Tax free, Guaranteed returns

GUARANTEED RETURNS

“Sir, you invest Rs. 1 lakh per year for 10 years and after 20 years, you will get Rs. 20 lakhs guaranteed, tax free.”

Isn’t this going to get your mouth watering?

Well, the absolute number of Rs. 20 lakhs is quite a big number, that too guaranteed and tax free.

It is big enough to get you thinking and consider the investment. However, like a good investor, you would search for options.

What’s the alternative?

Let’s consider the Bank Fixed Deposit. A Bank FD is one of the safest investments with guaranteed returns.

If you invest the same Rs. 1 lakh every year for 10 years in a Bank Fixed Deposit at a 7 % rate of interest, what would you get?

The answer is Rs. 29.08 lakhs. But, the interest is taxable as per your tax bracket.

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Insurance – the investment mirage

Insurance - the mirage of investment

Insurance continues to disappoint.

Every comment or email that I receive reflects the disillusionment with investment based insurance products, more specifically with “Pension Plans”.

The customer now wants to surrender these plans. Some are not happy with the returns, others don’t see the fit with their goals.

I wonder how millions of people were taken for a ride.

The answer is easy. Here’s a piece that you should read to know why? Insurance: All that is wrong with it and you!

The Pension Plan reality

In reality the pension plans are – “wolf in sheep’s clothing”.

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Bank FDs or Liquid, Ultra Short funds plus MF taxation

Alternative to a Bank FD- ultra short term, liquid

There are 3 posts that appeared on Unovest Blog and unless you have signed up to receive the posts in your inbox, you are likely to have missed reading them. What is the investment alternative to Bank FDs? Alternative to Bank FDs has been one of the hottest searches by investors. Low returns plus the taxation doesn’t make it attractive … Read more

The 32 fund portfolio – Diversification vs Diworsification

Mutual Fund Diversification or Diworsification

How many funds do you have in your portfolio?

“I will have to count.”

After 10 minutes.

“It is 32 funds.”

Did you say 32?

“Yes.”

What are these many schemes doing in your portfolio?

Diversification.” It was mentioned as a matter-of-fact. 

What does having 32 Mutual Funds in your portfolio mean?

Let’s understand this in two parts.

Part 1: It means a lot.

You believed in the theory that about 25 to 30 stocks make a good diversified portfolio and hence that would be true for mutual funds as well.

You believed that diversification is the best bet against ignorance or so said the Oracle of Omaha  – you don’t exactly know the right fund to invest in and hence accumulate many – at least some will perform.

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Investment problems of an HNI

Investment Problems of HNIs

“Why do you have 20 funds in your portfolio? Any specific reason?”

“Well, nothing specific. One advisor told me to invest in a few funds and I complied. Then subsequently another advisor came along and told me about better funds and I invested in them too. Of course, my Bank RM keeps advising me about various new investment options. I invested in some of them as well.”

“No wonder your portfolio is a mess.”

If you are a High Networth Individual or an HNI, you are literally spoilt for choice. You are made to feel that you deserve something special because of your monetary status and cash flow.

Money managers, advisors, agents and distributors flock to you to offer you that special treatment that you deserve.

Here are the investment problems that I have come across while talking to and working with HNIs:

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Investing in Equity Mutual Funds – a perspective from Rajeev Thakkar of PPFAS MF

Investing In Equity Mutual Funds with Rajeev Thakkar of PPFAS MF

Individuals are keen to invest in mutual funds but there is this rampant confusion still prevailing on what exactly is a mutual fund and how does it work. Should one go for direct stocks or an equity mutual fund? The number of mutual funds out there compounds this confusion further.

That’s where I reached out to Rajeev Thakkar, the CIO and Director of PPFAS Mutual Fund, who was kind enough to share his views and provide answers to some of the “top of the mind” investor queries.

Rajeev Thakkar possesses close to 2 decades of experience in various segments of the Capital Markets such as investment banking, corporate finance, securities broking and managing clients’ investments in equities.

Rajeev has been associated with PPFAS Limited (the Sponsor of the AMC) since 2001. He was appointed the Fund Manager for the erstwhile flagship scheme of the Portfolio Management Service, titled “Cognito” in 2003.

He is a strong believer in the school of “value-investing” and is heavily influenced by Warren Buffett and Charlie Munger’s approach. Apart from his technical ability, what distinguishes him from many others is his ability to stand his ground and remain unflappable during difficult times.

He is a regular contributor to Mint newspaper and has also appeared on business channels such as Bloomberg India TV and ET Now.

He is a man of few words but his low-key demeanor often underplays the fact that he is a good listener, a team player and a razor-sharp thinker.

I was glad to talk to Rajeev and get his expert views on equity mutual funds. 

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