A helping hand from numbers leads to objective opinions and confident decisions!!!

A much more appropriate way to say this – rebalance . But that doesn’t catch the eyeballs. So “Booking Gains” it is. At least the title!!! So why rebalance, err, correction – book gains? I can think of following reasons: -           Reducing risk, especially in case of catastrophic equity market fall. You have been investing in equity funds for real long time and have built sizeable “unrealized” gains. Some black swan event happens. Recall market behaviour during Covid era - down nearly 30% in one month!!!. It is given that good part of “unrealized gains” will be wiped off in case any other black swan event happens in future. It may come back quickly, or it may take a while to recover. You may start doubting the equity markets, or your investing acumen. Taking out some gains when things are going good will be of great help in taking in any severe market downturn stoically . Essentially, it will be much easier to say - “this too shall pass...

  SEBI has recently introduced a new category of fund – Lifecycle funds. These are essentially target date funds – they mature on a target date and proceeds will be returned to the investor on maturity date automatically. The premise of this fund category is – allocation to risk assets like equities need to be reduced as target date approaches to ensure accumulated corpus is shielded from severe equity market downturns close to target date. Long story short – the idea is to lower your risk progressively as the target date approaches. Though this is not what has made news. Investors have been taken in more by the fact that such funds will be considered as equity funds throughout their lifecycle and no tax liability will lie on the investor when the periodic switch from equity to non equity funds and vice versa happens. Never mind such flexibility and maybe better tax efficiency exists already in NPS system , though with “lock-in” cost thrown in. Again, never mind the tax effic...

Goal planning focusses on long haul projections while budgeting is more “current time”. Goal planning requires near perfect discipline. Budgeting gives you flexibility. All these points aside - my biggest gripe with goal planning – never seen anybody do goal planning basis real rate of return . Corpus projections basis nominal rate of return is commonplace. Going for real rate of return is difficult – because one needs to get an approximate idea of his / her personal inflation rate. Figure this – INR 25 Lacs invested for 20 years end up with corpus of: -             INR 2.41 Cr @ nominal CAGR of 12%. But hey, hold on - there’s a psychological trap in this number – your mind gets tricked into believing you did good because you measure purchasing power of this corpus of INR 2.41 Cr in current price terms   -           Now assume your personal inflation rate for next 20 years...

How quickly money doubles in any risk (growth) investment? That, I think is the best measure of categorizing returns into buckets of “Satisfactory”, “Good” and “Excellent”. And for good measure, let us also throw in the “Extraordinary” return bucket. Though we need to establish a reference point first. Like it or not, comparison or relativity needs to be there. Let’s say you get 5% post tax returns from fixed rate (risk free?) investments. It takes slightly more than 14 years to double the money at this rate of return. Here is my categorization of returns from risk investments: -           Satisfactory: Money doubles in two thirds the time of fixed rate of return. A return of 7.59% does this trick. Quiet a lowly return one would say. Do realize that it takes nearly 5 years lesser to double the money than fixed rate ROI   -           Good: Money doubles in half the time of fixed r...

"We must base  must our views of future policy on a knowledge of past experience'                                                                                                                         - Benjamin Graham 1 Day, 1 month, 3 months, 1 year, 5 year or 10 years? The context is “correction” afflicting the equity markets. Here’s how equity markets have performed as on closing of 13 th March 2026: 1 Day: Minus 2.31% 1 Month: Minus 8.21% 3 Months: Minus 9.72% 1 year: Up by 7.03% 3 years: Up by 15.05% 5 years: Up by 12.31% 10 years: up by 14.35% All return figures are basis Nifty 500 TRI . Data source is www.niftyindices.com. Situation is bad – if you look at t...

Not happy with the returns of your equity mutual fund investments? On the contrary, very happy with the returns you are getting? In any situation, take a quick look at your overall portfolio holding days. Should be easily available in the tracker (app?) you are using. If you have been at it for less than 3650 days (10 years), don’t be disheartened with not so good performance. Likewise, be wary of being elated with extraordinary high ROIs. It may not amount to much in absolute monetary terms. And in both cases, long pull may turn out to be very different. Here are some holding days data from some of the investor portfolios in our kitty: - Investor 1: Started of with us in 2016. That would be nearly 10 years now. However, portfolio holding days come to just 875 days (less than 2.5 years). Increase in monthly contribution over the years and a large lump sum investment couple of years ago brought down portfolio holding days significantly - Investor 2: Investing with us since 201...