entrepreneurs know that you are there to
evaluate a venture of theirs. Let folk know what you do and that you are there.</span></li><li><span style="text-indent: -18pt;">Give
time! You cannot be impatient. Give time for the seed to become a tree.</span></li></ol><p></p><p class="MsoListParagraphCxSpFirst" style="mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18pt;"><o:p></o:p></p>
<p class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18pt;"><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">When all the three are there, the
chances of success are higher.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Now, let’s look at this in the
context of investing – to get financial freedom. <o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">All investing is forecasting. We
want a particular outcome but there are hundreds of factors we cannot see. 2020
is a great example of things turning upside down and life being disrupted in a
way we did not think possible. So, how does one create conditions favourable
for success in reaching financial goals and getting success in investing.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">My take:<o:p></o:p></p>
<p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><i style="font-weight: bold;">1</i><b> </b> <b>Be
committed</b>. </p><p></p><blockquote style="border: none; margin: 0px 0px 0px 40px; padding: 0px;"><p></p><p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18pt;"> Be committed to a savings plan, to sticking to your process and
staying the course. I have seen that those who impulsively deviate from their planned
investing process, allocation invariably get a sub optimal result. Have seen
actual instances of folk impulsively sell off in March at the lowest of low
points and disturb their equity allocation, instead of following process. Just
sticking on would have meant being in gains now. One did not know how the
future would unfold but deviations from asset allocation hurt. Those who
stuck to their SIPs, <u>were there</u> (Be there- be committed) have gained. <b style="font-style: italic;">Those
who stuck to allocation and moved funds into equity did even better and created
their serendipity. </b>One may say that<i> </i>this is said in hindsight, but do check out previous instances in your own investing lives and note them down.</p><p></p></blockquote><p>
</p><p class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]--><b>Be
open: Be open-minded to:<o:p></o:p></b></p>
<p class="MsoNormal" style="margin-left: 36pt; text-align: justify;"></p><ul><li>Check out all
products and not derisively dismiss anything. I find folk on twitter dismissing
various products just because they are from AMCs. You alone lose if you do not know
about a product and way it can help you. I have been served through out life by
making an attempt to get insights about how various investment instruments work.</li></ul><ul><li><b>Seek advice</b>
if you think you will be better served along your journey with advice. Obstinate
refusal to take help will keep you away from learning much and gaining much.</li></ul><p></p><p class="MsoNormal" style="margin-left: 36pt; text-align: justify;"><o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt; text-align: justify;"><o:p></o:p></p>
<p class="MsoListParagraph" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7pt "Times New Roman";"> </span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; line-height: normal;"><b> </b></span></span></span><!--[endif]--><b>Give
time: Be patient:</b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt; text-align: justify;">Results take
time to fructify. Patience is required to sit out volatility. Patience is
required to allow time for the investment to give results. Patience would mean
you are invested in that one good year which will make a big difference to your
investment outcome.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt; text-align: justify;"><o:p> </o:p>I'm never tired of looking at this graph of the Nifty in 2020. Serendipity through patience, in a graph :)</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhh1qpXlH6Wmd42LimbfJ4cdFH5VHxVtPZEUavGzjVrIBlk-qTVGdPGAAdtMqluBi2knhOz6KCG_LFiGUoc-tm1nFQESg7EGuKZROk-5LODSaiEnxs6xvOsEYUzZJAjX04_wZdGaQck87sU/s655/nifty.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="358" data-original-width="655" height="350" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhh1qpXlH6Wmd42LimbfJ4cdFH5VHxVtPZEUavGzjVrIBlk-qTVGdPGAAdtMqluBi2knhOz6KCG_LFiGUoc-tm1nFQESg7EGuKZROk-5LODSaiEnxs6xvOsEYUzZJAjX04_wZdGaQck87sU/w640-h350/nifty.JPG" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">NIFTY 50 YEAR TO DATE</td></tr></tbody></table><br /><p class="MsoNormal" style="text-align: justify;"><br /></p><p class="MsoNormal" style="text-align: justify;">So, if you are committed, you are
open-minded and patient, you will often be creating your serendipity. Do save
this, try it and in time let me know how Lady Luck has blessed you. Follow me <a href="https://twitter.com/invest_mutual" target="_blank"><b>on twitter</b></a>.</p><p class="MsoNormal" style="text-align: justify;"><br /></p><p class="MsoNormal" style="text-align: justify;">DISCLAIMERS:</p><p class="MsoNormal" style="text-align: justify;">I am an AMFI-Registered Mutual Fund Distributor.</p><p class="MsoNormal" style="text-align: justify;">MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL SCHEME RELATED DOCUMENTS CAREFULLY BEFORE INVESTING</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><br /><p></p>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-5125897461423463782020-10-19T10:05:00.003+05:302020-10-19T10:14:51.496+05:30Investing though a bumpy ride: Having a stable support<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXQrClJAklXNfzxmAzwjDx_-KR9v3vSU4NCRQBXzc4782IH7kz4vVsu3gf8oypSORIC1e5k2cL7yP3Ixty4enwE1rtJnmH4F-WZOdRbRTkXIWnDyYcTnOg5JWlMI45pm-XLhx54oaGRZ2u/s275/Handholding.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="275" data-original-width="183" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXQrClJAklXNfzxmAzwjDx_-KR9v3vSU4NCRQBXzc4782IH7kz4vVsu3gf8oypSORIC1e5k2cL7yP3Ixty4enwE1rtJnmH4F-WZOdRbRTkXIWnDyYcTnOg5JWlMI45pm-XLhx54oaGRZ2u/w266-h400/Handholding.jpg" width="266" /></a></div><b style="text-align: justify;">Investing though a bumpy ride:
Having a stable support</b><div><div style="text-align: justify;"><b><br /></b></div><div style="text-align: justify;">My article with similar thoughts was published today in the <a href="https://www.morningstar.in/posts/60423/prepare-cant-predict.aspx#.X40PpZfhPQk.twitter" target="_blank">Morningstar</a></div><p></p>
<p class="MsoNormal" style="text-align: justify;">During my school days, two of my
friends and I would go often on public buses to explore the city. Those who
have travelled in Chennai’s public buses during traffic hours know about the
bumps, sharp turns, sudden brakes which would shove us front, throw us back,
and get us swaying. To avoid getting hurt, I would always hold on to the
holders or to the front seat when seated. One friend would sit confidently and
use little support only when required - when the bus was braking and making
sharp turns. He was not affected much by sharp movements and seemed to enjoy
turbulent rides. The third guy wouldn’t want to take any chances and would
always use both hands and tightly hold on to the holders or seat in front if he
were seated. He was clear – bus drivers are not to be trusted and he wanted a
firm support, just in case.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Three different folk – affected differently,
responding differently.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">As I think about it, our
investing journeys, just like bus journeys are a bumpy ride, what with huge
volatility and in addition, uncertainty of reaching our destination (financial
goals). And each of us taking the journey has a different temperament – like the
three of us travellers in the bus.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Some of us can take all the
volatility and not bother – because we may have the capacity to take such risk,
having a mental makeup that zooms out and sees things objectively OR having
secure jobs, financial stability already etc. The volatility in the markets may
shake some of us – but not so much that we are shattered and get badly hurt. <b>For
the rest – may I say the majority, going through a huge drawdown can be a
shattering experience mentally.</b> Even financially, a majority of the
investors are not prepared to recover from a 50% drawdown in equities.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">You’ve guessed it right: The point
I am coming to is what I keep making on twitter - the importance asset
allocation. Refer to the bus example. We used a support, an anchor to keep us
in place and safe when there were sharp movements. So also, investors, in their
investing journey need a stable anchor to hold on to.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">This is why I often speak about
the need for Liquidity and Stability in the form of Liquid Funds, FDs, Bond
Funds as the stable anchors to see us through volatile times. Add gold to this
also. <b><i>When markets are volatile and there has been a drawdown - at that
time to make a rush to safety and liquidity would be terrible.</i></b> You
would be selling a loss. What if you already had an allocation to your
stability anchors. You would then have a relatively calm mind and be able to
think objectively. <o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">Wanting to keep this message
short – I will end by saying – Know your mental make up and your financial capacity
– BOTH. Then, accordingly decide your need for stable anchors in your investment
basket. In the financial journey there is more uncertainty than in a bus
journey, so the need to be more careful.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><i>Mutual Fund investments are
subject to market risk. Read all scheme related documents carefully before
investing</i></p><p class="MsoNormal" style="text-align: justify;"><i><b>(I am a mutual fund distributor. Connect with me on <a href="https://twitter.com/invest_mutual">twitter</a>)</b></i></p>
<p class="MsoNormal" style="text-align: justify;"><o:p> </o:p></p></div>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-34543797133844037512020-09-20T10:00:00.001+05:302020-09-20T10:01:03.866+05:30RETAIN YOUR OBJECTIVITY - IN LIFE AND INVESTING<p></p><div class="separator" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="418" data-original-width="614" height="272" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjifHdAOCND2SJv9MGXnvLIXl3bWEazWMnTFKFZS7f8R4vzJB-XQAlyAHMFixV1cXUgnT_gozjfMKHdqr-tMtU8CT6r4nJV3JaAgEpWV-3Hf2_i2MLT4-6fEftXz9Kiir9ytEMldQ1RuIri/w400-h272/growth.png" width="400" /></div><p><br /></p><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: inherit;">As a young school kid in primary
school I would look towards the high school section, see bigger guys, and wait
to grow up and “be like them”. As an executive in a company you want to grow to
be a manager. As a manager, one wants to get into higher management. A
businessman wants to increase turnover and profits. All these are different examples for only ONE
thing – the universal human need to grow, expand and feel full and complete.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: inherit;">Wanting to grow, expand and feel full is human nature.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: inherit;">Now come to the world of personal
finance and investing. Fitwit has many people people speaking only about
themselves, their investments and their success and it is but natural for
beginners, newbies and many investors to “be like them” – to grow, get rich,
feel complete and successful. For every investor, the means to expand, grow, <b>feel
full</b> is to follow a path that takes them to such success. This strong
desire to FEEL FULL and NOT FEEL SMALL - is the root of action of every individual.
<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: inherit;">I am discussing investors and
their behaviour. <b>While wanting to be full and complete is natural, what
harms is the strong desire to do it fast. <u>This leads to the dulling of
discriminative ability.<o:p></o:p></u></b></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: inherit;">Think about it – all greed, instinctive
decisions, stupid allocation is the result of this wanting to grow fast,
quickly. And… the worst thing to happen is to do it by:<o:p></o:p></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"></p><ul><li><span style="font-family: inherit;">Reading clickbait
headlines</span></li><li><span style="font-family: inherit;">Taking tips,
free advice from various media</span></li><li><span style="font-family: inherit;">Listening to fake
folklore of office colleagues, cousins</span></li><li><span style="font-family: inherit;">Blindly
following authoritative figures.</span></li></ul><span style="font-family: inherit;"><o:p></o:p></span><p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><o:p></o:p></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><o:p></o:p></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><o:p></o:p></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><o:p> </o:p>As an objective
individual, it is easy to call out nonsense, but…. this need to grow fast and
feel full takes over and we simply lose all objectivity.</span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><o:p></o:p></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p><span style="font-family: inherit;"> </span></o:p><span style="font-family: inherit;">A true story.</span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p><span style="font-family: inherit;"> </span></o:p><span style="font-family: inherit;">Three years
ago, an entrepreneur running an SME came to me to onboard and I discussed with
him a scheme of allocation, keeping the overheated market in mind. He pooh
poohed the allocation showing data of recent returns of small caps and of
individuals on twitter. Disagreeing with his utter disregard of advice and with
his misallocation, I did not onboard him and he put directly a large sum in
100% equity, heavily tilted toward mid and small cap funds. We all know what
happened since 2017. Greed, fuelled by a desire to be successful, to get rich
soon, led him to lose objectivity and to ignore warnings of mis allocation. The
story continues…the same investor redeemed everything at a low in March 2020,
losing very heavily and </span><b style="font-family: inherit;">has come back for help on asset allocation.</b></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p><span style="font-family: inherit;"> </span></o:p><span style="font-family: inherit;">While one can
feel sorry for such misfortune, the one take away we can have from all this –
We all want to grow. But growth requires time and the ability to filter out the
bulls**t from the truth and choose rightly. In Sanskrit the word Viveka is used
for ability to discriminate – crap from reality. Viveka also means you know
when you can use help, advice rather than getting it free from gyan. Use this discriminative
power and it will help you as an investor and through out life.</span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p><span style="font-family: inherit;"> </span></o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><i>MUTUAL FUNDS
ARE SUBJECT TO MARKET RISK. READ ALL SCHEME RELATED DOCUMENTS CAREFULLY BEFORE
INVESTING.<o:p></o:p></i></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-family: inherit;"><i>DISCLAIMER: I
AM A MUTUAL FUND DISTIRBUTOR<o:p></o:p></i></span></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p><span style="font-family: inherit;"> </span></o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p> </o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p> </o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p> </o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p> </o:p></p><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><o:p> </o:p></p><p>
<span style="text-align: justify;"> </span> <br /></p>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-26887657193977440302020-06-04T21:03:00.000+05:302020-06-04T21:05:26.850+05:30Readymade asset allocation products - should investors use these?<div><span style="font-family: arial, sans-serif; text-align: justify;">The purpose of
this post:</span></div><div>
<p class="MsoNormal" style="text-align: justify;"></p><ul><li><span lang="EN-IN" style="font-family: arial, sans-serif;">Is NOT to
compare between different types of funds.</span></li><li><span lang="EN-IN" style="font-family: arial, sans-serif;">Is only to
reinforce my point that asset allocation must be continued even if our moods
change from extremely negative to very positive. It is my experience that you
will get a better result sticking to an asset allocation</span></li><li><span lang="EN-IN" style="font-family: arial, sans-serif;">Is to make a
point that products offered by mutual funds should not be written off just
because some on social media criticize. Study for yourself and drop
or accept a product.</span></li></ul><p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">That said...<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">"The most
important key to successful investing can be summed up in just two words-asset
allocation." ~ Michael LeBoeuf. I’ve been tweeting on this often. I often
receive DMs and messages on various funds which offer asset allocation and
whether they will be useful for retail investors. More often queries come because investors affected by criticism of everything on twitter and unfortunately retail
investors get carried with this and make stupid decisions.
Having received too many queries, I give here, a small note and start by
saying – <b><i>Do not reject anything unless you have analysed it yourself or tried
and found it not suitable. What is useless for others may be good for you!!!<o:p></o:p></i></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">A small note
on 2 of the common asset allocation products offered by mutual funds: <u>I
answer actual queries received.<o:p></o:p></u></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="font-family: arial, sans-serif;">AGGRESIVE HYBRID FUNDS:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">These funds
are designed in such a way that you have > 65% in equity to get the status
of an equity fund. More often than not we find that the equity:debt ratio is
closer to 75:25. So for an aggressive equity:debt allocation – a static non
changing allocation, these are available. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">So, why invest in these? <o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">If you want a
static asset allocation of about 70:30 in equity:debt. The debt part will
protect against very heavy drawdowns. This ensures automatic tax efficient
rebalancing. That is, when equity markets rise, equity will be sold off and
when equity markets fall, debt will reduced and equity part increased to <b>maintain the asset allocation</b>. In a
bull market a 100% equity allocation will far outperform and we as investors
get carried away and do not protect our portfolios. A March 2020 like drawdown
teaches us great lessons.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">Any precautions I should take?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="font-family: arial, sans-serif;">YES!! </span></b><span lang="EN-IN" style="font-family: arial, sans-serif;">Two very important points to note. First, I would go
for a fund that predominantly invests in large caps. Adventurism into small and
mid caps has hurt some funds. Second, be aware of the debt part of the
portfolio – it should have familiar sounding high quality paper. Many avaiable
funds do follow the above guidelines.<span style="color: red;"><o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">So, did these really protect in the recent steep fall
in equity prices??<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">Good question.
Many of these funds which follow the above rules did protect. At one time
benchmark indices were down >30% from highs. Below is a graph of 3 funds
compared to a Nifty 50 Fund. <b>The point
is NOT to compare performance, but a simple visual representation to show that
having asset allocation will protect you when there are big drawdowns and your
portfolio will end up doing better if you maintain discipline in asset
allocation. </b>March 2020 was an eye opener.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;"><o:p> </o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhv7t1Q-YArYBwt0LHvsIQfsvuk4u6npIIW3p1wi0zo0H_vL4VBS82Ua-r8gkw4s0AF81jSy6WluBW2_SBagfEX3Qt-3xa-XAHDVp4-hyNd_hccMoDY1uqPFS_oQSqr_05orjfMtHa8waai/s806/hybrid+funds+DRAWDOWN.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="328" data-original-width="806" height="261" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhv7t1Q-YArYBwt0LHvsIQfsvuk4u6npIIW3p1wi0zo0H_vL4VBS82Ua-r8gkw4s0AF81jSy6WluBW2_SBagfEX3Qt-3xa-XAHDVp4-hyNd_hccMoDY1uqPFS_oQSqr_05orjfMtHa8waai/w640-h261/hybrid+funds+DRAWDOWN.jpg" width="640" /></a></div><p></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">So, why so much criticism on social media?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">The one really
jarring note about these is that when markets boomed after demonetisation,
these were missold as alternatives to FDs and bought for monthly or quarterly
dividends. That IS NOT the reason to invest in these. Another issue is that
some fund houses may not have the highest quality debt in their hybrid funds.
Recently fund houses which transferred papers from their credit risk funds to
their hybrid funds caused great concern and received criticism. Be aware of shenanigans.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">Your final take?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">As long as you
consider the above points- look for a stable large cap based portfolio and
quality debt, I believe these have a place in investor portfolios. <i>Note, in a raging bull market, a portfolio
of 100% equity will far out perform. But, markets move in cycles</i><b>. </b>And it is my conviction that asset
allocation ensures a better outcome for your portfolio! How you do it is your
call.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">Final point –
know why you are investing in these – NOT for a monthly dividend, but for
maintaining a static, aggresive asset allocation. Remember, stick to funds
investing in larger caps.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="font-family: arial, sans-serif;">The other popular hybrid product fund houses offer:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="font-family: arial, sans-serif; font-size: 14pt; line-height: 115%;">Dynamic Equity funds:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">Unlike the
above Aggressive Hybrid Equity Funds, these as the name goes – dynamically
shift the equity and debt portions. The equity position can fluctuate between
20% to 80% depending on the model used by the fund. These are also popularly
known as Balanced Advantage Funds! These are much more conservative than the
aggressive hybrid equity funds.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">So how do these work?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">I can write a
full post on these, but in brief, based on either a valuation model or a trend
following model, the equity part of the portfolio will dynamically change
according to the market conditions. So, in the last few years, I have seen the
equity part of some such schemes go from 20% to 65% or maybe more. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">Any example of how equity levels changed in a fund?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">Yes, I just
saw some data put up by a fund house on how the equity allocation has changed
dynamically at various NIFTY levels and the table is shared below<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;"><o:p> </o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLi2eQapvXptvLcC2aI5MMPucrfJmu2scQr8Z0Og7uMiBgIMLNeuor8jIUSOMG-xXrA4HoNADLcSFHBkq_96i-JG1HJ-NKp9yxYijWE2zCwh1AOcgcAAEULLKDMSniNn7xv9GcvfHKuLWP/s612/idfc+def.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="201" data-original-width="612" height="210" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLi2eQapvXptvLcC2aI5MMPucrfJmu2scQr8Z0Og7uMiBgIMLNeuor8jIUSOMG-xXrA4HoNADLcSFHBkq_96i-JG1HJ-NKp9yxYijWE2zCwh1AOcgcAAEULLKDMSniNn7xv9GcvfHKuLWP/w640-h210/idfc+def.jpg" width="640" /></a></div><p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">An interesting
comment I received:<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif;">Some on social media emphasize that we should do our own allocation and talk down these. What should I do?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">Answer: They
have their own systems and ideas and even though brilliant, their methods may or may
not be suitable to you. Try out your own model. AMCs offer a readymade dynamic model and have been true to
their models in most cases. It is up to you to see if they work for you. If you
are a conservative investor <b><i>there may be a place for a type of product
which can do unemotional investing – buying low when things are bad while
selling high when things are good. And do this in disciplined manner over and
over again.</i></b> Or we have the other type of Dynamic Fund which consistently aims to
maintain higher equity levels when markets are going up and vice versa. Try for
yourself.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">The below
graph shows how they contained the drawdown in March.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;"><o:p> </o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1mthZVzysOpaQu0e5TeeUKvqWb0DarAK-nFnHQk6J6dBHdIILB__qlq0LrGRFbQ5fQHHrmRJHskXMU5sM-aCkvJ9M7VCRGdPMCfGaFPHhYqWeMPLOXoTcqDgqGBxD8WbWaAqworeaZhlm/s799/hybrid+baf.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="353" data-original-width="799" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1mthZVzysOpaQu0e5TeeUKvqWb0DarAK-nFnHQk6J6dBHdIILB__qlq0LrGRFbQ5fQHHrmRJHskXMU5sM-aCkvJ9M7VCRGdPMCfGaFPHhYqWeMPLOXoTcqDgqGBxD8WbWaAqworeaZhlm/w640-h282/hybrid+baf.JPG" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: arial, sans-serif;">By and large,
these funds have served a conservative investor well. It is important to note
that the return expectation from these funds should be tempered. With so much
debt and arbitrage positions, they are by nature defensive. </span><b style="font-family: arial, sans-serif;">These are not alternatives to FDs and these
too have been missold for monthly/quarterly dividends.</b></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="color: red; font-family: arial, sans-serif; font-size: 14pt; line-height: 115%;">Caution!<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">When investing
in these you have to ensure that the fund house follows it model. One large fund
house has such a scheme and disregards dynamic rules and uses it as an
aggressive fund. That has not protected investors.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;"><o:p> </o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQDSUCijP83e7WcfjUn5ctbY1yPS45PyZk0CPgE0NQceARk6w2DhDDPjWOukhrA3_QFQIcA1vVuIvjGPY5XuaTZmROT4hD-Dm1MgS6KCVDQMnPi4RawHgWttEpm4-8rqI-LXQ5XdWqSkTR/s788/hdfc+baf+caution.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="377" data-original-width="788" height="306" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQDSUCijP83e7WcfjUn5ctbY1yPS45PyZk0CPgE0NQceARk6w2DhDDPjWOukhrA3_QFQIcA1vVuIvjGPY5XuaTZmROT4hD-Dm1MgS6KCVDQMnPi4RawHgWttEpm4-8rqI-LXQ5XdWqSkTR/w640-h306/hdfc+baf+caution.JPG" width="640" /></a></div><p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: arial, sans-serif;">There are
other types of hybrid funds becoming popular – multi asset funds which have
gained popularity after the run up in gold. More about these at some other
time.</span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;">In conclusion,
this fall in stock prices has showed us how essential it is to have an asset
allocation. Not all will use readymade asset allocation models like the hybrid
funds AMCs offer. However, you decide for yourself. <b>What is important is that you look more deeply at asset allocation and
use your own model or a readymade investment product.<o:p></o:p></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="font-family: arial, sans-serif;"><o:p> </o:p></span></p><br /></div>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-83834927638419820802020-05-25T10:46:00.001+05:302020-05-25T10:46:25.078+05:304 expensive misadventures in investing<font face="arial" size="4">Markets have seen steep falls since the Covid 19 lockdown.</font><div><font face="arial" size="4"><br /></font></div><div><font face="arial" size="4">I shared my thoughts with <a href="https://twitter.com/larissafernand" target="_blank">Larissa Fernand</a> on errors and misadventures that can destroy portfolios, based on queries I've been receiving from investors since March. These were published in <a href="https://www.morningstar.in/posts/58232/4-expensive-misadventures-investing.aspx" target="_blank">The Morningstar</a> </font></div><div><br /></div><div><p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><b><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">4 expensive misadventures in investing</span></b><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F9F9F9; font-family: "Arial","sans-serif";">Based on interactions with clients, friends and
acquaintances, <b>MAHESH MIRPURI </b>recently </span><span lang="EN-IN" style="font-family: "Arial","sans-serif";"><a href="https://twitter.com/invest_mutual"><span style="background: #F9F9F9; color: windowtext;">tweeted</span></a><span style="background: #F9F9F9;"> about
what is going on in the minds of investors.</span></span><span style="background-color: #f9f9f9; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F9F9F9; font-family: "Arial","sans-serif";">Being a </span><span lang="EN-IN" style="font-family: "Arial","sans-serif";"><a href="http://invest-mutual.blogspot.com/"><span style="background: #F9F9F9; color: windowtext;">financial coach and adviser</span></a><span style="background: #F9F9F9;">, he neatly put it across as <b>misadventures in investing</b>. Here he fleshes out the points to
caution investors on how to be wise in such uncertain times.</span></span><span style="background-color: #f9f9f9; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F9F9F9; font-family: "Arial","sans-serif";">Here is something that you must know: You can gain
substantially in your portfolio by avoiding mistakes. Win, by not losing. Skip
these misadventures, and you are automatically ahead in the game. In fact, it
is more crucial to avoid certain errors, than hunt for the “best” instrument.</span><span lang="EN-IN" style="font-family: "Arial","sans-serif";"><br style="box-sizing: border-box; text-align: start;" />
<br style="box-sizing: border-box; text-align: start;" />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><b><span style="background: white;"><o:p></o:p></span></b></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><b><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">The misadventure: Ignoring risk when chasing a higher yield.</span></b><span style="background-color: #f9f9f9; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F9F9F9; font-family: "Arial","sans-serif";">The Reserve Bank of India recently lowered its repo rate to
4%, and the reverse repo rate to 3.35%.</span><span style="background-color: #f9f9f9; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F9F9F9; font-family: "Arial","sans-serif";">The repo rate is the rate at which the RBI lends to other
banks. The reverse repo rate is the rate at which the RBI borrows from banks.These
are the benchmark rates in the economy, which means that these as such, form a
basis for all other interest rates.</span><span style="background-color: #f9f9f9; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F9F9F9; font-family: "Arial","sans-serif";">Worth noting is that these are the lowest rates we have had
since 2000. With India facing an economic downturn, the rates may not rise soon.
Banks have consequently dropped lending and fixed deposit rates and this has
made senior citizens anxious.</span><span style="background-color: #f9f9f9; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">To compensate, investors are now looking at instruments that
offer a higher return, choosing to ignore the risk of losing capital. Senior
citizens have enquired about Company FDs, NCDs and other instruments which carry
a risk of losing capital.</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Please consider safety of capital more especially, at this
critical time like this. Senior citizens can consider the Senior Citizens
Savings Scheme @7.4% or RBI Taxable Bonds @ 7.75% or the </span><span lang="EN-IN" style="font-family: "Arial","sans-serif";"><a href="https://www.licindia.in/getattachment/Products/Pension-Plans/Pradhan-Mantri-Vaya-vandana-Yojana_05052018-(2).pdf.aspx"><span style="background: white; color: windowtext;">Pradhan Mantri Vaya Vandana Yojana –
a pension scheme</span></a><span style="background: white;">. A host of other small savings schemes are also
available. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";"><o:p> </o:p></span><b><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">The misadventure: Playing the guessing game.</span></b><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">I keep getting calls or requests for advice on whether a
stock is a good buy at a particular price. "Stock ABC was Rs 500. Today,
it is quoting at Rs 350. Should I buy?”</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">I answer such queries by posing another question: What is
your <b>anchor?</b></span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Let me explain. We don’t realize how dominant the <b>anchoring bias</b> is. This is when our
brain unconsciously seeks a reference or starting point when guessing an
answer.</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Let’s say I began to track a stock when it was Rs 3,000. Now
that it has dropped to Rs 2,000, I believe it is cheap. But is it? To really
figure out if it is cheap, you must study the stock in detail. Maybe it is
still expensive at Rs 2,000. Maybe it was cheap at Rs 3,000 and is cheaper
still. And if that is the case, why is it falling so rapidly? Is there a reason
it is plunging faster than other players in the same sector?</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><i><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Don’t rush
to buy because your mind is anchored to a previous price. </span></i><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Study.
Analyse. Don’t guess.<i><o:p></o:p></i></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";"><o:p> </o:p></span><b><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">The misadventure: Betting recklessly.</span></b><b><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";"><o:p> </o:p></span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">After Demonetisation, it was a dream run for the Indian
stock market. </span><span style="background-color: #f5f8fa; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">The Sensex stood at 27,591 on November 8, 2016. As millions
of investors channelized their money into equity funds since interest rates
dropped substantially, there was a phenomenal rally – and spectacular gains in
small and mid caps. Seeing recent performance, thousands of investors poured
money into small and mid cap funds and stocks, fuelling a stellar run. And while
there were substantial corrections along the way, the Sensex touched an
all-time high of 41,000 before this steep fall.</span><span style="background-color: #f5f8fa; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">The problem is that many investors flocked to the asset
class with no clue as to how volatile it can be and how punishing a steep fall
can be.</span><span style="background-color: #f5f8fa; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">To add fuel to the fire, many investors have invested a
substantial part of their financial assets into equity alone. Zero respect was
paid to asset allocation. Such portfolios have suffered tremendous damage. </span><span style="background-color: #f5f8fa; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">Never bet recklessly on one single asset. Always ensure
proper asset allocation and diversification. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";"><o:p> </o:p></span><b><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">The misadventure: Chasing returns.</span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";"><o:p> </o:p></span><span lang="EN-IN" style="background: rgb(245, 248, 250); font-family: Arial, sans-serif;">This has always been an investor weakness. Invest in the
sector once it rallies. Invest in a fund once it tops the chart. </span><span style="background-color: #f5f8fa; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: #F5F8FA; font-family: "Arial","sans-serif";">A number of investors now want to bet on gilt funds. Why?
Because they have put up some excellent return figures. No one considered them
when yields were high. Today, when 10-year paper is at 5.96%, maximum enquiries
come in for gilt funds. Why? Because investors are looking at the recent past
performance, without enquiring into why! </span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Agreed, gilt funds have no credit risk. There is no risk of
default. But they do have interest rate risk.</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">In simple language, if interest rates rise, the price of the
bonds will fall. If interest rates fall, the price of the bonds will rise. Interest
rates (yields on bonds) have fallen tremendously and this means bond funds have
given very good gains. Now instead of chasing such funds, ponder, how far lower
can interest rates go?</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">If you wish to invest in gilt funds, understand the offering
and consider it as a tactical play. I have written about it in </span><span lang="EN-IN" style="font-family: "Arial","sans-serif";"><a href="https://www.morningstar.in/posts/58023/build-debt-portfolio.aspx"><span style="background: white; color: windowtext;">How to build a debt portfolio</span></a><span style="background: white;">.</span></span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">Investing simply based on recent performance can turn out to
be a misadventure.</span><span style="background-color: white; font-family: Arial, sans-serif;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><b><span lang="EN-IN" style="background: white; font-family: "Arial","sans-serif";">In
conclusion, to avoid the mistakes enumerated above, develop a deliberate and
thoughtful investment process and stick by it. You will be well on your way to
having a good investment portfolio. <o:p></o:p></span></b></p></div>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-79601743857221748572020-05-13T08:31:00.000+05:302020-05-13T08:33:48.969+05:30Approach to creating a debt portfolio<span style="background-color: white;"><span> </span> </span><div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlZjmwg5I3vRIKoZLLHgPqhUfU3Hr9PO_lMftdAweNFXkCfaaXV_iNjPK0-7gtnlDCqtLaeAIHjsMxuWhENHvyaQOtCK__wn_Q_nMvAklCKOukh-RkCCG1ohO3PZa78wJi6n7vQ_WwLh-_/" imageanchor="1" style="background-color: white; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="181" data-original-width="279" height="207" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlZjmwg5I3vRIKoZLLHgPqhUfU3Hr9PO_lMftdAweNFXkCfaaXV_iNjPK0-7gtnlDCqtLaeAIHjsMxuWhENHvyaQOtCK__wn_Q_nMvAklCKOukh-RkCCG1ohO3PZa78wJi6n7vQ_WwLh-_/w320-h207/bonds.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="background-color: white;">BOND FUNDS<br /><br /></span></td></tr></tbody></table><font face="arial" size="4" style="background-color: white;"><a href="https://www.morningstar.in/posts/58023/build-debt-portfolio.aspx#.XrosGTC7X_8.twitter" target="_blank">I wrote an article in the Morningstar</a> and am reproducing the same here. <br /><br /><div style="text-align: center;"><u>Approach to creating a debt portfolio</u></div></font></div><div><font face="arial" size="4" style="background-color: white;"><br /></font></div><div><p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">The first step to creating any
portfolio, is to decide on the equity and debt combination. The allocation to
equity will rest on three factors: when you need the money, an honest appraisal
of your capability for risk, and the volatility you can stomach. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">When it comes to debt, there are two
aspects you must never lose sight of: S<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">afety
and Liquidity.I say this because the prime aim of a debt fund is capital
preservation and stability to the overall portfolio. It is supposed to make it
easier to stomach risk elsewhere in the portfolio. Investors </span><span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">can inadvertently sabotage their portfolios by
trying to juice returns by adding risky debt.</span><span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;"><o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">It is very easy to get carried away
by advice doled out of Twitter or television. Random transaction-based
investing will harm you and you will end up with a lot of "junk". Never
view any investment in isolation, always view it in relation to your portfolio.
Once you adopt this step, then you will get investments that complement each
other, at the same time, avoiding portfolio clutter and duplication. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">There are three elements to consider
when constructing a debt portfolio.<o:p></o:p></span></b></p>
<p class="MsoListParagraph" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";">An Emergency Fund <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">An emergency, by its intrinsic
nature, is meant for unexpected and emergency events. Which means, you will
need to use them instantly. Don’t chase returns here, keep a laser-like focus
only on Liquidity and Safety. This is all that matters. I suggest <span style="mso-spacerun: yes;"> </span>bank fixed deposits. If you want to consider
mutual funds, go for liquid and ultra short-term funds. Alternatively, you can
consider dividing the emergency fund amongst these options. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; font-family: Arial, sans-serif;">Liquid funds primarily
invest in money market instruments like commercial paper (CP), treasury bill (T-bills)
and certificate of deposit (CD) with low maturity period. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background-color: white;"><span lang="EN-IN" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; font-family: Arial, sans-serif;">Ultra short-term
funds primarily invest in liquid fixed income securities which have short-term
maturities. </span><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></span></p>
<p class="MsoListParagraph" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";">Core Portfolio<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">This bucket contains the bulk of
fixed income allocations and provides for a nest-egg to the overall asset
allocation of an investor. The chief pursuit here is one of safety. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">I suggest you layer it. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">Look at assured return investments
such as fixed deposits, Employee Provident Fund (EPF), Public Provident Fund
(PPF), RBI bonds, and small savings schemes. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">Build on this base with debt mutual
funds that are low on both, duration and credit risk. Do not deviate from this
rule and you will avoid credit risk and interest rate risk. The advantage of this
type of debt mutual funds is that investors get the benefit of lower tax rates
(if held for > 3 years) and market returns. The appreciation in these funds
is not only from the accrual of interest income, but possible capital
appreciation due to interest rate movements.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";">Tactical Portfolio<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">This is where you can afford to be
experimental and look for higher returns. To take advantage of market
conditions, 15-20% of your debt allocation can be funnelled into this bucket.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">Gilt funds would fit here. These
funds have no credit risk or risk of default. Their risk is interest rate
movements. If you expect interest rates to dip in the future, you could
consider a tactical bet here. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 12pt; text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">Dynamic
bond funds would fall under this category. Consider them after getting well
acquainted with the fund manager’s strategy. Steer clear of funds with credit
risk. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 12pt; text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">Credit
risk funds too fall in this satellite category. These funds do not even come
onto my radar as I see no point in taking on risk of default and wiping out
capital permanently.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">Non-convertible debentures (NCD)
issued by companies also fall into this category. But the risk here cannot be
ignored. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;">A word of caution to retail
investors when it comes to debt funds.<o:p></o:p></span></b></p>
<p class="MsoListParagraphCxSpFirst" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; font-family: Arial, sans-serif;">Start with the
question: why do I need market-linked debt instruments? Once that is answered,
take it forward using safety and liquidity as the two guiding posts. </span><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></span></p>
<p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";">Understand the nuances of each fund.
Different types of debt funds carry different risks. The risk of a credit fund
is totally different from that of a gilt fund. Gilt funds, on the other hand,
are not a homogenous lot. The category has actively managed gilt funds and
constant maturity gilt funds. Understand what the fund invests in and its
risks. <o:p></o:p></span></span></p>
<p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";">When evaluating a fund, keep various
factors in mind; whether it is purely open ended or a “target maturity” fund, weighted
average maturity, credit quality and expense ratio. <span style="mso-spacerun: yes;"> </span>Liquidity of the portfolio must also be
considered. Your open-ended debt fund must be able to provide for liquidity in
the assets that it holds. This means that when faced with redemptions it should
have assets that can be liquidated and with reasonable impact costs. When
selling assets, the risk profile of the remaining assets should not shoot up or
be concentrated, like we have seen in the recent credit fund crisis<o:p></o:p></span></span></p>
<p class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-indent: -18pt;"><!--[if !supportLists]--><span style="background-color: white;"><span lang="EN-IN" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-IN" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; font-family: Arial, sans-serif;">Finally, don’t invest ONLY because the past performance has
been great. This is a mistake many a retail investor is susceptible to. </span><span lang="EN-IN" style="font-family: "Arial","sans-serif"; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></span></p>
<p class="MsoListParagraphCxSpLast" style="text-align: justify;"><span lang="EN-IN" style="background-color: white; font-family: Arial, sans-serif;"><o:p> </o:p></span><span style="background-color: white; font-family: Arial, sans-serif;">If all of this seems a bit
overwhelming, I suggest that you take the help of a knowledgeable guide or a
financial adviser OR you can approach me.</span></p><p class="MsoListParagraphCxSpLast" style="text-align: justify;"><i style="font-family: Arial, sans-serif;"><br /></i></p><p class="MsoListParagraphCxSpLast" style="text-align: justify;"><i style="font-family: Arial, sans-serif;">MUTUAL FUNDS ARE SUBJECT TO MARKET RISK. PLEASE READ ALL SCHEME DOCUMENTS CAREFULLY BEFORE INVESTING</i></p><div style="text-align: justify;"><br /></div></div>Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-7917344487694341612018-02-13T13:29:00.000+05:302018-02-13T13:29:24.573+05:30You cannot ignore these - Journey from Good to Great<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "Arial","sans-serif";">From good to great<o:p></o:p></span></b></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpkW1iDqviJ33RhyphenhyphenQy_MDIGqW4DikmjgRjlC6VhdxFM8P15pEAgVuxmYndLLTyZPMpfhSAvjIIy6g06HsdRLwOZdbEfm4n1LnTAzrq10m2egRrSKBMcgJl-yAPHYIF6PB7gXYNlVyNY-pA/s1600/Great.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="581" data-original-width="716" height="259" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpkW1iDqviJ33RhyphenhyphenQy_MDIGqW4DikmjgRjlC6VhdxFM8P15pEAgVuxmYndLLTyZPMpfhSAvjIIy6g06HsdRLwOZdbEfm4n1LnTAzrq10m2egRrSKBMcgJl-yAPHYIF6PB7gXYNlVyNY-pA/s320/Great.jpg" width="320" /></a></div>
<span style="font-family: Arial, sans-serif;">The recently concluded IFA Galaxy Annual
Summit this year had the theme – From Good to Great. My piece was published in
the Annual Souvenir. Sharing the same here.</span><br />
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<span style="font-family: "Arial","sans-serif";">There is a wonderful series
of instructions in the Veda starting with the words - Na Pramaditavyam/ Ma
Pramada </span><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%;">(</span><span style="font-family: "Utsaah","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-ascii-font-family: Arial; mso-bidi-font-family: Arial;">न</span><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%;"> </span><span style="font-family: "Utsaah","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-ascii-font-family: Arial; mso-bidi-font-family: Arial;">प्रमदितव्यम्</span><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%;"> / </span><span style="font-family: "Utsaah","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-ascii-font-family: Arial; mso-bidi-font-family: Arial;">मा</span><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%;"> </span><span style="font-family: "Utsaah","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-ascii-font-family: Arial; mso-bidi-font-family: Arial;">प्रमद</span><span style="font-family: "Arial","sans-serif";">:)
Simply these mean – DO NOT NEGLECT the few things listed. These
injunctions are meant to ensure we live a fulfilled life. </span><span style="font-family: Arial, sans-serif;">In the list, the Shruti
has even mentioned – Do not neglect your well being and prosperity!</span></div>
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<br /></div>
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<span style="font-family: "Arial","sans-serif";"><br /></span></div>
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<span style="font-family: "Arial","sans-serif";">There are some traits
common to every person who has achieved greatness A few things they have not
neglected in life’s journey – a few things that has made the difference between
good and great. These few are mentioned in the list I mentioned above and I
enumerate the same here.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Arial","sans-serif";">Do
not neglect basic values – Build your profession around values:<o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif";">The great stand by some
values and principles. <em><span style="background: white;">“To be truly rich, regardless of his fortune or
lack of it, a man must live by his own values. If those values are not
personally meaningful, then no amount of money gained can hide the emptiness of
life without them.”</span></em><span style="background: white;"> </span><span style="background: white; mso-bidi-font-weight: bold;">John Paul Getty</span><span style="background: white;">.<o:p></o:p></span></span></div>
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<br /></div>
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<span style="font-family: "Arial","sans-serif";">The basic principle
around which every action is built is<b>, “Do
as you would be done by</b>!” When you are in a position of an advisor, mentor
and have relationships built on trust, there is a great responsibility to
uphold that trust – at the cost of business. Have a code of honour and live by
it. If you cannot be great in your own mind, it does not matter what others
think.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Where there is choice,
there is conflict. In such cases, your values should decide your choices as a
professional. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial","sans-serif";">These values should not
just be taglines to our business names. They should be the principle(s) around
which our entire profession is built. <o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Arial","sans-serif";">Do not neglect your contribution to
society:<o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif";">Everyone
who has achieved greatness is a contributor, more than a mere consumer. In the
balance sheet of life, ensure that the contribution side is far greater than
what you have received and consumed. Be intensely aware of the <b>entire</b> cosmic infrastructure that has
supported you in life’s journey and you will feel the need to take care of it.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Contribution
need not be financial only. It can be in the form of teaching or giving your
time to some cause etc. Look at the world around, everything is cyclic. You receive-give,
receive-give, receive-give. Let the cycle not be broken. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial","sans-serif";">Contribution
as a professional, is also giving back to your employer, employees, your
principals and clients more in value than you receive. <o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Arial","sans-serif";">Do
not neglect your health - Physical, mental and intellectual health:<o:p></o:p></span></b></div>
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<em><span style="background: white; font-family: Arial, sans-serif;">“The foundation of success in life is good health: that is
the substratum of fortune; it is the basis of happiness.”</span></em><span style="background: white; font-family: Arial, sans-serif;"> — </span><b><span style="background: white; font-family: "Arial","sans-serif";">P.T. Barnum</span></b><b><span style="font-family: "Arial","sans-serif";"><o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif";">When I speak about
health, I refer to physical, mental and intellectual health. Everyone is aware
of the need to have good physical health. My focus here is on mental health.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Work environment is competitive,
ever changing and challenging. Invariably during waking hours, the mind is
filled with stress, indecisiveness regarding choices and preoccupations. Mental
fitness refers to calmness of mind, an ability to focus and to see things
objectively. It means <b>enjoying a mental detachment</b>
and not letting emotions rule, create havoc and affect decisions. Unchecked,
powerful emotions subdue the intellect.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Every great, successful
person has this mental fitness – ability to remain objective and enjoy relative
calmness amidst action in the ever changing environment. <b>He has this ability to remain in control and let the intellect work. <o:p></o:p></b></span></div>
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<span style="font-family: "Arial","sans-serif";">Some suggestions:<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;">1.<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif";">The
breath and mind are connected. Watching one’s breath is a great relaxation technique
when one is stressed. Works immediately to help one calm down<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;">2.<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif";">Take time out to watch nature and take
a walk <b>alone.</b> This will ensure that
you develop mental leisure that is so important. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;">3.<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif";">One trick that is useful, is to learn
to “neighbourize” any situation. At times of
conflict and indecision, it would be good to watch your mind / the
situation as if it were a neighbour and then respond. <o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Intellectual health
refers to a <b><u>well informed, thinking
intellect</u></b>. Please do not restrict learning and reading only to
investment related stuff. An intellect continually sharpened by going deep into
a subject, learning new things and ideating makes the difference between good
and great.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">While those who have achieved greatness in their fields have several other traits, I thought it fit to emphasize the above. Be
mindful of the above and see difference it makes.
Wishing you greatness in your chosen path.<o:p></o:p></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-40531517735801983652017-12-31T14:29:00.002+05:302020-12-27T11:15:04.258+05:30#Throwback2017 General observations. Bulls, SIPs and gyani investment babas<div dir="ltr" style="text-align: left;" trbidi="on">
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp9YD9Q9CTJl_GEBKI9lmkLXYtZyK2TCzR0N24qqmIv_Rxg0cRe51URCBWa2rKV1715NzxH1CZcnE4DpiGjtkk5xbbc0ncCSYi3yWvALJn_rkdjIBeTcBTmHIljLRyNPoRBl_R2wAxoHBS/s1600/bull+market.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="500" data-original-width="600" height="166" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp9YD9Q9CTJl_GEBKI9lmkLXYtZyK2TCzR0N24qqmIv_Rxg0cRe51URCBWa2rKV1715NzxH1CZcnE4DpiGjtkk5xbbc0ncCSYi3yWvALJn_rkdjIBeTcBTmHIljLRyNPoRBl_R2wAxoHBS/s200/bull+market.jpg" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;"><i>2017 - year of the Bull</i></span></td></tr>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">Wishing
you all a very happy new year, filled with good health, success in your endeavours
and a step forward to complete financial freedom.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">2017
has been fantastic for equity investments and do see the chart prepared by<b>
<a href="https://twitter.com/rajeshkathpalia/status/946744170042900480" target="_blank">Rajesh</a> </b>below. <o:p></o:p></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7KLGlGYHmymqhDWqvTNDYkg7jdoNPOyu-CuILBUaEtmbkx6-szucU3OxBmBCYPw_BWHwctsd3CKunyv076rWmrEWCwzDdmQyNGG0YB4abFaG_xQ3ldTY7qL1yHyXnOS8INa-V00Z_Mq0w/s1600/Index+Dashboard+2017.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1156" data-original-width="720" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7KLGlGYHmymqhDWqvTNDYkg7jdoNPOyu-CuILBUaEtmbkx6-szucU3OxBmBCYPw_BWHwctsd3CKunyv076rWmrEWCwzDdmQyNGG0YB4abFaG_xQ3ldTY7qL1yHyXnOS8INa-V00Z_Mq0w/s640/Index+Dashboard+2017.jpg" width="396" /></a></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">Just
wish to make a few observations:<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">All
those who have remained in the markets since 2008 have truly gained. They have
seen lows and have understood the necessity of asset allocation. They remain
grounded and have taken advantage of this bull run. While, this year has been good and in fact the last 3 years have been great, investors will do well to remember years when things did not go well.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">Thousands of new investors have entered the equity through mutual funds – mainly using
SIP as an instrument. The industry monthly SIP book is almost 6000 crores now. SIP
has been a wonderful way to enter for those who earn a salary and for those whose
cash flow allows a specific sum to be invested every month. <o:p></o:p></span></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5_v_0hHcKLYC0e7607rmj-yZwFT6HvAdpu4nzvHUriihZaQ0U_jadXM2RjR5R0lBMJXEv54GRB69Kz0c_y9eXg77LKscwvQTxLPKowsKI2yNyq_kB9BVa5ejDmYbID5_CMl2VAsJwLg6L/s1600/amfi.PNG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="226" data-original-width="871" height="103" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5_v_0hHcKLYC0e7607rmj-yZwFT6HvAdpu4nzvHUriihZaQ0U_jadXM2RjR5R0lBMJXEv54GRB69Kz0c_y9eXg77LKscwvQTxLPKowsKI2yNyq_kB9BVa5ejDmYbID5_CMl2VAsJwLg6L/s400/amfi.PNG" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: AMFI</td></tr>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">The
one thing I can say is that simplicity scores over any complicated investment
method. Salaried professionals simply have no time to look regularly at their
portfolio and keep a tactical portfolio running.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">There
has been no dearth of social media gyani investment babas waiting
for the market to crash. Some of them seem to be waiting to tell the new entrants into Mutual Funds that mutual funds sahi nahi hai!! Waiting to tell the SIPers that that
SIPing does not take out risk from equity. Today also one worthy on twitter said that he was waiting for years of single digit returns so that his point was proved right! Phew!<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;"><b>No
investor says that SIPing takes out risk from equity investing. And we know that the market
will crash sometime</b>. We SIP not because it is a risk free method of investing, but because our cash flow allows for monthly investments. It is a tool to maintain discipline and automate the
saving/investment process. Using SIP does not mean not allocating to debt! IMHO the best advice is one that makes you STAY THE
COURSE and stick to your investing principles. Stay the course, shut out the
noise and you will do well on your path to complete financial freedom.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">Equally,
many gyani investment babas</span><span style="font-family: "arial" , sans-serif;"> like only 1 or 2 particular fund houses because of their “perceived
honesty” and criticize others. They have have missed out! <u>Be open to ideas</u>. Always be open to new ideas. Approaching investments with a closed mind is having a frog in the well approach</span><b style="font-family: arial, sans-serif;"> There are some great fund
houses with some great schemes and fund managers. You miss out if you do not
use these to your benefit. </b><span style="font-family: "arial" , sans-serif;">The light blue line in the chart below is the fund with a low TER and the orange line is a NIFTY ETF. These are one year returns. These are all large cap based funds that I track. So, be open and do not miss out on good opportunities. <i>Yes, times may change and one day we may move into an era of passive investing. Till that time comes, make the best out of active funds. Be open to changing over to passive investing too :)</i>😁</span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQAjme5rOxaNBSIWxO2WEURttZhC0GO6_4GDwtETVC8zjyVpVyeanikGDyiIjfN7rVHHcx03CuKI0GbaY0ccTCKI9Ux2ES3puXQdh-RruVGjOOmD5N9wjmUB07_7HIZTUMPtqM6Arbn-8s/s1600/Returns.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="232" data-original-width="891" height="164" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQAjme5rOxaNBSIWxO2WEURttZhC0GO6_4GDwtETVC8zjyVpVyeanikGDyiIjfN7rVHHcx03CuKI0GbaY0ccTCKI9Ux2ES3puXQdh-RruVGjOOmD5N9wjmUB07_7HIZTUMPtqM6Arbn-8s/s640/Returns.PNG" width="640" /></a></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">One important point: Many will not agree with me, but I would certainly NOT neglect mid cap based funds just because they have run up a lot. More on this in a future post.</span><br />
<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">If you've remained in SIP in a mid cap fund for the last 5 years, you've surely got an XIRR of > 25% in that fund. However, keep expectations grounded.</span><br />
<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;"><br /></span>
<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;"><b><u>A note on debt</u></b>: Just because the last one year has not been good for debt funds, do not neglect these. The GOI 10 year bond is at 7.33% now and FD rates are at about 6.75% only for a one year FD. Rates look to be inching higher and definitely bond funds look attractive. Some of the shorter duration and accrual funds we track have all given a CAGR of > 8.5% over 3 years.</span><br />
<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;"><br /></span>
<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">Finally
a few words for 2018<o:p></o:p></span></div>
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<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Imbibe
principles of personal finance and investing well</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Be
disciplined when it comes to working for complete financial freedom and automate the process</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Stay
the course</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Do
not procrastinate ( in cleaning up portfolio, in rebalancing to original allocation etc) </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Cut
out the noise from financial media – learn to filter out the information you need</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Last
– take help <b>if</b> you need it.</span></li>
</ul>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; mso-ansi-language: EN-IN;">Once
again, wishing you all a happy, healthy and successful 2018<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif;"><i>Mutual Funds are subject to market risk. Read all scheme related documents carefully before investing</i></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-17572903967082025502017-11-18T19:27:00.003+05:302017-11-18T19:57:57.982+05:30Cafemutual interviewed me...<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEip7g3izJkFnT_l0389SeQ743u-FkYN1HN4N2GEw-Ce3R9unZO0aecvJ6gK4oLJ0gKIwKJIij6ulfQbzgJy4Rdk_2s3Ni5evbtKtLOQTwOKbS9thVigfkr0z2a-nojwoWV5DGEEXoowv_st/s1600/cafemutual.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1012" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEip7g3izJkFnT_l0389SeQ743u-FkYN1HN4N2GEw-Ce3R9unZO0aecvJ6gK4oLJ0gKIwKJIij6ulfQbzgJy4Rdk_2s3Ni5evbtKtLOQTwOKbS9thVigfkr0z2a-nojwoWV5DGEEXoowv_st/s320/cafemutual.png" width="202" /></a></div>
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<span style="font-weight: normal;"><span style="font-size: small;">Cafemutual intervewed me recently when they were looking for the most (top 3) followed mutual fund advisors on twitter. The below is what they <a href="http://cafemutual.com/news/tarraki/236-how-dmuthukrishnan-and-mahesh-mirpuri-gained-over-10000-followers-on-twitter" target="_blank"><span style="color: blue;">published</span></a></span></span></h1>
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<span style="font-weight: normal;"><span style="font-size: small;"><i>Getting a loyal following on twitter is every advisor’s dream. While most advisors are yet to reach their first 1000 followers, these two IFAs have taken social media presence to a whole new level. They have not just established themselves as thought leaders but managed to get more than 10,000 followers. In this interview with Cafemutual, they reveal their unique style of tweeting.</i></span></span></h1>
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<strong style="background-color: white; box-sizing: border-box;"><i>Mahesh Mirpuri of Invest Mutual, Chennai</i></strong></div>
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<em style="background-color: white; box-sizing: border-box;">@invest_mutual</em></div>
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<em style="background-color: white; box-sizing: border-box;">Followers: 11368</em></div>
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<em style="background-color: white; box-sizing: border-box;">Joined on: July 2011</em></div>
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<span style="background-color: white;"><i>I started using Twitter before I became an IFA. I believe since Twitter is a social media, one should focus on personal interests and passions. Hence, apart from mutual funds, I post tweets on personal finance, Sanskrit and Vedanta.</i></span></div>
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<span style="background-color: white;"><i>In fact, in my profile description too, I have specifically mentioned this to let my followers know what type of posts to expect from me.</i></span></div>
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<span style="background-color: white;"><i>By sharing infographics and giving commentary on news or articles, I am able to reach out to a wide audience. In fact, many people in my Vedanta and Sanskrit lists have approached me for financial advice.</i></span></div>
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<span style="background-color: white;"><i>In addition, I make it a point not to give advice on Twitter. I keep it strictly for socializing. If someone asks me a mutual fund query, I encourage him or her to become my client first.</i></span></div>
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<span style="background-color: white;"><i>My advice to advisors is to increase interaction with people on social media. If someone has posted a tweet, reply immediately. I am never shy of replying to industry leaders, CEOs, CIOs and fund managers. By interacting with various people, I have increased my visibility. Recently, a fund manager approached me telling he recognised me from Twitter. </i></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com1tag:blogger.com,1999:blog-8604197643943927369.post-64823915873758041682017-10-16T10:31:00.001+05:302017-10-16T10:31:43.216+05:30Personal Finance: From darkness to light<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">Diwali is here and we have some
really great words of wisdom from many investors and advisors on investment strategy
and on behaviour patterns required to be successful in investing and reaching financial
goals.<span style="font-size: 10pt;"><o:p></o:p></span></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">The avalanche of news
articles, advertisements along with lower returns from traditional investment
avenues that guarantee returns have prompted many to seek out newer products. Many
of you are new, first time investors, shifting tentatively from FDs to investments
that give market related (not guaranteed) returns.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">The most common places for information
we go to are news articles, opinion in the finance pages, TV channels. We do get some really great information from here but truly useful information is hidden among a lot of rubbish. Unfortunately much of what is bandied about is exaggerated, inappropriate and I
find many getting utterly confused on what to do. More importantly, they make
you feel you are missing out and lead you to hara-kiri.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">Another person who freely dishes out information
is that Bank “Relationship Manager”. I’ve personally never seen so many untruths
being spoken as when I hear a Relationship Manager speak about an investment.
His/her only relationship is with the money in your account which may have come
from a matured FD.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">So, what should investors do?
<o:p></o:p></span></div>
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<i><u><span style="font-family: "arial" , sans-serif; line-height: 115%;">First
– take some effort to move from darkness of ignorance of financial instruments
towards the light of knowledge<o:p></o:p></span></u></i></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">Spend some time learning
about various financial instruments, how they work and what you can expect. Such
information does not come from the questions on in newspapers or on CNBC asking
“Which is the best Fund?”. Neither will it come from WA forwards on investment
tips. It requires some time to read relevant books on investments and simple financial
primers explaining various instruments.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">An investment in knowledge pays the best
interest. This learning does not take too much time and only requires some
interest and commitment on your part. <o:p></o:p></span></div>
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<i><u><span style="font-family: "arial" , sans-serif; line-height: 115%;">Second
– seek advice and learn<o:p></o:p></span></u></i></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">While I was addressing a large
group on personal finance – a group of about 80, <u>only two persons</u> could
answer a question of mine on how a mutual fund worked. If you don’t know, it
makes sense to seek advice, have someone to guide you and teach you. Your
advisor, guide, financial mentor can keep you focused, impart his wisdom. Wisdom is more than just knowledge about
financial instruments. As I hinted above – right at the start, your behaviour,
your reaction to various events, attitude towards finances can be changed which is the most important factor
in attaining financial goals. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">While many of you have
entered the markets for the first time in this bull run and have had a great
experience in the last four years, it is
imperative that you are aware of what you are getting into and <b>enjoy the ride, with the light of knowledge
guiding you in your path to financial freedom.</b><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">I wish you all a Happy
Diwali, healthy and prosperous new year and success in your journey to
financial freedom.<o:p></o:p></span></div>
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<b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">असतो</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">मा</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">सद्गमय</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">।</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><em><b><span style="background: white; color: #6a6a6a; font-family: "mangal" , "serif"; font-style: normal;">तमसो</span></b></em><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">मा</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><em><b><span style="background: white; color: #6a6a6a; font-family: "mangal" , "serif"; font-style: normal;">ज्योतिर्गमय</span></b></em><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">।</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">मृत्योर्मा</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">अमृतं</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">गमय</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="background: white; color: #545454; font-family: "mangal" , "serif";">।</span></b><b><span style="background: white; color: #545454; font-family: "arial" , "sans-serif";"> </span></b><b><span style="font-family: "arial" , "sans-serif";"><o:p></o:p></span></b></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-11755556850129063122017-02-25T11:41:00.002+05:302017-02-26T11:00:39.469+05:30Integrated personality and success in your financial life<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtp0Ogfpp2teMDS4ZztteCbxv_fN3b6HOVtcPzMCzuVfhyY2pVdIFDiGp8fsdZSu6Mwz-ve9lk8wgweJu-VMm_ro8YJWJkkXIIRwY8llxbPdjTqZsIw4QQSvwCPiudwc4PMf6CrHHpZqSB/s1600/PERSONALITY.JPG" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="164" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtp0Ogfpp2teMDS4ZztteCbxv_fN3b6HOVtcPzMCzuVfhyY2pVdIFDiGp8fsdZSu6Mwz-ve9lk8wgweJu-VMm_ro8YJWJkkXIIRwY8llxbPdjTqZsIw4QQSvwCPiudwc4PMf6CrHHpZqSB/s320/PERSONALITY.JPG" width="320" /></a></div>
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<span style="font-family: "arial" , sans-serif; text-align: justify;">I
met a young investor </span><u style="font-family: Arial, sans-serif; text-align: justify;">several months</u><span style="font-family: "arial" , sans-serif; text-align: justify;"> back wanting to make a start and he
decided to invest in an ELSS scheme. He took the KYC forms and promised to get
back in 2 days. Months passed and even after reminders, there was no
information, till last week he called and lamented that a huge amount of TDS had
been cut from his annual bonus received in the end of Jan!! (He has delayed in
making the investing and did not submit proof to his HR)</span><br />
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<span style="font-family: "arial" , "sans-serif";">Now,
another investor: A young lady, at her first job discussed a plan for savings
and investment last year and started with an SIP of Rs 2000.00, promising to
increase SIP by Rs 10000.00 after a year. She has just come and actually made
the NEW investment even though her increment was not as expected. Was truly
impressed when she said that she would not let anything get in the way of the
plan and would cut unnecessary expenses. <o:p></o:p></span></div>
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<span style="font-family: "arial" , "sans-serif";">You
can already guess who has a greater chance of achieving total financial
freedom!! The difference in the two investors is the heading of this post – <b>Integration of one's personality!!</b> - Integration
of the various layers of personality is a very very important factor in
achieving success in ANY field let’s see how this works. First, what are the layers of personality referred to here?<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , "sans-serif";">Layers of personality<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , "sans-serif";">Intellectual layer</span></b><span style="font-family: "arial" , "sans-serif";">: All of us individuals have an
intellect (brain!!) which receives information, processes it, learns new facts,
discriminates between right and not right and makes a decision. Planning,
analysis, deciding processes etc are the functions of the intellect which makes
decisions. So deciding on how you invest, how much to invest, planning our
budgets etc. etc. are a process of the intellectual layer of our personality. (Alas,
many do not fully use their intellectual abilities and just amber along, which
is the subject of another post)<o:p></o:p></span></div>
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<span style="font-family: "arial" , "sans-serif";">Now,
this decision made by the intellect needs to be implemented!! In between the
decision and the implementation come two more layers of our personality – our <b>MIND (mental layer)</b> and our <b>BODY (physical layer of our personality).</b>
The mind is a fickle thing, has strong likes and dislikes, needs, desires,
wants the easy way out (jugaad), is pulled by the various things of beauty and
novelty in the world around! <b>It is very
strong and PULLS the body along with it. It is often working at a tangent different
from the intellect.</b><o:p></o:p></span></div>
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<span style="font-family: "arial" , "sans-serif";">To
give an example, you have decided to take an early morning walk and set the alarm for 5.30 AM. The alarm goes off. Invariably
the fickle, pleasure loving mind will want another 10 minutes more of sleep!!
This snooze thing is a real killer and you never get up. But note what has
happened. Your mind and body are opposing the decision of your intellectual
layer!! Let this happen a few times and you will NEVER get up early. The same
is the story with all new year resolutions!<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , "sans-serif";">Integration of our
personality – when the intellect, mind and body are aligned<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , "sans-serif";">It’s
easy now to see what we need to do but most difficult to implement. Integration
of our personality is the complete alignment of our decisive intellects, our
minds and the body. If the intellect works out a plan or even decides something
small, the MIND SHOULD agree to implement <u>without excuses</u> and the body
should be in alignment working towards our objectives, goals. If not done, it will weaken your
personality as you consistently negate yourself.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "sans-serif";">When
investing, we often decide an asset allocation. If the market is shooting up
wildly, see how our minds go crazy with dizzy excitement and does not
implement the decision, justifying it instead - giving or making excuses!!! Looking objectively, you know this can be harmful. Many
such examples can be given.<o:p></o:p></span></div>
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<b><u><span style="font-family: "arial" , "sans-serif";">Exercises to </span></u></b><span style="font-family: "arial" , sans-serif;"><b><u>practise</u></b>: Simple methods have been given to practise integration of personality. Just make a start by being on time – ALWAYS. Being punctual is a proof of integration. Another good exercise to
follow, is to positively give up some favorite food for a month and ensure that
the craving mind and body follow!!<o:p></o:p></span></div>
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<b><u><span style="font-family: "arial" , "sans-serif";">Successful living</span></u></b><span style="font-family: "arial" , "sans-serif";">: The bottom line is to ensure that
the discriminating, thinking intellect, the mind and body are in perfect
alignment and harmony. Look around and see all instances of success. They did not
happen purely by luck. The individuals have been decisive and with the
different layers of their personality completely aligned towards their
objectives. The adage – united we stand, divided we fall applies to layers of
our personality. Ultimately it is we ourselves who are our own friends and our
own enemies.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "sans-serif";">If
you wish to invest in mutual funds through me, <a href="mailto:maheshmirpuri@yahoo.com">write to me</a> . You can also message me on twitter <a href="https://twitter.com/invest_mutual" target="_blank">@Invest_mutual</a>
<o:p></o:p></span></div>
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<span style="font-family: "arial" , "sans-serif";"><i>Mutual
Fund investments are subject to market risk. Please read all scheme related documents carefully before investing.</i></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-16260704080509436992017-02-12T09:06:00.003+05:302017-02-12T16:24:51.969+05:30Empower Yourself - SM, a great tool you can use<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="text-align: left;"><span style="font-family: "arial" , "helvetica" , sans-serif;">The IFA Galaxy 2017 Annual Summit concluded yesterday and the theme was LEAP - <b>L</b>earn, <b>E</b>volve, <b>A</b>dapt and<b> P</b>rosper. The below is my piece published in the Annual Souvenir.</span></span></div>
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<b style="text-align: center;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Empower yourself</span></b></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">(Social Media - a great tool you can use)</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Many years ago, (maybe 20 years)
as I was driving down Mount Road in Chennai, I saw a huge hoarding with an
advertisement for the Economic Times that has I remember and recollect often.
It had a picture of a ferocious canine looking down menacingly at a little cat
that was sitting surprisingly calm, unafraid, staring right back! The caption
of the advertisement read – THE POWER OF KNOWLEDGE. The picture made me stop driving
and look again. The dog was chained to a post and could not move and the little
cat was aware of it. This knowledge gave her the power to sit calmly and stare
back!! Made me laugh then, but this has stayed with me. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b><i>The simple message from this – Knowledge
IS power!</i></b> <b><i>Empower yourself through knowledge. </i></b>In whatever field we are
and whatever profession we follow, we can grow, evolve and adapt only if we have
a continuous learning process in place.</span></div>
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<b><span style="font-family: "arial" , "helvetica" , sans-serif;">Social media – a means to empower ourselves<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">As professionals, it is
imperative to read, stay in touch, get information and in depth knowledge about
every aspect of our business. I need not mention the various sources of getting
information and means of knowledge, but wish to emphasize here on using social media
as a wonderful means to empower oneself. I was surprised that someone suggested
to advisors not to spend time on social media! We have five sense organs to
gather knowledge from the world outside. <b><i>I consider social media as a sixth sense
organ we can use to get access to information</i></b><i>.</i> Those who do not use this great tool to learn and get ideas are
simply shutting out one means of knowledge. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Bloggers today write on a range
of topics - from personal finance basics to in depth analysis of securities, from
detailing products and methods of investing to behavioral finance. These will give
you far more knowledge than anything you read in the financial papers. Twenty odd
years ago, the above advertisement pulled me to the paper, but in general, mainstream
media often does not measure up these days with shallow and biased analysis. These
are shared on various media.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Many on social media often mine
data and give in depth commentary of major events like the budget which is
often lifted by print and TV media. Media now-a-days lifts tweets of leaders
etc. and presents this as news! In fact, the world gets to know future US
Policy from the US President’s tweets only!
Unbelievable is the fact that information is available absolutely FREE to
us when one pink paper is charging to read its stuff online. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">In additions to the blogs we
follow, twitter and facebook are simply a must to get a pulse of what is
happening in your profession. Conversations of investors, commentators and
analysts give a great insight on events and on regulatory developments. <i>Unlike mails, you will almost certainly get
a response on social media to a query you put to an expert. And, it is instant.</i>
I mean, imagine getting almost instant responses from a Professor of Finance at
a Management Institute or from a fund manager! I have learnt more seeing the
approach of fellow professionals on social media than from any relationship
manager. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Are we clued on to the thoughts,
needs of investors and clients? If you aren’t using SM well, you are simply
missing out. Responses to a simple post on FB will give you more information
that you think.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">We are in a situation where the
mutual fund industry is growing much faster than we thought it would. Investors
are maturing in their outlook and there are big changes coming in the way the
advice is given. Products are manifold. My simple message – among the various
sources of knowledge, learn to use SM well. It will serve you well in the years
ahead! </span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-84704719805789125212017-02-01T13:53:00.001+05:302017-02-01T14:21:42.729+05:30Budget speech - some highlights<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "arial" , "helvetica" , sans-serif;">1.<span class="Apple-tab-span" style="white-space: pre;"> </span>Total expenditure 21.47 Lakhs crores </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">2.<span class="Apple-tab-span" style="white-space: pre;"> </span>Increase in Direct Tax collection by 34% after demonetisation.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">3.<span class="Apple-tab-span" style="white-space: pre;"> </span>Holding period for LTCG for Land & Building reduced to 2 years.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">4.<span class="Apple-tab-span" style="white-space: pre;"> </span>Carried forward of MAT Credit for 15 years instead of 10 years.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">5.<span class="Apple-tab-span" style="white-space: pre;"> </span>5% tax exemption for companies having turnover below Rs 50 crores.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">6.<span class="Apple-tab-span" style="white-space: pre;"> </span>No cash transaction above Rs. 3 Lakhs will be permitted.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">7.<span class="Apple-tab-span" style="white-space: pre;"> </span>Maximum Donation receivable from unknown source by pol party will be Rs 2000.00</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">8.<span class="Apple-tab-span" style="white-space: pre;"> </span>Change in period of limitation for scrutiny assessment.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">9.<span class="Apple-tab-span" style="white-space: pre;"> </span>The tax rate for the slae between Rs 2.5 lakhs and Rs. 5 Lakhs has been reduced to 5% </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">10.<span class="Apple-tab-span" style="white-space: pre;"> </span>10% surcharge for assesse income between Rs 50 Lakhs toRs 1 crores.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">11.<span class="Apple-tab-span" style="white-space: pre;"> Simple </span>One page Income Tax return proposed.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">12. IRCTC to be listed</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">13. Corporate tax for small corporates - MSME with turnover upto Rs 50 crores will be 25%</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">14. People not filing taxes for the first time will not be subject to scrutiny</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">15. <b><u> Huge focus</u></b> on infrastructure spending and poverty alleviation</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">16 Base Year for indexation now 2001 instead of 1981 for long term capital gains</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">17. Capital gains period for real estate reduced to 2 years</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">18. Fiscal deficit contained - at 3.2% of GDP</span><br />
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-55478498106830163342016-10-11T10:05:00.000+05:302016-10-11T10:41:00.899+05:30Interview: Kalpen Parekh MD, IDFC AMC "Our focus is to make our investors aware of what each fund stands for"<div dir="ltr" style="text-align: left;" trbidi="on">
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<i><span lang="EN-IN" style="font-family: "arial" , "sans-serif"; font-size: 10.0pt;"> </span><span style="font-family: "arial" , sans-serif; font-size: 10pt;">Kalpen Parekh is the Managing Director, Sales &
Marketing at IDFC Asset Management Company Limited and has over 14 years
experience in Retail Sales & Distribution.</span></i></div>
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<span style="font-family: "arial" , sans-serif; font-size: 10pt;"><i><br /></i></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; font-size: 10.0pt;"><i>He has been associated with IDFC AMC since December
2010. Prior to joining IDFC AMC, he was associated with Birla Sun Life AMC, as
Head - Sales & Distribution and earlier was with ICICI Prudential AMC as
Joint Head – Retail Sales & Distribution.<o:p></o:p></i></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; font-size: 10.0pt;"><i><br /></i></span></div>
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<span lang="EN-IN" style="font-family: "arial" , "sans-serif"; font-size: 10.0pt; line-height: 115%;"><i>He holds a Masters Degree in Management Studies
in Finance and a Bachelors Degree in Engineering (Chemical). Kalpen comprehensively
answers my questions on the changes at IDFC AMC and the strategy
followed for some of its schemes.</i></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Hi Kalpen!
Was great meeting you at Chennai. Your efforts to upgrade advisor skills
through various programs and behavioural sessions and the tools you have
provided have been much appreciated. Thank you for taking time to answer some
of my questions.<o:p></o:p></span></div>
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<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">There has been a major change in the Fund
Management team of IDFC, with the moving out of Kenneth Andrade and Punam Sharma.
Anoop Bhaskar has taken over. Can you give some details on the fund management
team now at IDFC?<o:p></o:p></span></b></div>
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<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Thanks for
the opportunity to talk to your investors.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We have
gone through a transition over the last one year! <o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Punam and
Kenneth were part of the team which set up the equity platform and helped us
reach our current scale of 10000 cr Equity AUM<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Over the
last one year, not only has Anoop joined us but we also have significantly
strengthened the team further – We have added one analyst and three fund managers
on the equity side. We have now built the team keeping in mind our future
growth aspirations.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
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<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">How has the transition been after a fund
manager change? What has been your initial focus?<o:p></o:p></span></b></div>
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<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Our focus
over the last year was to give confidence to our investors and advisors that
they are a part of an Institution which is able to attract talent and can
manage long term assets. We have ensured we have built a high quality team with
all the hiring done now as mentioned above.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We have
ensured continuity in the way we manage money in our flagship Fund Premier
which is a very unique fund. To a consumer/investor, it’s a fund which has
stood for Experience because of its investor friendly design of being an SIP
fund always and opening it up for larger investments when we see compelling
investment opportunities for the medium term.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We have
used this transition to reinforce and communicate our investment process and
investment framework for every fund of ours! Our focus is to make our investors
aware of what each fund stands for over and above its performance as an
outcome. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We
recognise that IDFC Sterling and IDFC Premier are better known Product Brands
from IDFC MF platform and we need to complete our product gap in the Large Cap
and Diversified segment hence we have also invested in revamping Classic and
communicating extensively about Classic as a credible product in the Diversified
Equity Segment.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">I have seen a lot of changes in your Classic
Equity Fund and a pickup in its recent performance. Would you like to share
details on the process/changes you have made in managing this scheme?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">IDFC
Classic Equity fund has been revamped this year to take a new avatar that
follows a “Quality & Relative Valuation” framework. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 34.5pt; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">The focus of the fund is on quality
companies, mainly from the balance sheet perspective. <i>A three factor model focusing on
the following attributes will help filter companies for this investment
strategy</i><i>.<o:p></o:p></i></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><i><br /></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">A. Cash
generation from operations as a percentage of EBIDTA; <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">B. Debt
repayment ability (Debt / EBIDTA < 3)</span><br />
<span style="font-family: "arial" , sans-serif;">C. Profitability</span><a href="https://www.blogger.com/null" name="_GoBack" style="font-family: arial, sans-serif;"></a><span style="font-family: "arial" , sans-serif;"> of the business (RoE of 15% over a business cycle)</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; text-align: justify;">
<i><span lang="EN-IN" style="font-family: "arial" , sans-serif;">Companies which qualify on the above
parameters will then be classified into sectors</span></i><span lang="EN-IN" style="font-family: "arial" , sans-serif;">. <i>The
final selection would be driven by relatively lower valuation</i> of the
identified companies within each sector on P/BV (Price to Book Value)
basis.Such identified companies would comprise between 50-65% of the portfolio.
Allocation to financials would be between 25-30% and the balance would be theme
driven / high quality companies.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">This strategy of purchasing quality companies
with sufficient margin of safety has resulted in lower PE and PB for the fund
as compared to Nifty. This gives us comfort given the current market valuations
are on the higher side and can limit downside in case the expensively valued
stocks correct.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 34.5pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">You mentioned that you will have a 25-30% allocation
to financials in Classic Equity?</span></b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">IDFC Classic Equity Fund will be conscious of
the benchmark (S&P BSE 200), and therefore will maintain similar weights
towards the sector. Currently the fund has ~27% exposure to the Finance space
(in line with the 29% exposure of the benchmark).<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">Any changes in your approach towards the
Iconic Premier Equity Fund?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We continue to re-emphasize the key
attributes which have been the driver of the long term performance delivered by
the fund during its first decade of existence. Buying ‘Quality’ companies, a
key attribute, which has been critical for the fund’s past performance is now
being detailed on the following factors: 1. High promoter holding; 2. Higher
than sector profit growth over the medium term; 3. Improving trend of RoE; 4.
Low leverage and 5. Generating free cash flow. </span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<i><span lang="EN-IN" style="font-family: "arial" , sans-serif;">IDFC Premier Equity Fund further has added a
new element (Sell Discipline) to give the fund an extra dimension to sustain
the strong long term performance.<b><o:p></o:p></b></span></i></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">The Sell discipline - PEG ratio of 3x+ for 2
year forward earnings estimates, will help us trim/exit stocks where valuations
appear to have moved ahead of actual performance.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">In my view, what’s made Premier iconic is the
experience to every investor – those who continue their long term SIPs as well
as those who invested whenever we have raised new money by opening the fund
selectively. We would continue with this approach for Premier.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">Any changes envisaged in your midcap scheme,
Sterling Equity?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We will incorporate a <i>‘core portfolio’</i> concept comprising 25-35 stocks which will form
the foundation of the portfolio for the future. Our stock selection would
balance growth aspirations with balance sheet strength. We would remain sector
agnostic, with focus on individual companies.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">The near term focus would remain on
valuations than future growth expectations<i>; <b>this may lead to portfolio changes over the next few quarters in
Sterling Equity</b></i>. Over the medium term, portfolio churn will be a key metric
of focus. We aim to significantly improve on this metric going forward, aided
by the incorporation of ‘core portfolio’ concept. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">The fund is currently over weight Auto,
Consumer Discretionary and Industrials. We plan to increase weight in
Financials stocks and maintain or reduce weight in IT services on account of
higher valuations.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">Do you have any new products or NFOs in mind?
How do you wish to drive the growth at IDFC MF?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoListParagraph" style="margin-left: 0in; mso-add-space: auto; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;">Our growth will be via balance of new ideas and scaling
existing products across Debt and Equity. <o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-left: 0in; mso-add-space: auto; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;">A
lot of our fixed income funds have delivered credible performance and alpha
over the last 3 to 5 years, without taking excess risk. India is an FD market
and there is a large opportunity to position various short term funds as a
replacement to Fixed Deposits. We have a range of funds in this segment managed
both passively and actively. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;">I
see a large opportunity for asset allocation funds to grow in the near term as
both Equity and Debt have delivered good returns and funds which allow us to
manage both asset classes actively can be good ideas for incremental
investments – we will scale our Asset Allocation Funds and Dynamic Equity Fund
in the coming months<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraph" style="margin-left: 0in; mso-add-space: auto; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;">We have filed for a Balanced and Credit opportunities
Fund and we are awaiting SEBI Approvals<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-left: 0in; mso-add-space: auto; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">You’ve been known to come up with ideas to
improve investor experience like the PE Ruler / traffic signals and have lately
mentioned PE STP. Can you elaborate a bit for readers on how this works?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">We all
know that Equity in the long term generates Wealth but in the short Term
generates Volatility. Thus, without Volatility, Wealth Creation is an illusion.
Our <b><a href="http://www.idfcmf.com/is-it-a-good-time-to-invest.aspx" target="_blank">PE Scale</a></b>
was the first attempt by an AMC to upfront show to investors both the sides of
Equity as an Asset Class. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Evidence
shows, that while Mutual Funds NAVs grow over decades, it’s not the same in
investors’ account statement, especially as investors tend to invest for
shorter time horizons. 80 pc of equity flows come when markets are richly valued
and on the basis of past performance and as the market cycle turns; investors
get disappointed with early volatility.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Thus, <b><a href="http://www.idfcmf.com/is-it-a-good-time-to-invest.aspx" target="_blank">PE Scale</a></b> upfront
states that volatility can’t be avoided; but if one is aware, it can be
managed. It also tells investors, that the worst time to exit Equity is in
Green and Yellow Zone, when the foundation of future returns is being laid out<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">While the
PE Scale became popular, we got feedback - why not design funds or processes
which can apply the principles for them in an easy manner. That led us to
launch Dynamic Equity Fund, which increases Equity exposure in Green Zone and
reduces it in the Red Zone thus cushioning volatility. <b><i>For eg, in the last two years
since launch, it has outperformed Nifty with an average 55% exposure to Equity</i>
<o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><b><i><br /></i></b></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Likewise,
we got the idea to launch PE STP. When PEs are high, many investors stagger
their investments via STP (Systematic Transfer Plan). What we realised, is that
most STPs had a short tenor of few months. <b><i>An STP becomes a lumpsum actually if done in
short tenors.</i></b><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><b><i><br /></i></b></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">PE STP
increases the investment transferred to Equity in Green by 5 times and 2 times
in Yellow Zone and maintains the instalment amount in the red zone. Thus it
follows the basic rule of good investing – Invest more when markets are cheap
and less when expensive. Evidence shows that this approach reduces purchase
price and increases probability of outperformance <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">PE STP is
an idea which allows investors to earn excess returns via a scientific process
and discipline.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;">A candid question! Do you and your fund
managers invest in the funds you manage?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">I have
been with IDFC Since 2010. <b><i>100 pc of my investments are in IDFC MF</i></b>
since then. I have invested in IDFC Premier, Sterling, Classic, Dynamic Equity,
Dynamic Bond, Arbitrage fund and All Seasons Bond Fund<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Likewise
all our colleagues across functions invest in our own Funds.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif;">Thank you
Kalpen. Wishing you and the team at IDFC AMC a Happy Vijayadashami and success
in all endeavours.<o:p></o:p></span></div>
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<div style="text-align: left;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 115%;">
</span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-72391504528227168382016-09-23T21:03:00.000+05:302016-09-24T05:43:49.033+05:30Working - How a Debt Fund beats a fixed deposit post tax<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "arial" , "helvetica" , sans-serif;">I have received many requests to give a working of how Bond Funds beat fixed deposits post tax. When you invest in an FD, you pay tax at your tax slab which could be 30%. However investors in bond funds get the benefit of indexing the cost and a reduced rate of 20% tax which significantly reduces tax burden.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Assumptions in the sample below:</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">1. Investment has to be for 3 years for indexation benefits for bond fund</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">2. Cost inflation index growth at 5% which is very reasonable considering the rate of inflation</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">3. 7.25% returns for both</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Even with the same returns, the net gain at the end of 3 years is substantial if one had invested in bond funds</b></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Mutual Fund investments are subject to market risk. Please read all scheme related documents carefully.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Connect with me at <a href="mailto:maheshmirpuri@yahoo.com">maheshmirpuri@yahoo.com</a> to learn more about mutual funds.</b></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-63291532963981373912016-08-31T14:27:00.003+05:302016-08-31T15:12:49.096+05:30Aashish Somaiyya, MD, Motilal Oswal AMC answers a few of my questions on their upcoming NFO<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPzPgzhPd3FZJ-xb_V1rI0PByDRf-l09GItw1HZGfrQ9hmqvRz2dbCrYAhR9h1RhUUfq-uSqdMqjOIIFqX-7115nJa_lnyM1awdxx4o1PL_a37IyHWNKVgjU_Ih_tXtp2xs1Ujo7PHsz6x/s1600/buy+right+sit+tight.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPzPgzhPd3FZJ-xb_V1rI0PByDRf-l09GItw1HZGfrQ9hmqvRz2dbCrYAhR9h1RhUUfq-uSqdMqjOIIFqX-7115nJa_lnyM1awdxx4o1PL_a37IyHWNKVgjU_Ih_tXtp2xs1Ujo7PHsz6x/s1600/buy+right+sit+tight.jpg" /></a></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Congratulations Aashish, on the sustained good performance of the schemes of Motilal Oswal AMC and on become one of the fastest growing fund houses in the equity segment. It is great to see an equity focused AMC with a strong emphasis on process doing well.</span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">You are launching your MOSt Focused Dynamic Equity Fund on 6.9.2016 – a fund which allocates investor money dynamically between Debt and Equity - and it would be great to get some details from you on this.<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Balanced funds / Dynamic-asset allocation funds as a category have done very well in the last couple of years. Are you a bit late in launching this fund?<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">The appreciation for a concept like Dynamic Equity is higher when markets are very volatile. In the last 12 to 15 months we have seen 9000 on Nifty and then 6700 as recently as Feb 2016 and now again we are near 8700 as we write this. In such an environment you would expect that a Dynamically managed fund which calibrates equity allocation would perform quite well. Due to recency bias, such funds are popular currently and strictly from that perspective one can say we are late! But just like change is the only constant, when it comes to capital markets, volatility is the only constant and from that perspective such funds can never be in our out of vogue. They are ever-green solutions for one of the biggest challenges of equity investing, that of volatility.<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Can you explain a little to investors on how an investment in this scheme will work for them?<o:p></o:p></span></b></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;">The Scheme through dynamic asset allocation aims to generate reasonable returns even in volatile markets. </span><span style="font-family: "arial" , sans-serif; line-height: 20px;">A low MOVI level (our proprietary index) indicates that the market valuation appears to be cheap and a high MOVI level indicates that the market valuation appears to be expensive. The equity exposure percentage based on the MOVI levels is depicted below.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">The Scheme conducts asset allocation between equity, Equity derivatives and debt instruments based on the MOVI levels.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Equity: The Fund shall follow an active investment style using bottom-up stock picking based on the ‘Buy Right : Sit Tight’ investment philosophy. The Fund managers shall identify and invest in shares of businesses run by high quality management & having sustainable and scalable business models thus using QGLP (Quality, Growth, Longevity& Price) as the key evaluation parameters.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Debt: The Fund shall invest in various types of permitted Debt Instruments including Government Securities, Corporate Debt, Other debt instruments and Money Market Instruments of various maturities and ratings with the objective of providing liquidity and achieving optimal returns. The fixed income component will be passive in nature.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Arbitrage and Derivative Strategies: The Fund shall undertake Cash/Futures Arbitrage to take advantage of the volatile situation in the market. The Fund may use Derivative including Index Futures, Stock Futures, Index Options and Stock Options etc.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Following depicts more clarity on MOVI based Scheme allocation.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Scenario 1 - Let’s assume the MOVI level is at 60 which means it falls in the range of 100% equity allocation. Therefore, the fund manager in the above case will take upto 100% long only equity exposure.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Scenario 2 - Let’s assume the MOVI level is at 100 which means it falls in the range of 55% equity allocation. Therefore, the fund manager in the above case will take 55% long only equity exposure and minimum 10% in equity derivatives or hedged exposure. The balance upto 35% will be invested in debt instruments.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Scenario 3 - Let’s assume the MOVI level is at 150 which means it falls in the range of 0% equity allocation. Therefore, the fund manager in the above case will take 30% long only equity exposure and minimum 35% in arbitrage opportunity. The balance upto 35% will be invested in debt instruments.<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Can you share the results of a 10 year back test done using the investment pattern of MOSt Focused Dynamic Equity Fund and a graph/graphs comparing with the NIFTY?</span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">The historical back testing of the dynamic asset allocation on the <b>Index (Nifty 50)</b> suggests that the rebalancing provides better return than the Index with very low volatility.<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Index-Nifty<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Index (Nifty)Rebalanced<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Annualized Returns<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">12.73<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">13.34<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">23.68<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">14.47<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;">Index – Nifty 50; Index Rebalanced - Nifty 50 rebalanced based on MOVI levels<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Index and Index rebalanced are rebased to 10 as on 1<sup>st</sup> January 2004<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">However when applying the dynamic asset allocation to Value PMS strategy of Motilal Oswal AMC, the results are different.<u> While annualized return reduces by few percentage points, the volatility is cut in half.</u> Here we are taking liberty of using Value PMS strategy because that’s the longest running embodiment of BUY RIGHT : SIT TIGHT investment philosophy that we practice. Please note this below chart is only for explaining how MOVI rebalancing works, it meant for this discussion and it is not meant to be circulated to investors or used as marketing literature.<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Since Inception<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">Value Strategy<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Annualized Returns<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">26.10%<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">22.73%<o:p></o:p></span></div>
</td></tr>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Standard Deviation<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">21.13<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;"><b>12.64</b><o:p></o:p></span></div>
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</tbody></table>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">You had once mentioned in a column that alpha comes from the right asset allocation in place. Essentially, in this scheme you are deciding the asset allocation for the investor?<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span></b></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;">I personally believe that an asset allocation decision is to be made by the investment advisor or distributor in conjunction with the client and yes the larger decision is to be in the right asset class; that’s what produces alpha or what is called advisor alpha before we get into seeing the fund managers alpha. But this logic works when an investor has maturity to view his performance at portfolio level and not at product level. We don’t have that maturity in the system yet.<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span></div>
<div class="MsoNormal" style="line-height: 24px; text-align: justify;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;">As far as I am concerned I don’t even see the Dynamic Equity Fund as a segregated scheme. It’s a solution to a problem that we face. If I had it my way I would continue to offer what we have always offered i.e. MOSt Focused Multicap Fund and a MOVI index for taking asset allocation calls in and out of equity. This is why even now this Dynamic Equity Fund will have a passive fixed income allocation and the equity will be similar to our multicap fund. But some of these beliefs of mine are as of now only theoretical and difficult to execute but in future they will be more practical.</span><br />
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;"> There are few issues we have faced:<o:p></o:p></span></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0.75in; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-IN" style="font-family: "symbol"; line-height: 107%;">·<span style="font-family: "times new roman"; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;">Investors see performance product by product and
not at portfolio levels so a fund like Dynamic Equity has the great ability of
improving investor experience amidst volatility and enhance their stickiness
and willingness to remain invested<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0.75in; text-indent: -0.25in;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-IN" style="font-family: "symbol"; line-height: 107%;">·<span style="font-family: "times new roman"; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;">There are taxation issues with switching asset
allocation on an inter-scheme basis hence it is more efficient to do it
intra-scheme by maintaining 65% equity and equity arbitrage<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-IN" style="font-family: "symbol"; line-height: 107%;">·<span style="font-family: "times new roman"; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;">There are emotional biases which prevent people
from making right asset allocation decisions, since these get hard-coded in the
scheme structure they will surely get implemented<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-indent: -0.25in;">
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;"><br /></span></div>
<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;">
</span><br />
<div class="MsoListParagraphCxSpLast" style="margin-left: 0.75in; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-IN" style="font-family: "symbol"; line-height: 107%;">·<span style="font-family: "times new roman"; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 107%;">Volatility is a reality and volatility is here
to stay, instead of worrying about it we need to create structures that benefit
from the volatility<o:p></o:p></span></div>
</div>
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<span lang="EN-IN" style="font-family: "symbol"; line-height: 20px;">·</span><br />
<o:p></o:p><o:p></o:p></div>
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<span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px;">Let me also tell you what are the issues with making a Dynamic Equity Fund kind of structure<o:p></o:p></span></div>
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</div>
<ul>
<li style="line-height: 24px;"><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px; text-indent: -0.25in;">The asset allocation decision which according to me is an investment advisor or distributors decision after understanding the client’s requirements, is being outsourced to manufacturer like us by embedding it into the product itself</span></li>
<li><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px; text-indent: -0.25in;">We are pandering to the client’s requirement of viewing performance product by product not at portfolio level, this is slightly regressive instead of advancing client behaviour in the right direction</span></li>
<li><span lang="EN-IN" style="text-indent: -0.25in;"><span style="font-stretch: normal; line-height: 20px;"><span style="font-family: "symbol";"> </span></span></span><span lang="EN-IN" style="font-family: "arial" , sans-serif; line-height: 20px; text-indent: -0.25in;">If equity and fixed income are managed separately some discretionary decisions can be taken by clients and intermediaries to enhance performance or to improve liquidity of the investment, which now would not be possible</span></li>
</ul>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;">You are known for your straight talk. Why should investors choose this scheme from your basket of schemes?<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">I think the concept has been explained clearly up this point in our discussion, and there are similar funds which are available in the market. First of all someone should consider us only if one believes in our philosophy of BUY RIGHT : SIT TIGHT and hence it follows that wealth is created by holding high quality companies through their entire earnings growth cycle. Secondly, the MOVI index is proprietary to us and it is quite comprehensively designed, as you might have seen from the back tested data the concept seems to have worked in the past. This fund is a good combination of bottom up fundamental stock picking with top down asset allocation decision making with macro market level indicators.<o:p></o:p></span><br />
<span style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 20px;">Thank you Aashish for giving us comprehensive responses and wishing you success.<o:p></o:p></span><br />
<span style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span>
<span style="font-family: "arial" , sans-serif; line-height: 20px;"><a href="mailto:maheshmirpuri@yahoo.com" target="_blank"><b><span style="color: blue;">Contact me</span></b></a> if you wish to invest in this NFO</span><br />
<span style="font-family: "arial" , sans-serif; line-height: 20px;"><br /></span>
<span style="font-family: "arial" , sans-serif; line-height: 20px;"><b>Mutual Fund investments are subject to market risk. Please read the scheme documents carefully before investing </b></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-7445652314311853992016-07-09T10:43:00.000+05:302016-07-09T10:45:54.760+05:30Are you in control?<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
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<b><span style="font-family: "arial" , sans-serif; line-height: 115%;">Are
you in control?<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEVb8RKDVRuwb9oVPNMYS9E24I5zFsAyVvxL3Oce1X5UUTI-If3pJWoxRug9KA01-nPxIGCyuoJ6W1E8OK9Nzvi-UgNFyYL5-yzFmmegF6igrgkno7h5-wUUdre6g1ZEJ4_iw4owDUt18G/s1600/control.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEVb8RKDVRuwb9oVPNMYS9E24I5zFsAyVvxL3Oce1X5UUTI-If3pJWoxRug9KA01-nPxIGCyuoJ6W1E8OK9Nzvi-UgNFyYL5-yzFmmegF6igrgkno7h5-wUUdre6g1ZEJ4_iw4owDUt18G/s320/control.jpg" width="320" /></a></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">Over the last couple of
weeks, I have been inundated with queries from investors on Brexit, Rexit,
equity outlook, how investments will be affected, which way the
markets will move etc. The happenings and consequent media noise has confused many.
Investors like to listen to anyone who “has an air of authority” and thus
listen to various, often conflicting statements made by “analysts / experts” on
various media. Speaking to many investors, I found that much of their fear and
confusion was because they were not in control – had jumped into investments
without really knowing what they were doing.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">A change in the way you
approach your investing will keep you in charge. Ask yourself and answer the below two questions.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 115%;">Is
there a direction to your investing or are you driving around aimlessly with no
actual destination in mind?<o:p></o:p></span></b></div>
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<b><span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></b></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;">Many of us just invest “to
make money”. There is no clear destination in mind. <b><i>Only when you have a certain
destination in mind, will you take the appropriate route.</i></b> Without a
destination, it will be aimless wandering, allowing yourself to be tossed around
with the happenings and market ups and downs. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; line-height: 115%;">Right from the time we were
conceived, plans were made to get us into some school! Yes, some schools ask
parents to register the child for admission on conception!! A great deal of
planning and effort is put into getting into the right university course and
then a post graduate course. The direction of one’s life is planned very well.
Then we land that great job and start earning. This is where planning (financial planning) goes
missing and haphazard or random investing starts – to save taxes, to get some
returns from insurance and of course to make some money also from real estate, equity
etc.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; line-height: 115%;">Now suppose, you write down
your financial goals which may be varied and many, and work out each investment
towards achieving that goal, won’t it provide a great direction to your
financial life? You won’t be aimlessly driving around affected by all the
noise. You are focused and much more in control of the situation. In many cases
one may need an advisor to help in this process, in deciding asset allocation
and selection of appropriate products and intelligence is taking help if one
needs it. Once appropriate investments have been made keeping the destination
in mind, you will be less affected by all the noise around. You are in control
when your financial life has a direction. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; line-height: 115%;">Do
you fully understand what each investment entails? <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; line-height: 115%;">We often invest based on
tips received from various fora - whats app groups, SMS and advice from “informed”
colleagues, promises of bank relationship managers. While we may know what we
have invested in, do we really understand the details and the fact that things
may not go as planned or what we buy will not give what is seemingly promised? I
find investors investing in equities and other instruments, with not much clue
of the possible downside. Worse still, investors get stuck in endowment insurance
policies, other products sold by bankers not having any idea of what they will
really get and how they fit in to their financial plans.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><i><span style="font-family: "arial" , sans-serif; line-height: 115%;">A little effort to
understand what exactly you are investing in, how it fits in to your financial
goal will go a long way in keeping you in control</span></i></b><i><span style="font-family: "arial" , sans-serif; line-height: 115%;">.</span></i><span style="font-family: "arial" , sans-serif; line-height: 115%;"> When an advisor, a banker
or an insurance guy shows you details of a product, ask questions, plenty of
them. Only when you know each and every detail in simple layman’s language,
should you invest in a product. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; line-height: 115%;">“Know
what you own and why you own it” - Peter Lynch. </span></b><span style="font-family: "arial" , sans-serif; line-height: 115%;">As a
start, give yourself answers to the above two questions and you will find you
are more focused and in control of your financial life and far less swayed by
the noise and the volatility in the markets.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; line-height: 115%;"><br /></span></div>
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<i><span style="font-family: "arial" , sans-serif; line-height: 115%;">Write
to me at maheshmirpuri@yahoo.com<o:p></o:p></span></i></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-36952475586739126942016-04-01T11:06:00.000+05:302016-05-10T05:36:34.212+05:30A new financial year - time to take stock and review<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="background: white; color: #222222; font-family: "arial" , "sans-serif"; font-size: 12.0pt;">We start a new financial year today and wishing all a successful year.</span><br />
<span style="background: white; color: #222222; font-family: "arial" , "sans-serif"; font-size: 12.0pt;"><br /></span>
<span style="color: #222222; font-family: "arial" , sans-serif;"><span style="background-color: white;">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.</span></span></div>
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<br /></div>
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<span style="color: #222222; font-family: "arial" , "sans-serif"; font-size: 12.0pt;">The Nifty has moved
smartly from 7216 on 10.2.16 to close at<b> </b>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<b> </b>Rs. 80000 crores<b> </b>last year<b>. </b>There
has been a sharp rise in equity MF inflows and we now have greater than Rs. 2500
crores of SIP every month.<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "arial" , "sans-serif"; font-size: 12.0pt;">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.<o:p></o:p></span></div>
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<span style="color: #222222; font-family: "arial" , "sans-serif"; font-size: 12.0pt;">The beginning of a
financial year is a good time to review how we moved forward and ask a few
questions<o:p></o:p></span></div>
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<ul style="text-align: left;">
<li><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">Do I have adequate
life insurance? Have I adequately protected my family in the case of an
unfortunate event?</span></li>
<li><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">Do I have sufficient
medical insurance?</span></li>
<li><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">Have I created an
emergency fund and is it adequate?</span></li>
<li><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">Have I noted down -
yes, written down each of my financial goals?</span></li>
<li><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">What is progress of my
movement forward towards my financial goals?</span></li>
<li><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">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.</span></li>
</ul>
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<span style="color: #222222; font-family: "arial" , "sans-serif"; font-size: 12.0pt;">I do stress on writing
down goals. This makes us read the same regularly and review. </span><span style="background: #f4f5f8; color: #333333; font-family: "arial" , "sans-serif"; font-size: 12.0pt;">"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.<o:p></o:p></span></div>
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<span style="background: #f4f5f8; color: #333333; font-family: "arial" , "sans-serif"; font-size: 12.0pt;"><o:p><b>Beware of the investing noise:</b></o:p></span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif;">Have seen investors get thoroughly confused with differing approaches of various commentators on TV and other media. <a href="http://www.forbes.com/sites/rickferri/2013/09/18/2773/#66da7893487b" target="_blank">Investment noise</a> 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. </span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;">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. </span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghlb8aiaKBI4uPt5jft3AhdMZpzKgXVQUcEW1Pc0EO62HgduGE_KS-6SJRdqthl9HeXY1zmVI-fbi0E5kHb78YoeGajdAVeg8cZ6CTBneEMzKHbRKf6jM9YTo0IFwNLgPbdf86Cc6Zmw5S/s1600/idfc+ad+how+to+invest.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="230" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghlb8aiaKBI4uPt5jft3AhdMZpzKgXVQUcEW1Pc0EO62HgduGE_KS-6SJRdqthl9HeXY1zmVI-fbi0E5kHb78YoeGajdAVeg8cZ6CTBneEMzKHbRKf6jM9YTo0IFwNLgPbdf86Cc6Zmw5S/s640/idfc+ad+how+to+invest.JPG" width="640" /></a></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">Do <a href="mailto:maheshmirpuri@yahoo.com" target="_blank"><b>contact me</b></a> to know more about how mutual funds work.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">To end, some </span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 12pt;">Mutual Fund Statistics: Source Value Research:</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;">It is interesting to note the</span><b style="color: #222222; font-family: Arial, sans-serif; font-size: 16px;"> </b><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;"><b>5 year SIP returns</b></span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;"> that mutual funds have given us. Multi-cap funds have given a median returns of </span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;">13.12%</span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;">, with large caps and mid cap returns being </span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;">8.7%</span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;"> and</span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;"> 20.7% .</span><span style="color: #222222; font-family: "arial" , sans-serif; font-size: 16px;"> Past returns may not be replicated!</span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-61891626183233830962016-02-13T14:16:00.000+05:302016-02-14T20:08:15.874+05:30Build real wealth through SIP - Has your SIP performed - checking a curated list<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;"><span style="font-family: "arial" , sans-serif; font-size: 11pt;">I have had the chance to interact with several investors, working professionals and businessmen over
the past couple of years in investor awareness sessions and have
brought to their notice the benefits of discipline in savings and regular
investment. Despite the inherent risks of investing in equity, investors
should</span><span class="apple-converted-space" style="font-family: "arial" , sans-serif; font-size: 11pt;"> </span><span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="http://www.livemint.com/Money/MvbWmowuEj501VV4AeH42L/Do-not-shy-away-from-equities.html" style="font-family: arial, sans-serif;" target="_blank">not shy away from equities and do read
this</a> </span></span><span style="font-family: "arial" , sans-serif; font-size: 11pt;">. I consider mutual funds a great tool for investing in equity.
Even old market pros, I have met, invest in mutual funds for wealth building.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">The
question arises as to when to invest - what is a good time to enter the market?
Do see this.. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: 13.3333px;">Munger was asked in 2009 how stocks investors should avoid big drawdowns: <a href="https://t.co/OUUaGMJbHN">pic.twitter.com/OUUaGMJbHN</a></span></span></div>
<span style="font-family: "arial" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: 13.3333px;">— Morgan Housel (@TMFHousel) <a href="https://twitter.com/TMFHousel/status/698174510885965824">February 12, 2016</a></span></span></blockquote>
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<span style="font-family: "arial" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: 13.3333px;"><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script></span></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Many
individuals simply have no time to follow the market and invest on their own
regularly and are happy to participate in the equity markets through SIP in
mutual funds. <o:p></o:p></span></div>
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<span style="background: white; font-family: "arial" , sans-serif; font-size: 11pt;">.</span><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="background: white; font-family: "arial" , sans-serif; font-size: 11pt;">The mutual fund SIP is a fantastic tool which obviates the
need to time markets. In addition, the automation of investments simplifies
life. Else, one may not have even invested in equity if this facility was not
available. Most advisers ask investors to be invested in SIP for the long term
to enjoy the benefits. It wont work in the short term.</span><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="background: white; font-family: "arial" , sans-serif; font-size: 11pt;">I wanted to see the efficacy of Funds in building wealth over
a period<span class="apple-converted-space"> </span><b>and since markets
have fallen considerably from last year's highs, I thought I
would check the performance of investments through SIP now after this fall</b><span class="apple-converted-space"> </span>. To choose the funds, I chose the popular curated list by the <a href="http://www.livemint.com/Money/WoxyQUnA7sCeHCKIyjmw7O/How-to-use-Mint50.html" target="_blank">Mint newspaper</a>, though I may not agree with
some of their choices. </span><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">I have
checked SIP returns of Large Cap (7 funds) , Multi Cap (9 funds) and Mid
cap (6 funds) funds in the list. The categorization has been done by the Mint
only and one can check the list published by the Mint online.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Returns
have been taken for 5, 7 and 10 years (in those cases where the fund was in
existence for 10 years) and the returns are for the<span class="apple-converted-space"> </span><b>period ending 11 Feb 2016,</b> i.e 5 years, 7 years, 10 years ending 11th Feb 2016.<o:p></o:p></span></div>
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<u><span style="font-family: "arial" , sans-serif; font-size: 11pt;">The
results -<span class="apple-converted-space"> </span><b>SIP returns</b><span class="apple-converted-space"> </span>from the list of funds included in the
Mint 50 </span></u><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Disclaimer:
Past performance may not be repeated<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; font-size: 11pt;">Large Cap
Funds -7 funds in the list:</span></b><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over a
period of 5 years the various funds gave a median return of <b>9.02%</b><span class="apple-converted-space"> </span>inspite of this drawdown and
annualized returns of the best and worst fund in the list were 11.3% and 5.07%
(Guess who the low figure belongs to!)<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over 7
years the various funds gave a median return of<span class="apple-converted-space"><b> </b></span><b>9.8%</b><span class="apple-converted-space"> </span>and annualised returns of the best and
wort fund were 11.3% and 6.13%<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over 10
years the various funds gave a median return of<span class="apple-converted-space"> </span><b>10.44 %</b><span class="apple-converted-space"> </span> and annualised returns of the
best and wort fund were 12.41% and 6.15%<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; font-size: 11pt;">Multi Cap
Funds - 9 Funds in the curated list:</span></b><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over a
period of 5 years the various funds gave a median annualised return of <b>12.12%</b> and annualized returns of the best and worst fund in the
curated list were 18.33% and 5.70%<o:p></o:p></span></div>
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<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over 7
years the various funds gave a median return of<span class="apple-converted-space"> </span><b>14.14%</b> and annualised
returns of the best and worst fund were 19.1% and 8.43%<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over 10
years the various funds gave a median return of<span class="apple-converted-space"> </span><b>12.89 %</b><span class="apple-converted-space"> </span> and annualised returns of the
best and worst fund were<span class="apple-converted-space"> </span><b>17.92%</b><span class="apple-converted-space"> </span>and<span class="apple-converted-space"> </span><b>10.2%</b><o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; font-size: 11pt;">Mid Cap
Funds - 6 Funds in the curated list:</span></b><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over a
period of 5 years the various funds gave a median return of <b>20%!!!<span class="apple-converted-space"> </span></b>I<u>nspite of this
drawdown!!</u> The annualized SIP returns of the best and worst fund in
the curated list were<span class="apple-converted-space"> </span><b>23.81%</b> and <b>16.74%</b><o:p></o:p></span></div>
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<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over 7
years the various funds gave a median return of <b>19.75%</b> and
annualised returns of the best and worst fund were <b>20.74%</b> and <b>17.67%</b><o:p></o:p></span></div>
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<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 11pt;">Over 10
years - there were only 2 funds in the list over ten years and their returns
were a decent annualized<span class="apple-converted-space"> </span><b>18.26%<span class="apple-converted-space"> </span></b>and<span class="apple-converted-space"> </span><b>17.04%</b><o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;"><b><span style="color: red;">These are SIP returns</span></b> and these annualized returns were an eye opener for me. It has convinced me that time in
the market maters. Real wealth can be built over the long run through SIP.<o:p></o:p></span></div>
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<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 11pt;">If you
have invested Rs. 10000 per month in each of the median schemes over the last 7<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 11pt;">years -
i.e a total of Rs. 30000.00 per month, the amount you would have is greater Rs
38 Lakhs.<o:p></o:p></span></div>
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<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 11pt;">I dont need a muhurat to start an SIP. It inculcates a sense of discilpiline,
automates the investment of your saving. <u>Choose wisely and take the help of an advisor if you need one.</u><o:p></o:p></span></div>
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<b><span style="font-family: "arial" , sans-serif; font-size: 11pt;">Disclaimer:
Past performance may not be repeated </span></b><span style="font-family: "arial" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-13798166839704704272016-02-11T20:58:00.000+05:302016-02-11T21:40:12.895+05:30Chart Nifty vs Bank Nifty<div dir="ltr" style="text-align: left;" trbidi="on">
Bank stocks have been hammered. See the fall compared to the Nifty<br />
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Chart - Nifty vs Bank Nifty<br />
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-29069893651977534272016-02-06T10:36:00.000+05:302016-02-06T11:00:40.950+05:30Snapshot: Nifty PE, PB, Dividend yield and the worlds cheapest markets<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The Nifty is at 7489 and the Sensex at 24617. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />So, where are we in terms of valuations, when the market has receded from recent highs? Two ratios to evaluate how expensive the market is are the market <a href="http://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio" style="color: #0b5394; text-decoration: none;" target="_blank"><b>PE Ratio - (Price-earning ratio)</b></a> and the <a href="http://en.wikipedia.org/wiki/P/B_ratio" style="color: #0b5394; text-decoration: none;" target="_blank"><b>P/B Ratio (price-to-book ratio)</b></a>. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />Today, the Nifty PE is <b>19.99</b> Nifty PB is <b>3</b> and the Nifty Dividend yield is <b>1.54 . </b></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Just for perspective, the highs on 8.1.2008 were </span><span style="font-family: "arial" , "helvetica" , sans-serif; line-height: 23.1px;">PE - <b>28.29,</b></span><span style="font-family: "arial" , "helvetica" , sans-serif; line-height: 23.1px;"> Nifty PB - <b>6.55</b></span><span style="font-family: "arial" , "helvetica" , sans-serif; line-height: 23.1px;"> and the Dividend yield - <b>0.82</b></span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">See this pic from: <a href="http://www.telegraph.co.uk/finance/personalfinance/investing/12074159/Mapped-the-worlds-cheapest-stock-markets-to-buy-for-2016.html" target="_blank">The worlds cheapest markets</a><b> </b></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">A snapshot view of the Nifty </span><b style="font-family: Arial, Helvetica, sans-serif;">PE</b><span style="font-family: "arial" , "helvetica" , sans-serif;">,</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><b style="font-family: Arial, Helvetica, sans-serif;">PB</b><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><span style="font-family: "arial" , "helvetica" , sans-serif;">and</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><b style="font-family: Arial, Helvetica, sans-serif;"><a href="http://www.investopedia.com/terms/d/dividendyield.asp" target="_blank">Dividend yield</a> as on 5.2.16</b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9UUhahBGYm5AWJ-Tkzqoqe43i9ej2s1U8zpni19vkkGmc7YL35IYD755qI5cZSaWxovEmpCJoSo9wxKoBzZ_tAZTs1T4eTZEfjFI6G_ig_D6phuIp1ES8AhmlZ1PC-CKsl1lqJjAMogZo/s1600/Nifty+dividend+yield+as+on+5.2.16.JPG" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="411" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9UUhahBGYm5AWJ-Tkzqoqe43i9ej2s1U8zpni19vkkGmc7YL35IYD755qI5cZSaWxovEmpCJoSo9wxKoBzZ_tAZTs1T4eTZEfjFI6G_ig_D6phuIp1ES8AhmlZ1PC-CKsl1lqJjAMogZo/s640/Nifty+dividend+yield+as+on+5.2.16.JPG" width="640" /></a></div>
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<span style="background-color: white; color: #222222; font-family: arial, helvetica, sans-serif; line-height: 23.1px; text-align: justify;">Do read this - </span><a href="http://www.starcapital.de/research/stockmarketvaluation" style="background-color: white; font-family: arial, helvetica, sans-serif; line-height: 23.1px; text-align: justify;" target="_blank">Global stock market valuation ratios</a><br />
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-52925128878848291882016-02-03T14:49:00.000+05:302016-02-03T20:06:35.092+05:30Mutual Funds, online gyan, criticism and more... <div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhv09KALRj4mBNxD6P6_O9r5JZaMY3EMlXbabagOWYO9TObpZiKPNn4jILZunFWz92gpPvw5rS9rsaPfsmv0a4FhpOFOUBN9Mm5HqMSmjmz99bSe2gQl4LvWXImxLA5dnFK-a_tnu5xC1tN/s1600/gyan.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhv09KALRj4mBNxD6P6_O9r5JZaMY3EMlXbabagOWYO9TObpZiKPNn4jILZunFWz92gpPvw5rS9rsaPfsmv0a4FhpOFOUBN9Mm5HqMSmjmz99bSe2gQl4LvWXImxLA5dnFK-a_tnu5xC1tN/s320/gyan.jpg" width="320" /></a></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><br />Advice on investing is free and fast on online media and the noise is as much
as it is on TV and mainstream media. Gyan for the
day is common and everyone with their own agenda, viewpoint gives gyan (<b>some
of it very useful</b>). Many statements are made and with real conviction. Yes,
we do do require several view-points and many of these statements, make me
re-look at my processes for investing<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Some of the things I hear often are given below. Decide for yourselves
if you agree with these or not.<o:p></o:p></span></div>
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<b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Don't go by past returns/ performance</span></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><span style="font-size: 13.5pt;">These words are sometimes bandied about on twitter and FB by themselves without adding, what is to be done. Shouldnt one check the performance of the fund when </span><span style="font-size: 18px;">selecting</span><span style="font-size: 13.5pt;">? The actions of the fund
manager are captured in the returns and investors measure the returns
over various periods, the rolling returns, SIP returns to get an idea the scheme's and fund manager's performance. I do check the rolling
returns and the SIP returns over various periods </span></span><u style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">among other
things</u><span style="font-family: "times new roman" , serif;"><span style="font-size: 13.5pt;"> when selecting a fund for myself.</span></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">There are other parameters I check, other than past returns and more about that in
tweets or in another post. <o:p></o:p></span></div>
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<b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Glorification of DIY and vilification of IFA</span></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">While I am all for DIY, which will save one in intermediation costs, how
many are really ready for DIY investing? I have met a DIY investor with 42, I
repeat, 42 funds in his portfolio. When he learnt that it was sub-optimal, he took help.</span><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"> </span><b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Intelligence is in
taking help</span></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"> <b>if you need it</b> </span><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">and it is upto to you to choose if you
are knowledgeable enough to DIY or need to take the help of an advisor,
intermediary. <o:p></o:p></span></div>
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<b><i><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Vilification of IFAs</span></i></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><o:p></o:p></span></div>
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<b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><br />
</span></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Running down IFAs is a special pastime on online forums. This is mainly
done by DIY votaries. <b>It often seems that those
engaging in this, grudge the intermediary IFA/ advisor her income. </b> <a href="https://twitter.com/Yaminintweet" target="_blank"><b><span style="color: blue; mso-bidi-font-size: 11.0pt;">Someone</span></b></a></span><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"> </span><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">nicely said in a tweet – You don’t rise by putting the other one
down. Leave that to the elevators.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Having conducted a few financial planning workshops over the last
couple of years I found that hardly 5% of those attending have invested in
mutual funds and know about funds. Many who attend want help and guidance and some are even confused with SEBI's advertising code and the word<b> RISK</b> prominent
in the ads. Young and old investors want to understand what it means and how funds
work. In such a case, they may come to an IFA / or advisor for help who can
handhold them till they learn. <o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">There is nothing wrong in either going to a registered investment advisor or to a
distributor of mutual funds if you need help in investing. Only, do not
hesitate to ask her questions. There should be willingness to answer every question
asked. <o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><br /></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Do not listen to the "grudge" comments. Advisors do advise on asset allocation, allocation within the asset class and on monitoring and rebalancing. </span><br />
<span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><br /></span>
<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">If you do believe
you can DIY, you should go ahead. You own up the decision making process.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;"> </span><b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">To SIP or not</span></b></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">A few investors on online forums </span><span style="font-family: "times new roman" , serif;"><span style="font-size: 18px;">criticize</span><span style="font-size: 13.5pt;"> SIP regularly! Yes, there is more
to investing than just regular investing. Yes, you have to
allocate among different asset classes and within an asset class like equity,
you have to diversify. You have to monitor. </span></span><b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;">You may have already allocated your
funds among real estate, gold and may want to start / increase allocation to equities. I have found personally that SIPs
are a good way to do so.</span></b><span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">I personally consider SIP as a great way to invest in <b><u>equity
mutual funds</u></b>, but I know what to expect and what I should not:<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Using SIP as a tool:<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;"><br /></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">1. I do not have to bother timing the market<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">2. One cant get rich quick with an SIP, BUT ONE WILL BUILD WEALTH slowly
SIP by SIP. As one spends more time in the market, one will see
the effect of compounding.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">3. Doesn't mean that if I use SIP, I cant do a lumpsum when I choose to. I
use both.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">4. SIPs work over the long term <o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">5. I will not stop SIPs when the market is down.</span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">Critics of SIPs dont provide an alternative, simple method for professionals who start with small amounts to save every month for whom I consider automation of the process, the best. </span></div>
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<span style="font-family: "times new roman" , serif; font-size: 13.5pt;">All those reading must make their own choice regarding all the above since personal finance is "personal".<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><span style="font-size: 13.5pt;">Disclaimer: I have been conducting investor awareness</span><span style="font-size: 13.5pt;"> workshops and have been </span><span style="font-size: 18px;">approached</span><span style="font-size: 13.5pt;"> by many of those attending, for help. Therefore, I have registered with AMFI and became an IFA recently to advise those asking for help. </span></span></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-89434906065927652752016-01-29T08:46:00.005+05:302016-01-29T08:47:35.121+05:30India - a gigantic success or colossal failure - reply of an NRI<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: inherit;"><a href="https://twitter.com/NileshShah68" target="_blank">Nilesh Shah</a>, <span style="background-color: #f5f8fa; color: #292f33; line-height: 20px;">MD, Kotak Mahindra Mutual Fund, </span>put out a great series of tweets giving the answer of an NRI to the Question - India - a gigantic success or colossal failure?</span><br />
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<span style="font-family: inherit;">These had to be compiled and shared.</span><br />
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<div class="storify">
<iframe allowtransparency="true" frameborder="no" height="750" src="//storify.com/invest_mutual/india-a-gigantic-success-or-colossal/embed?border=false" width="100%"></iframe><script src="//storify.com/invest_mutual/india-a-gigantic-success-or-colossal.js?border=false"></script><noscript>[<a href="//storify.com/invest_mutual/india-a-gigantic-success-or-colossal" target="_blank">View the story "India - a gigantic success or colossal failure - reply of an NRI" on Storify</a>]</noscript></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0tag:blogger.com,1999:blog-8604197643943927369.post-50367538765832679112016-01-02T09:42:00.001+05:302016-01-02T09:43:53.347+05:30Your Money 2016 - The "forget it way" to managing your money<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh61YXrh0eF5sS8o-gXX8MImp4nRhGLLPkooLknqic039OoZxc0goRYurIaPQlOQs4-eKFCZVqDq4lFjA0teR-x7MX2bNlNoN2B2_9DMjwlLSmJGXa5foZPzC4YlFnb84lOQKSbv40OuY8r/s1600/money+box.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh61YXrh0eF5sS8o-gXX8MImp4nRhGLLPkooLknqic039OoZxc0goRYurIaPQlOQs4-eKFCZVqDq4lFjA0teR-x7MX2bNlNoN2B2_9DMjwlLSmJGXa5foZPzC4YlFnb84lOQKSbv40OuY8r/s320/money+box.jpg" width="320" /></a></div>
A great series of articles in the Mint should serve as a guide to all those who wish to take charge of their financial lives.<br />
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Most of us work hard for money but falter when it comes to putting that money to good use and making money work for us. Many of us plan our lives wonderfully till we get a great job and live off that income without working to create wealth. The links given here can be a very useful guide in personal financial management.<br />
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Tips are given in each of the links below on how to start and progress - step by step<br />
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Do read and save these links which I tweeted earlier. <br />
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<div class="storify">
<iframe allowtransparency="true" frameborder="no" height="750" src="//storify.com/invest_mutual/your-money-2016-the-forget-it-way-to-managing-your/embed?border=false" width="100%"></iframe><script src="//storify.com/invest_mutual/your-money-2016-the-forget-it-way-to-managing-your.js?border=false"></script><noscript>[<a href="//storify.com/invest_mutual/your-money-2016-the-forget-it-way-to-managing-your" target="_blank">View the story "Your Money 2016 - The "forget it way" to managing your money" on Storify</a>]</noscript></div>
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Mahesh Mirpurihttp://www.blogger.com/profile/17737747330789901363noreply@blogger.com0