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

We are talking about much desired “Financial Freedom” in this blog. Two numbers dominate this topic: -           How much do I need to get on to the shores of “financially free” land -           How do I reach the magical number. And that too rather quickly!!! The latter part – “how do”, receives overwhelming attention. It mostly translates to targeting highest return on capital invested. “How much” translates into a specific number, mostly without basis. Getting a hang of one’s “expenses”, which happen to be the foundation of arriving at “how much” does not get the focus it deserves. Maybe it is difficult to track expenses on daily basis. Or is it? What worked for me is a simple solution – do all your expenditures from one bank account. Fund this bank account monthly from your source of income and by the year end you will have fair idea of your annual expenses. Keep up at it for few ye...

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...

“What doesn’t kill you, makes you stronger” -           Friedrich Nietzsche, 19 th Century German Philosopher IT Stocks are being hammered on almost daily basis. “ AI ” seems to have given serious “infection” to IT companies and doomsday predictions for most of the organizations abound. NIFTY IT index as on 21 Feb 2026 is down nearly 16% in a month and 19.84% in year. On the contrary, broader Nifty 500 index is up 2.04% in a month and by 13.37% in a year. One following a broad market indexing strategy using Nifty 500 index fund has been spared the sectoral downturn reflected in IT stocks. And that’s what diversification is all about. That said, is it time to take a contrarian call and buy some IT stocks? Or rather than go for individual stocks, introduce IT index fund to your portfolio and build a diversified holding of IT companies? The latter approach looks better to me as it takes the guesswork out of which company handles the AI ...

In the latest blog , I had shared (my) benchmarks for checking broader markets overvaluation or undervaluation status. Before I proceed to check the efficacy of these benchmarks, why do we really need such benchmarks? Here let me quote the timeless advise rendered by Benjamin Graham in his investment classic – “The Intelligent Investor”: We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequent inverse range of between 75% and 25% in bonds. There is an implication here that the standard division should be an equal one, or 50–50, between the two major investment mediums. According to tradition the sound reason for increasing the percentage in common stocks would be the appearance of the “bargain price” levels created in a protracted bear market. Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgment of the investor the mar...

Buy low, sell high is what everyone wants for investments (equities) where high ROI is being targeted. That gives one a shot at landing up with extraordinarily high returns. The catch – identifying high and low valuation situations. With consistency!!! High decibel pitch mostly highlight latest annual returns while long pull data is mostly mentioned on the sidelines. Relying on short term point to point data will mostly lead to wrong conclusions. My view: looking at decadal ROI’s and assessing them against a fixed rate low risk benchmark will give one a better shot at forming an opinion on whether prices are low, reasonable or high. And while one is at it, 3 period smoothening (averaging) will still give a better result as it tends to iron out significant outlier events making point to points returns even for long horizons go haywire.   Circling back to fixing benchmarks. As we assessing performance on decadal basis, I will consider 10 year Indian government bond yield as...

Remember my index plus approach blog? Never mind if you don’t recall. You can check it out here . This gist of index plus approach – trying to better the returns generated by broad market indexing by following some “active” investment options. Let’s check how this approach has done in the latest calendar year gone by (1 Jan 2025 – 1 Jan 2026). And rather than looking at index returns, we will check out index fund returns from a particular fund house (Motilal Oswal) as that gives an idea of actual return what an investor would have realized. Here are some numbers: -           Nifty 500 Index fund: 6.57%, way below “general expectation of 12% to 15% returns   -           Nifty 50 Index fund:  10.89%. That’s more than 4% extra from Nifty 500 index fund. Underperformance by mid cap and small cap stocks pulled down Nifty 500 performance quite a bit   -    ...

Ever heard about the “Permanent Portfolio”? The genesis of this investment strategy lies in a book – “Fail Safe Investing – By Harry Browne”, written way back in 1999. This portfolio is quite unique and contrarian in the sense that it proposes one quarter of holdings each in investments such as gold (not jewellery), cash equivalents, long durations bonds and broader equity indexes. The premise is - "Every investment has its time in the sun - and its moment of shame". However, put together, such highly uncorrelated investments let one be one up on bad financial times of any kind. I admit this is the first time I have heard of such high gold and cash holding in any investment program. 5% to 10% is more like it. I would have mostly trashed this portfolio as some marketing gimmick if I had not come across excellent analysis done in this blog . While the said blog is in UK context, I would tend to believe same would be more or less true in Indian context too. Maybe better as our ...

First question: How much do I have? Second question: How much of it is liquid which I can move around quickly? Third question: Where all, and how much do I want to put my money? Fourth question: Does my budget have a provision for any urgent requirement to ensure I don’t need to tweak my plan midway? Final Question: What is the plan for pulling out some money from an investment which has done exceedingly well against established benchmarks? 

Annualized returns as on 30 Sep 2025 Asset Class 1 (Gold): -           One year: 52%. Outstanding performance by Gold -           10 year: 16.12% Asset Class 2 (Equities, basis Nifty 500 TRI ): -           One year: Negative 4.94%. Abysmal performance by equities in past 1 year, more so when compared to gold returns -           10 year: 14.35%. Now it does not look that bad even if you bring gold in perspective However, it is quite clear gold trumped equites both in long and short horizons. Good many people will be inclined to go for gold investments going forward, now that data proves gold trumps equities even in long horizon But hang on. What was the situation on 30 Sep 2024, and for good measure on 30 Sep 2023. Here we go… Annualized returns as on 30 Sep 2024 Asset Class 1 (Gold): - ...

Momentum investing: Deploy money in the “trend”, hope the “trend” to keep up, and keep reaping the rewards!!! Current example – precious metals like gold and silver have delivered super returns in past one year. Those BUYING GOLD & SILVER now are following a momentum strategy. They expect the good times for gold and silver to continue!!! Contrarian Investing: You are expecting the trend to reverse. Say I have good amount of investment in gold. I feel the price has run it’s course and now buying into gold or even not selling some is a high risk as prices may pull back (trend reversal). On the contrary, equity markets have not done well in recent past. Nifty 500 index return for 1 year ending 30 Sep 2025 is NEGATIVE 5.28%. If I decide to SELL GOLD and BUY NIFTY 500 INDEX, I am being a contrarian. Both have pros and cons. Personally, I prefer contrarian play. Cons of Momentum play: the (up)trend may stop once you put money on the line. Worse, it may reverse and you will now star...

Whether value of your primary home or the car you drive be counted in your asset inventory  ? Or in Indian context, the value of jewellery you possess? For a long time, I was on the other side of the fence – any consumption stuff should not be considered in asset inventory working. Now, my views have changed – the stuff which give you and your family “status” and let the world know that you have “arrived” are definitely worthy of being counted in your net worth. Ok, don’t roger me for being so subjective despite of running a blog obsessed with numbers. But even in numbers context, anything which can be liquidated for money maybe be considered in “Asset Inventory”, or more simply wealth status. I say “can” and not “should” because for consumption stuff, which serves only a particular need, it is upto an individual of what he / she plans to do with the money realised after liquidating the stuff. For example, when I scrapped my 15 plus year old motorcycle and got nearly 10% of pur...

Should an 80 year old   or near about person who has come about in possession of large chunk of money through some source, let’s say property sale consider deploying a large chunk of money in listed equity investments? General opinion: No, absolutely no. Too risky at this advanced age!!! Even if one is really inclined to invest in equities, should be in lowly amounts. Somewhere I read – equity allocation should follow 100 minus current age rule. If you are 80, equity allocation basis overall assets should be 20%. Never mind doing up asset inventory and asset allocation check on overall capital basis is rarely focused on. Well, I don’t subscribe to this “general opinion”. In personal finance, “personal” comes before “finance” and any generic statement does not take into account investor specific financial situation. What if an 80 year old: -           Has assured income which is at least 1.25 times his / her regular expenses? To...

You don’t know how well your money is doing until you have a clear picture where all your money is. That is where the role of periodically working out asset inventory comes into play. While it may appear to be a chore initially (and it is), if one perseveres, the results may be the best guide a very successful financial situation. The best part – you don’t need any fancy apps or other tools to go about it. Simple excel sheet or even a diary if you prefer writing can do the job near perfectly. I am deliberately not putting up any sample asset inventory format. That is left to each individual. The format you go by can be a simple one, with just the asset type & associated number against it. Or an advanced one where you also plug in realistic expected return. Maybe even a super advanced one (if I can say that), where you adjust the weighted average portfolio returns with expected inflation to get an idea how well your investments are keeping up with purchasing power capacity. Wh...

With the tax incentives for savings gone if one opts for new tax regime, going for NPS (National Pension Scheme) investments on voluntary basis to the tune of INR 50,000/- per annum or even higher will be out of consideration for many. Or should it be? While the tax savings during accumulation phase are gone for those who go for new tax regime, key attraction of tax benefits on withdrawal still remain. It has been sometime now that equity investments have become taxable beyond certain minimum threshold of capital gains. However, NPS still offers the opportunity of deploying sizable annual contribution in equity investments and get large part of accumulated corpus (60%) tax free after 60 years of age. This, plus the option of continuing NPS contribution till 75 years of age is what made me subscribe to NPS scheme. The flexibility offered by extending NPS subscription till advanced age of 75 while still having a chance to exit whenever you want to is excellent.   Coming to annuit...