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

Whether value of your primary home or the car you drive be counted in your net worth? 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 net worth 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 “Net Worth”, or more simply wealth status. I say “maybe” 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, I scrapped my 15 plus year old motorcycle and got nearly 10% of purchase outlay as cash value....

Do you believe that Indian Equity markets are doing better than US equity markets? As far as I get the drift from the “news”, it seems Indian markets are on the roll, while global equity market, especially the US is doing bad. Let’s see if the numbers support this opinion!!! Here’s what the numbers say***: 1 Year calendar year (CY) performance, basis Total Return Index (TRI): -           NIFTY 500:           4.25%   -           S&P 500:              -18.11      Indeed, Indian markets have held up better. And hence all the noise about being an oasis in the desert!!! What does 5 year horizon hold? -           NIFTY 500:           11.52%  ...

Why have one? Say you are a bit like me and think too much about spending money on certain activities/stuff and always have guilt about splurging on something which you may do without, even though they may give you immense pleasure, even for short term. How do you manage that guilt? Put in a different way, how do you convince yourself that the money you have, let’s say not spent but splurged, is you can well afford, the spending “guilt” is unfounded and you can let go the opportunity cost conundrum. The solution I found for me is to create a separate corpus. I will call it “Splurge Fund Corpus” (SFC henceforth) . Simple excel worksheet did the job for me. I created an excel sheet with different activities like travel, eating out, buying gadgets, etc and allocated annual capital to them for current FY (April 2022 – March 2023). While allocating capital for SFC, to ensure I don’t go overboard and also don’t budget too less an amount, I needed a benchmark. Enter a simple thumbrule – my S...

  Slightly more than 3 years ago, I did something unconventional – I bought into a very high deductible health insurance plan for our family. The deductible was INR 5 Lacs. Essentially, I was on my own for this much money – EVERY YEAR, in case I or any of my family members needed any hospital care. The upshot for this big risk I took: -           I paid a very meagre premium for a policy with no sub limits – especially no daily “room rent” limit which renders Sum Insured of normal “ground up” policies mostly useless to the full extent -           The Sum insured I got was quite high for the premium paid – just under INR INR 5,000/- for a Sum Insured of INR 20 Lacs Why did I go for such a high deductible health insurance policy and took such a seemingly big risk? Because the numbers I did brought out a very different picture and I made my decision to be self insured for first INR 5 Lacs a...

After what seems a really long time, I went on a long vacation to a quaint sea side town with wife, son and my parents in tow. While doing the bookings, I always try to scrimp on paying for a hotel room. However, during my last vacation at Goa, I did realize that if chosen well, some hotels / resorts can be worth the money they charge. Location, space, good upkeep of the property and quality of ancillary services (like F&B service) can justify the asking price of some properties. But still, how much should you be paying for your stay, say on per day basis for a room? We all know that the range is vast, and we need to cap it, as the higher we go, our net worth is getting the hit, while the pleasure derived from the stay experience may not be as high as the price. The rule of thumb I have devised to decide my daily room rent budget when travelling is linked to my primary residence market value, or an amount designated for buying my primary home as I do not own any residential p...

Here I checked how a portfolio of active mutual funds fared against passive index fund – for 1 year horizon. But such short horizon analysis is not a very good way to make long term investment decisions. Going to 10 year horizon now. Selection criteria remains same as earlier. Just reproducing here for ready reference: -           All Large cap funds, excluding index or ETF for April 2002 – March 2012 -           Minimum / maximum AUM: None whatsoever. We don’t want to be biased towards small or large funds -           Top 5 funds, basis only one criterion – “Returns” shortlisted. We are keeping it simple!!! No complex risk parameters like Sharpe ratio, Treynor ratio etc -           Funds allocated in equal proportion to all 5 funds. No bias again!!! -        ...

Assume you have decided to put money in equity mutual funds. This begets another question: be a DIYer or go through a professional (RIA, distributor whatever)? Any choice one makes, this will lead to another dilemma – how do you or the professional choose that killer fund (manager) which will deliver the significant excess ROI over your “safe” fixed income investments. Once could have taken in easy and gone for Index funds. But these never come into picture for most people. High decibel marketing for active funds keeps index funds in the shadows. Circling back to question of utmost importance – how to shortlist, say 5 “best” equity funds to deploy the capital? One will, as most people do look to the best free advisor in the world – google for answers. This will lead you to some mutual fund rating websites. Apply some easily understandable filters and one will have shortlist of “best” performing funds. But some with higher analytical bent of mind will go further – they will look for...