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

Now that you are done with quickly deploying money in debt mutual funds in last few days of FY 2022 - 2023 to take advantage of indexation benefits which stand withdrawn from 1 st April 2023 onwards, what would you do with any money coming your way which you do not want to put in growth (risk) investments like equities? If you go by news, the money would move back to bank deposits now that fixed income investment area has been tax-levelled. We’ll see in a while what numbers say. Though for me, bank deposits beyond the insurance amount are a strict no. That said buying GILTS from RBI Retail Direct portal does deserve a serious thought now. But first let’s look at some subjective benefits of keeping money in bond funds. I could think of two: -           Liquidity. Bond funds are very liquid, while I cannot say for sure whether direct government bonds will be that liquid as I have never sold a GSEC in secondary market. In fact, not bough...

Now that FY 2022 – 2023 is comfortable behind us, here’s an evaluation on how things went for various investments (or asset classes if your prefer) last FY. No 1 position goes to GOLD. Yellow metal delivered nearly 14.5% return if you bought it through very liquid fund of fund (FOF) route. Holdings via SGB route may have done better considering there is an interest component also, but for now we will consider returns from FOF as sacrosanct.   Next best performer:   The much bashed cash equivalent, basis overnight mutual funds yielded around 5.35%. Even though positive, there’s a huge gap from returns delivered by gold, the best performing investment.   Long term bonds, basis 10 year constant maturity Gilt Funds yielded 3.45%.   Nothing great, but lot better than listed equity investments – which yielded just 0.09%, going by Nifty 50 index mutual funds.   If you want to be a contrarian, you know where your money should be going for the current ...

  Conventional wisdom in India: Gold jewellery is an investment. Though quite a many folks (I included) treat jewellery as consumption item and only bullion and various digital forms of gold as investment. If things were that black and white. Keeping the argument between physical gold - gold jewellery and gold bullion. Let’s set aside the digital forms of gold as of now. Assume you have enough digital assets and now want to possess little bit physical gold. Do numbers favor jewellery or bullion as investment? Bullion will mostly win hands down. UNTIL… We bring in the wearability factor of gold jewellery. One can don, correction - flaunt jewellery multiple times, for many years to come while bullion only serves as a collectible, to be stored in some locker. Maybe one can look at the bullion once in a while and marvel at the dazzle – but that’s about it. You can never don/display it like jewellery. But wearability, or the show off factor comes at a cost. Issue at hand – ...

  Assume you have decided to sell an investment. Another assumption here is the said investment is a volatile asset – it’s price can go up or down next year. Only thing holding you form taking the plunge -  the price. You have decided upon a price and will not sell until you get it. You have the capacity to hold. Never mind there is a possibility of the asset price going down instead of appreciating. A certain "price fixation"is probably the most unappreciated part of any sell decision.  But circling back to the quest for realizing a particular “price” - one mostly fails to consider the number which should be key to “hold for the price” or “sell now” decision -   “The Carrying Cost” . Or, in simpler words – the opportunity cost of holding the sale proceeds of a “fluctuating” investment in a fixed return, risk free kind of asset. Let’s say you own an investment property – debt free. You have decided you will not sell it below INR 1 Crore. And you don’t mind wai...

It can’t be right. I am definitely missing something. I get it market - does misprice traded securities sometimes but it is rare such mispricing continues for extended period, especially for securities where one is bound to get assured price (not returns) with a publicly available agreed benchmark. I am talking about SGB’s  – the Indian government gold price denominated security which is benchmarked to 999 purity gold price. How does RBI, the Indian central bank price these bonds? Fact is, it doesn’t. It lets the market (aka IBJA Rates – IBJARATES.COM) determine the price – at which it issues and also the price at which it redeems these gold denominated bonds – during final maturity after 8 years of issuance or even during premature redemption option after 5 years. Meanwhile, from issuance period till final redemption, these bonds trade in stock exchanges – like other securities, mostly at discount to spot rates. Let me go with an example: – I own Aug 2028 Series V SGB. Let’ se...

Before I begin this post, let me say it loud and clear - I have a conflict of interest in this topic as I am professionally engaged as a a mutual fund distributor. That part out, let's begin.  Can you roll on your own? Let me rephrase the question – should you roll on your own? Simple answer – yes, one “should” always try to be a DIY investor. Because if one is able to do it appropriately, and for a real long time, the end results may be  much better than if you get professional help, either by way of a fee charging advisor or an agent who gets compensated by way of commissions. A part of this “better” portfolio performance will come from savings on fee or commission being paid to the “helper”, and compounding of savings invested will add to it significantly. And with the help of google and host of free apps available, being a DIYer, at least in theroy is not that tough. But there is world of difference between “SHOULD” and “CAN”. Here what the dictionary says about thes...

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....