India Budget 2016 – Cut the Noise!

by
India Budget 2016

Cut the noise

So, the budget 2016 announcements are over. The finance minister is done with his speech.

Now the incessant and sometimes over the top, commentaries on the budget will start – by experts, economists, journalists, news anchors, et al. Each one is vying for your attention presenting analysis, etc.

I am sure you too couldn’t resist taking one glance at your TV screen or your twitter timeline to find out what’s the budget saying – such is the frenzy around the event.

As I write this, your email inbox probably has also started receiving highlights and summaries of Budget 2016 – one each from your mutual funds, online newspapers and magazines.

Several of them speculated about the budget contents. How some tax benefits are going to be taken away or how more tax benefits would come in? Thankfully, none of that came true. Gives you one more reason to not go by rumours and stay away from speculations. Basically, an urge to think for yourself.

Now, if you are really interested in what was actually said and the true highlights of the budget, here is a link to the official budget site of the Govt of India.

Read more

What’s wrong with a ULIP?

by
WHAT IS WRONG WITH A ULIP

There is a raging debate on ULIPs. Article after article is being published in favour or against a ULIP. Since this is the last leg of the tax saving season, the pitch has become even more shrill.

There was recently an article on ValueResearch about choosing ELSS vs ULIPs and there are angry comments on the article to the extent of accusing the writer of taking sides and not presenting a true picture about ULIPs. Both the camps, for and against, have made their points and it is difficult to ignore either.

If you are not truly aware of what a ULIP today is, you may want to first read another post here.

Now, let’s come to the real issues with ULIPs. What’s wrong with a ULIP?

Read more

Should you invest in an FMP or Fixed Maturity Plan?

by
Should you invest in an FMP?

If you have been bombarded recently with emails from various fund houses announcing several fixed maturity plans or FMPs, as they are popularly known, then you are not alone.

FD returns have gone down recently and fund houses are doing their best to offer an alternative to the ‘safe return’  seeking population.

If you have come across an FMP sales pitch, it almost always is that “it is as safe as a Bank FD”, yet, “it will give higher returns than an FD.” An easy lure for most investors since ‘safe returns’ is a primary criteria.

Let’s build a perspective on FMPs and should they become a part of your portfolio?

What is an FMP or a Fixed Maturity Plan?

If you have invested in a Bank FD before, you know that it comes in for different tenures of 1 year, 3 year, 5 year, etc. 

Read more

How to make sense of the mutual fund factsheet?

by
mutual fund factsheet

If you have ever read or heard a mutual fund advertisement in print or radio or TV, the final cautionary words are – “Please read the scheme information document carefully before investing.” 

In reality, very few investors actually do it. That does not take away the fact that the best way to understand a fund is to read various documents associated with it.

Unfortunately, the fund industry has done its best to confuse the investor in every way possible. The information is strewn across so many documents including a Scheme Information Document (SID), a Key Information Memorandum (KIM) and a Factsheet.

And worse, there is no standard format for them. So, if you take scheme documents of two funds, you would feel that they have come from two different planets.

Just search documents for any two funds on the Internet and you will know what I mean.

As an investor, the most important information that you should be looking for is available in the fund factsheet.

Read more

Are you a disciplined investor?

by
Disciplined Investor

Do you know more than 95% investors fail to create wealth for themselves or find it difficult to reach their financial goals?

Why?

They cannot control their behaviour. It means that they fall prey to their own emotions. They do everything that an investor should not be doing. Here are some of them:

  • Don’t have any goals
  • No plan, random last minute action such as for tax savings
  • Copy friends and family
  • Take advice from popular news media
  • Falling for highest returns

In short, they just lack the discipline to be an investor.

What is discipline after all?  Discipline is about behaviour. It is about awareness, alertness and action, in that order.

Discipline is paramount in every walk of life and you too, as an investor, cannot remain immune to it.

What makes a disciplined investor?

Read more

Investments for Beginners: Understand 3 essential elements

by
Essential Elements of investments - Safety, Liquidity, Returns

Before you make an investment decision, you would knowingly or unknowingly run the following questions in your mind:

  • Will my money be safe?
  • Will I get my money back when I need it?
  • What return will I earn from it?

These questions are about the 3 essential elements of investments – Safety, Liquidity and Returns. 

Let’s see what are you most likely to do if you were to focus on just one of the elements.

What is the safest investment? You would typically invest in a PPF, NSC, Government Securities/Bonds, Bank Fixed Deposits, etc.

What is the most liquid? Well, cash in the locker, money under the mattress or your savings/ current account are the likely places.

What will give the highest or best return? Now, that’s where the conflict begins. Will this be the one with highest safety and liquidity?

Read more