Vipin Khandelwal

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:

Surrender Value Taxation – Must know insurance facts

January 19, 2019September 22, 2015 by Vipin Khandelwal

I am increasingly convinced that insurance (specially the investment variety) is a super complex product. There are so many ifs and buts attached to the product. It could have been otherwise so simple to understand and buy.

With the current product structure, it is just not possible for a layperson to understand and evaluate the product and make an informed decision. And on top of it, there are tax laws.

Well, I guess there is no point complaining. We will have to learn to navigate through the jungle.

Recently, I received the following query from a reader. It is about surrender value taxation of a life insurance policy.

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?

1 Deceptively Simple Rule to save more

September 16, 2015 by Vipin Khandelwal

What is the most popular advice that you receive about money?

My vote is on Spend less, Save more!

It is one advice that my parents always told me. After all, “money does not grow on trees“.

It was drilled down to a point that whenever I spent money on a new phone or that coffee in the Star Cafe, a little guilt feeling would raise its head.

How do you spend less?

I am so afraid to start a discussion on this topic. The suggestions that I have received range from the funny to the ridiculous.