Archive for August, 2015

Healthy, Wealthy and wise !

Today the media will have a field day as equities crashed by over ‘1000’ points or 3% to put it correctly !. These are normal and Prashanth Krishnan in twitter mentioned that this has happened 55 odd times in last 15 years, I’m sure you don’t remember the last 3% fall, forget the first one !! Media works on the principle of bad news being good news for their business, more people watch TV and they can get more TRPs and advertisements which is more money for them.

As an investor, we make money by staying invested, ignoring the headlines and if at all there is a serious fall ( say 20% from top) ¬†investing more if possible. We don’t make money by following headlines, in fact serious research has shown regularly following media ( be it on markets or politics is injurious to both your health and wealth, not to mention wasting precious time !) .

Be healthy, wealthy and wise !


Healthy – instead of seeing TV debates on politics, go for a walk !

Wealthy – instead of listening to “experts” on business channels, keep investing via SIP

Wise – Doing the above two will make you wise than most people you know !!

If you don’t believe me listen to what M/s Peter Lynch & Warren Buffett have to say on the subj. ūüôā


What stock market?

What stock market?


Is your money stuck in a traffic jam?

Few days back i read this report in Mint about how much waiting in traffic jam costs you ?

The report says you spend 20% more fuel waiting in a traffic jam. I was more worried about the time spent say half an hour one way stuck in jam, that’s an hour a day, time that can be spent better.

I thought about this from the angle of our financial lives, and what causes financial traffic jams and what is the solution.



Are you keeping too much money in Savings account ?

So, this money is stuck in large jam hardly earning 4% p.a interest ( which btw, is fully taxable). ¬†Check when you need the money. If you don’t need it for a year FD is better, if not required for 3 years you can look at Bond Mutual FUnds that are more tax efficient than FDs and if not needed for 5 years or more you can consider balanced or equity funds.

Are you keeping too much in FD’s and Gold ?

I know people who have more or less their entire investments only in FDs. This is being too conservative like having a top notch SUV but never using it !. If the money in FD is not required for many years there are better ways to let it grow. This is the traffic jam most Indians are at today. FDs can be a part of your investment kitty but not only FD. It is a losing propositon basically as taxes and inflation eat away your interest. ¬†Since they are safe people prefer them but just like we can’t stay at home all day since it is safe, similarly you can’t have all your money in FDs. The same goes for Gold – at least FDs give some interest, gold gives nothing, in fact takes away as you pay making charges for jewelry and locker charges to the bank.

A good portfolio has mix of investment that works for you?  FD for emergencies, Debt Mutual Funds for expenses coming up  in three years,  Mutual funds with debt and equity  for > 5 year goals and Equity Fund for > 10 year goals.

As in past posts let me remind that insurance is like seat belt or helmet only to protect you and not give returns so don’t invest in insurance plans with an aim to make money but only for security with a term plan.

See the chart below of how much equities ( represented via Sensex ) has delivered. I’m not saying the same returns will be repeated but saying there is no ignoring equities as it remains the best asset class for long term investors.


The above return is for the sensex. A better metric would be to measure equity mutual funds that have been around for > 10 years. Most of equity funds have delivered around 15-20% pa. So you definitely need equity investments if you would like to escape the traffic jam of Gold and FDs. At 15% returns, a Rs. 10000 monthly investment can grow to Rs. 1.5 Cr in 20 years.

In our daily routine, we can’t avoid traffic jams but atleast ensure that your money is not caught in one.

A word of caution :¬†Equities as the link of mint article above is ‘slow cook’ product not suitable for instant noodle types ! You would need to invest regularly ( monthly) give it 10 -15 years to create real wealth. It is about becoming wealthy not getting rich quick !

Happy Independence Day, plan for your financial freedom this year.