investing Archives – Page 17 of 19

The Acid Test for your Investment Portfolio

September 28, 2015 by Vipin Khandelwal

“How do you know if your investment portfolio is doing well?”

I usually get a range of responses to this question. They start from “ummmmm (which means I have no idea)” to “when it delivers the best returns“. The latter also means “I have no idea” but with an attempt to sound smart.

Very few investors are aware of what makes their investment portfolio worthwhile. Let alone that, they don’t even know what is their portfolio return. They know their FD return, PPF return, NSC return, but portfolio return?

You would realise that the ‘portfolio return’ is one of the key numbers that tells you if your investment portfolio is really working for you or not.

Today, let’s set aside all our excuses and do an acid test on your investment portfolio.

Save taxes with mutual funds: ELSS

September 26, 2015September 25, 2015 by Vipin Khandelwal

“Save taxes with mutual funds?”, my friend Ajay had a look of curiosity on his face as he heard this. “How is it possible?”

“Yes, it is. There are mutual fund schemes specifically created for this purpose. They are known as Equity Linked Savings Schemes or ELSS or Tax saving mutual funds.

I am sure you are aware that under Section 80C of the Income Tax Act, you can invest upto Rs. 1.5 lacs in various eligible investment options and claim deduction of income tax. Simply put, when you invest in those specified options you do not have to pay any tax on that portion of the income.

ELSS funds are eligible for such investment.” I took a pause.

“So these ELSS funds invest in stocks?” Ajay was excited.

“Yes, these funds invest most of their monies in stocks.”

Ajay looked happy. “Isn’t that a wonderful combination – save taxes as well as get benefit of equity investing?”

I nodded in agreement and said, “The popular idiom to describe such a benefit is to kill two birds with one stone. In Hindi, that would be ek teer se do shikaar.”

“Are there any restrictions that apply to this investment?” he enquired further.

Equity Mutual Funds: Avoid these!

September 25, 2015September 23, 2015 by Vipin Khandelwal

Talk to any wise person and one learning that you are most likely to take away is that you should tread your path carefully.

And if you hear Charlie Munger, Warren Buffett’s best buddy and partner in Berkshire Hathaway; he puts it like this.

AVOID BIG MISTAKES.

Quite simple.

When it comes to investing, the rule stays the same.

When you are out there to build your portfolio of equity mutual funds, you may not be very lucky all the time to find the best performing funds. But what you can and should is that when you set out to pick your funds, ensure that you avoid the big mistakes.

How do you avoid the big mistakes?

Usually, investors select funds that have delivered the highest returns in the past. That’s the easy bait. But that also akin to entering DANGER ZONE, a sure-shot recipe for disaster.

The only point that should be noted in this regard is:

The Secret Power of 3

September 22, 2015September 19, 2015 by Vipin Khandelwal

“Kitne aadmi the” is one of the most memorable lines of the Indian movie industry. Gabbar Singh, the evil villain from the classic movie Sholay, rolls it off his tongue when his 3 men return empty handed from a loot campaign.

Let’s take another one – Veni, Vidi, Vici or I came, I saw, I conquered. I am quite sure that you have come across this one too. This was Julius Caesar.

Do you see anything common in the two statements? I dropped a hint very early, if you noticed.

Well, both are ‘memorable‘ and both have ‘3 words‘. Isn’t that interesting?

Can you recall any other which has a structure of ‘three‘ – 3 words, 3 parts, 3 rules?

It’s not difficult. I would say, it’s as simple as ABC or 123.

You get the direction, right? See, if you can think of a couple of them.

What power does 3 have?

Somehow 3 is that magic number that our brain can focus attention on and absorb in. Not 2, not 4 but 3.

Come to think of it, it’s been there, forever. The most memorable and actionable ideas are no more than 3 words long. I would say 3 is the ultimate brain hack. And we will know why?

Debt mutual funds: Which ones to invest in?

April 17, 2016September 11, 2015 by Vipin Khandelwal

In an earlier post, we built a winning equity mutual fund portfolio. This time we will look at debt mutual funds and see which ones can best deliver on your investment goals.

As I set out to select debt mutual funds, I realised this huge challenge staring at me. If selecting equity funds was like running a marathon, selecting debt mutual funds is akin to climbing Mount Everest.

Why?

Investing to be a millionaire: What matters and what doesn’t?

September 8, 2015 by Vipin Khandelwal

A young friend of mine just began his working career.

We met for lunch one day. One of his questions to me was, “Vipin, how can I be a millionaire? And I mean a dollar millionaire. How should I be investing to reach that goal?”

Hmm. It wasn’t the first time I heard a question like that. Who doesn’t want to be rich, a millionaire?

To answer my friend’s question, I ran some quick calculations. Now, he has set his goal to be a millionaire, that too a dollar one. For ease of understanding, a million dollars at the exchange rate of Rs. 66 to a dollar would mean about Rs. 6.6 crores.

Whoa! That needs some work. Let’s crack it. Here we go!