Personal Finance

Rely on rolling returns, not point to point data

Financial, Investments, Personal Finance, Press / By /

“FD can give better returns over a 10 year period than stock markets”. That was the shocking statement that triggered this article in Business Standard more so because is true 5% of the time (95% of the time stock markets beat fixed deposits over 10 years). Clients often struggle to embrace rolling returns, which offer a clearer picture than misleading point-to-point comparisons. Mark Twain’s words on ‘lies, damned lies, and statistics’ resonate when cherry-picking exceptional periods like the rare 10 year period where FDs beat the stock market—ignoring that 95% of the time, stocks outperform FDs. Investors reading this please remember this when your advisor is asking you to exit a fund which has given good point to point returns but has poor rolling returns compared to its benchmark and peers.

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Evaluate funds on rolling returns over long term

Investments, Mutual Fund, Personal Finance, Press / By /

Momentum funds have become the flavour of the season with their outsized “extra” returns over the already high returns provided by the market over the last one year. Harsh’s article in the Business Standard highlighting how they are not the absolute certainty they are made out to be. There is a need to take a conscious decision on the tradeoffs involved while evaluating investments in such factor funds.

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Breaking the silence on death and money

Personal Finance, Press / By /

Is it a good idea for a financial plan to consider the inheritance that is likely to be received maybe decades later? Would parents be comfortable discussing these issues with their children? In this article Harsh write about Rekha who was able to follow her passion for starting a non-conventional business because she figured her goal for a retirement home could be taken care of from the inheritance from her parents. She had mixed feelings about the decision as family situations and circumstances are dynamic and complex. Did she take the correct decision? Your views are most welcome…

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Retail investors vs algos: Like lambs to slaughter

Personal Finance, Press / By /

Harsh had worked out a half baked doubling stake strategy to try and win a game of chance called “Lucky 7” popular in the 1980s. F&O traders try to make money by using similiar half baked strategies or algorithms promoted by brokers interested in boosting trading volumes. As a result 93% of such traders lose the money (a whopping Rs. 1,83,000 crores in last 3 years) that is mopped up by 1% of them who use well researched and thought through algorithms executed in nano seconds. Harsh’s article in Business Standard why investors who ignore SEBIs warnings, do so at their own peril.

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Usher in competition between EPF and NPS

Financial, Governments, Personal Finance, Press / By /

Employees earning Rs. 15,000 pm pay “tax” @42% (the same rate as those earning more than Rs. 5 crores do). Finance minister late Arun Jaitley in his budget speech for 2015 mentioned “the situation with regard to the dormant EPF accounts and the claim ratios of ESIs is too well known to be repeated here. It has been remarked that both EPF and ESI have hostages, rather than clients. Further, the low paid worker suffers deductions greater than the better paid workers, in percentage terms.” He went on to advocate the solutions listed here. These solutions though promised a decade ago in a budget speech on the floor of the parliament have been stonewalled by the powerful EPFO and ESI establishments. Bureaucrats can justify anything as exemplified by the fictional UK bureaucrat Sir Humphrey in the BBC series “Yes Minister”. Watch how he justifies continuing a hospital with no patients but with 500 administrative staff https://shorturl.at/pdau2 . Don’t let the Sir Humphreys win this battle.

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Investing for children: Buy house or opt for MFs?

Financial, Investments, Personal Finance / By /

Meera, a high flying corporate executive, was bent on using the money earned from her ESOPs to buy a second house as an investment which could be passed on to her children later. Her spouse Karan was against it as it would mean postponing their retirement plan. Harsh’s article in Business Standard on how Karan and Harsh managed to convince Meera to invest the money into financial assets instead. “You do not buy a cow today just because you may need milk years later. You make sure you have the money to buy the cow should you require it later” was one of the arguments that helped to convince Meera.

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Lack of central KYC hinders market participation

Investments, Personal Finance, Press / By /

Harsh just spent an idyllic week trekking through south west france. His tour organiser could put this together so well because the basic infrastructure already exists. Things like complete Geo marking of every square meter, availability of licensed hotels and taxi services who actually follow the licensing conditions & general cleanliness allowed them to build and deliver excellent packages on top. His article in the Business Standard drawing an analogy to an investors journey where the lack of a basic infrastructure like a centralized KYC has meant that 20 crore indians are involved with crypto/online gaming platforms with real money, but only half as many have demat accounts, and less than a quarter invest in MF.

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Retirement: Embrace holistic planning

Personal Finance, Press / By /

There is more to retirement planning than ensuring enough monetary corpus to last out a long retired life (almost as long as the working career itself). Unfortunately, even corporate executives nearing retirement, do not think about retirement at all and the few who do, concentrate on the monetary resources required for retired life. As the example of my friend Yogesh shows even a well planned retirement plan can have it’s twists and turns but is better than none at all. Harsh’s article in the business standard. Your comments and suggestions are welcome as always.

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Insurance: High surrender charges deter exits

Insurance, Personal Finance, Press / By /

Most people reading this article would have experienced the bank’s “relationship manager” trying to (mis)sell a life insurance policy to them. Harsh’s article in Business Standard on the economics that push the bank to cannibalise on their own deposits and convert them into Life Insurance premiums. Comments/ disagreements welcome.

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