On January 17, 2020, many debt mutual fund investors with Franklin AMC woke up to a nasty surprise. NAVs of many popular debt mutual fund schemes from Franklin had gone down by 4-7%. Why did this happen? Many of Franklin debt mutual fund schemes held debt issued by Vodafone-Idea. What about Vodafone-Idea? On January 16, 2020, The Supreme Court of India dismissed the … [Read more...] about Loss in Franklin Debt Mutual Funds: What should you do?
You invest Rs 100. Let’s consider the following sequence of returns. Case 1: You earn -50% (or lose 50%) in the first year. You earn +50% in the second year. Case 2: You earn -25% (or lose 25%) in the first year. You earn +25% in the second year. Case 3: You earn -15% (or lose 15%) in the first year. You earn +15% in the second year. Case 4: You … [Read more...] about The Key to Investment Success: Lose Less
Once you lose money in stock markets or any other investments, there is a natural tendency to shift to products that offer guaranteed returns or that seem to offer guaranteed returns. While it is important to make investments that are aligned with your risk appetite, you also need to make investments in line with your financial goals. You must appreciate that return guarantee … [Read more...] about The Price you pay for Guaranteed Returns in Investments
In the first week of December 2019, the Government paved the way for the launch of Bharat Bond ETF. The Bharat Bond ETF will invest in bonds issued by various public sector units. From the investors’ perspective, it is a new investment option in the fixed income space. The Bharat Bond ETF is an easy and low-cost way to invest in bonds from public sector entities. From the … [Read more...] about What is Bharat Bond ETF? Should you invest?
Most mutual fund schemes have not performed well since the start of 2018. This is broadly in line with the overall performance of the markets. Over the past few months, I have started receiving interesting queries from clients/readers. This happens more with clients who have started investing recently, i.e in the last 2-3 years. Should they start investing in ULIPs and … [Read more...] about Read this if you find merit in ULIPs and traditional plans over mutual funds
Risk and Reward go hand in hand. Higher the risk, the higher the return. Isn’t that what most of us have come to believe? Well, this understanding is only partially correct. Why? If you could earn a high rate of return simply by taking higher risk, a lottery ticket would be the best investment. And you would find the world’s best investors in casinos. If we define … [Read more...] about The Less Understood Relationship between Risk and Returns
If there is one thing no parent wants to compromise, it is their children’s education. The parents would do anything to provide the best education to their children. Of course, not everything is under their control. At the same time, they would want to be prepared financially. How do you prepare financially for children’s education? Easy. By investing. When should you … [Read more...] about Saving for Children’s education: When should you start?
You got Rs. 10 lacs with you. You know you would need the money or at least some portion of it within 3 years. Where would you invest that money? A Bank Fixed Deposit or a Debt Mutual Fund? Let's assume debt mutual funds have as low risk as FDs and FDs are as flexible as debt MFs. The only difference is in tax treatment. And that both return 8%. After 1 year, you … [Read more...] about Need money within 3 years: Bank FD or a Debt Mutual Fund?
If you are an investor in debt mutual funds, do keep an eye on the size of your fund scheme. It is a red flag if the size of your debt fund scheme has gone down sharply. If your fund scheme has experienced sharp outflows, you need to investigate. What is the problem if the size of my debt fund scheme has gone down sharply? If your fund scheme is experiencing fund … [Read more...] about A Sharp Decline in Debt Mutual Fund Size is a Red Flag
I regularly write against mixing investments and insurance. I highlight issues in the cost structures of various investment and insurance combo products. Regular readers would know that I like mutual funds for investments. However, I must concede that the mutual fund companies do not really smell of roses. I have written about many issues with their intent and communication to … [Read more...] about Mutual Funds: The Expense Ratio Trick