A simple way is to invest in risk-free assets (Government bonds, PPF, EPF, bank fixed deposits). You will never see losses. However, by shunning risk completely, you might have to compromise a bit on the long-term returns. And if you consider risky assets (gold or equities) for higher returns, you must prepare yourself for portfolio losses too. At the same time, avoiding … [Read more...] about How to reduce losses in your Portfolio?
While index funds are gaining acceptance among informed Indian investors, it is always interesting to test out certain rule-based investment strategies and how those strategies have fared against simple portfolios. Rule-based strategies can eliminate human biases, or so I hope. In this post, we compare the performance of the following 4 portfolios over the last 18 … [Read more...] about Nifty + Liquid Fund Momentum Portfolio: How it fares against a 50:50 (Debt: Equity) portfolio?
The last few weeks have been terrible for equity investors. And we don’t know if it will get worse. The market correction has been savage. And nothing has been spared. The best of blue chips have been battered. So have mid and small caps. Global equities have been trashed too. It is not just the quantum of correction but also the pace of it, that has most investors … [Read more...] about Market Crash: How could we have reduced the pain?
It is good that you want to assist your parents in their money decisions. At the same time, you need to be cautious while handling their investments. What if the investments go wrong? You may say that even if these investments were to go wrong, you will be around to take care of them. Yes, that’s your duty. However, your parents may not want to depend on you financially. In … [Read more...] about Your Parents’ Retirement Corpus is not your Investment Project
The Union Budget 2020 gave a choice of tax regime to the taxpayers. Continue with the old tax regime and keep taking tax deductions. OROpt for the new tax regime (lower taxes) but don’t take tax deductions As a taxpayer, you can calculate tax liability under both the regimes and opt for the one with a lower tax liability. Under the new tax regime, all the common … [Read more...] about You can take this Tax Benefit even under the New Tax Regime
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
Many of us attach a lot of value to house ownership. Many of us also feel that house rent is a waste of money. It is better to take a home loan and pay a bit more. After a few years, you will also own the house. Contrast this with renting a house. You don’t own anything even after paying rent for so many years. Is this the right thought process? I don’t think so. You … [Read more...] about Rent vs. Buy: Paying Rent to the Owner or Rent to the Bank?
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
I advise investors of all age groups. Many middle-aged investors are concerned about whether they are too late in starting investments. Even though it is better to start early, it is never too late. They will just need to make up for the missed period by investing more. Not as easy as it sounds. They can, of course, make up by targeting higher returns but that’s … [Read more...] about The Choice between Starting Early and Investing more