Finance2024-03-29T07:44:47+09:00Jyoti Sharmaurn:md5:a3e07ac0001aedf69f7188f8e4737d5cDotclearFinancial Services Offeredurn:md5:071675a2a28d95ee55aaec2fd99e28272021-01-15T22:06:00+09:002023-02-21T20:23:39+09:00JyotiBusinessServices <p>We provide fee only advisory for Mutual Fund investment and NPS product. Please reach out to us using any of the following methods and we will get back to you:</p>
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<form><script src="https://checkout.razorpay.com/v1/payment-button.js" data-payment_button_id="pl_GPbAj9SztQ7wq5" async> </script> </form>https://finance.ekvastra.in/index.php/post/Financial-Services-Offered#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/17How to select equity MFurn:md5:79487855548a8d6edb8d777abfd2f49b2020-11-09T02:42:00+09:002020-11-11T14:59:24+09:00JyotiMutual Funds<p>Remember that you are trying to select for ten years so don't be very picky!</p> <p><meta charset='utf-8'></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">You shouldn't be picking an equity mutual fund for anything less than 8-10 years. During such a long period the fate of any MF can change, so do not be very picky. Go with a rough idea and then live with it. A normal strategy does not involve switching funds frequently and it is impractical after you have accumulated a huge corpus. How do you move a huge corpus into another equity fund quickly without increasing risk? Holding an equity fund for a long duration reduces the probability of loss.</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">The focus is longer than 8-10 years and protection from market fall. You should bear in mind that you will be holding a huge corpus that will not be easy to move into another equity fund. That is why taking high bets on a sector or thematic fund for the long term is risky, it is not easy to time them! A Flexi cap (earlier this was called a multi-cap) allows a better risk-reward scenario in the long run with relatively lesser management effort. Pure equity funds will also give the opportunity of harvesting excess gains from time to time along the journey. That is due to its higher volatility compared to lesser volatile debt funds. Balancing from time to time by hand allows a deeper understanding of investment management and moving funds to suitable known low-risk debt funds is better than relying on the debt component of an aggressive hybrid fund when the goal is coming close. Managing a pure equity fund with debt fund by hand is superior in this way when compared to an aggressive hybrid fund. It also allows you to have clearer management of your debt fund and equity fund. Incidentally, this also allows remaining handy with a low-risk debt corpus if there is a sudden huge opportunity in the form of a severe market crash (which is environmental and expected to recover soon). <strong>Most gains in a market are made in the few bull runs after a huge market correction</strong>, so this is a significantly important aspect of this strategy and not a trivial one.</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">This is how I filter a Flexi cap fund for the long term, one Flexi cap fund with one ultra-short duration or money market fund from the same AMC is good enough. Maybe an aggressive hybrid fund or a balanced advantage fund (also called dynamic asset allocation fund) instead of Flexi cap fund when you have learned to manage a large corpus in equity for a very long term patiently and want to shift to something less volatile than Flexi cap:</span></p>
<ol style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;">
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">High downside protection (in the category)</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Low max drawdown (in the category)</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Low expense ratio (below 1.2)</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Reasonable PE ratio (not much above nifty)</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">High fund age (more than 10 years)</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Large fund size (more than 2k crore)</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">less Volatility (less than nifty)</span></li>
</ol>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>https://finance.ekvastra.in/index.php/post/How-to-select-equity-MF#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/16Actively managing own equity portfoliourn:md5:f112896a225485983b8d43269b0b3dff2020-10-26T16:22:00+09:002020-12-17T18:21:02+09:00JyotiFinance<p>This is a simple approach. This approach can be mastered and refined over time.</p> <p>There are two major approaches for an intelligent investor who want to manage their equity investment <em>actively</em>:</p>
<p>Filter from common list of nifty-alpha-quality-value-low-volatility-30 and nifty-dividend-opportunities-50, then based on stockreports.zerodha.com, www.tickertape.in, marketsmithindia.com/mstool/evaluation.jsp, and Morningstar make some purchase after moving cash into the trading account. Then track their performance against Nifty and from time to time move out some funds and move in some funds while taking care of not missing on the dividend by a few days. Decide to add more funds from time to time. Update the transactions in Value research, MProft, Perfios, Morningstar, and Marketsmith to have running analysis to take the correct decision.<strong> Needless to say that perceived risk increases as the amount increases and the chances to beat the Nifty diminishes unless very high concentration bets are taken and a lot of time is invested to manage a portfolio.</strong> This will also mean more transactions.</p>
<p>The other approach is to just switch between UTI Money Market Fund Direct Growth and UTI Nifty Index Fund Direct Growth based on marketsmithindia.com/mstool/marketOutlook.jsp. After a fall it is difficult to say if a particular factor-based index will rebound quicker or the index but it is sure when the market recovers it means the Nifty index is recovering. This does not require any more analysis. Even if the index fund crashes very suddenly it is okay to stay invested in it rather than some other active or factor-based index. This can handle the maximum amount of investment, a few crores are very easy to handle this way. Switching between funds of the same AMC does not even require the involvement of a bank. Reporting and tracking of MF will happen implicitly and with ease and accuracy along with all other MF. <strong>This is a simple approach. This approach can be mastered over time.</strong> This will have lesser transactions due to the nature of the approach itself. As long as the investment stays in debt it is growing at a nominal rate without losing value and waiting for the next run to enter Nifty. This is an almost optimal scenario. This way there will be liquidity available during a huge crash to make the most of it (provided the huge crash wasn't very sudden and the fund was not already in Nifty). This loosely means cash can be immediately deployed from the salary account in this scheme and it still maintains fair liquidity. The tax processing gets done along with other MF. <em>This is likely to beat active MF due to low expense and an improved process over time.</em> This will also increase the understanding of investment and how it is behaving. MF can not do this because they are restricted by rule to stay invested in equity at all times up to a certain minimum percentage plus they have huge fund volume to do this quickly enough but a retail investor with only a few crores at max can deploy this approach.</p>
<p>In favor of the second approach, money is made in the stock market in the bull runs, because it is not possible to time the market and know exactly when that heavy rain of the decade starts it is best to stay invested, otherwise you are waiting outside for the dip to enter and the market goes onto newer heights. But while you are invested you also experience the downs acutely and if you pull out then you reap a loss and lose capital. By dispassionately participating in the Nifty roughly during each bull run by entering a little late and leaving a little early before it turns into a bear run you reduce the volatility and still run a fair chance of catching the rain of the decade. Tax management may 'feel' burdensome but it adds nothing to the existing MF tax calculation. And because this is the Nifty we are talking about you will have all information available in public! You won't need to research and hunt and do stuff that you need to do with direct equity. This is made possible only due to a low-cost direct Nifty index fund and a low volatility direct debt fund and the ability to switch between them with one click without any exit load - this situation was not present earlier! This works around the challenge with ETF liquidity and tracking error besides obviating the need to move funds between bank and trading accounts.</p>
<p><meta charset='utf-8'><meta charset='utf-8'><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">We have to switch at the start of every ConfirmedUptrend and again at the start of UptrendUnderPressure. There should be less than three-four such opportunities in a year typically, which is less than ten switches. Even here most of them will be less than debt fund gain or an outright loss, although a minor one. <em>What we are hoping to catch is the rain of the decade with maximum capital preserved till entering it to make the full of it <strong>and</strong> exit gracefully.</em> This will also make one aware of the challenge faced by MF and the risk of investing in equity. This will also dispel the myth of compounding. There is no compounding and you can always do better with lumpsum that SIP if you are paying a little attention. Generating alpha by investing a lot of time is the game that active mutual fund managers are trying to achieve while restricted from exiting equity completely at any point in time. Many fund houses are calling this strategy with different names. Samco calls it SmartSIP, Finpeg call it Alpha SIP <em>except that they do not have an exit strategy</em>. The next obvious question is how is it different from a well managed dynamic fund? Truth be told -- it is not very different from them! A dynamic fund or a multi-cap fund (by moving among different fund categories and sectors) is doing the same! This manual hula hooping helps only when there is a<em> </em><em>mix of bull run and bear run</em></span><em style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">, </span></em><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">it is likely to save from the pains of the bear run and also take benefit from the bull run. But if it is a secular bull run a large-cap fund is better placed, it is going to reap the benefit of each rise in the market because it stays invested while you incur headache and lost time and money due to the multiple entry and exit. So this strategy presumes a discipline, understanding, and uncertainty in not outperforming a vanilla mf. The advantage is that you are in charge, you gain insight into investing, you get rid of the myth of compounding, and you may be able to reduce volatility and match the Nifty index returns while lagging it slightly due to taxation and the difference between TRI and PRI. Use TRI for the index but PRI for the strategy because you are not remaining invested during all the dividend dates, you are entering and exiting. Because it is equity, the 15% taxation is less even for short-term capital gain if you are in the 30% tax bracket.<strong> If you master the art over time and if at all you face a steep market correction, you will have the capital to benefit from it. And the odds of this happening is reasonably good for a long duration of ten years. This is the only narrow scenario where this strategy can outperform a simple multi-cap or dynamic fund but it will always add value to your understanding and keep you grounded. </strong>It will keep you away from riding imaginary clouds of making wealth in equity without planning for churn, high capital deployment, facing volatility, conducting intensive research, and managing diversification.</span></p>
<p><strong>The key is to own this strategy, keep the expectations low and focus on achieving low volatility and decent returns while keeping it simple! Over a decade this can make you wealthy!</strong></p>
<p><meta charset='utf-8'></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Remember that this strategy is possible only because of the following features, it wasn't possible before:</span></p>
<ol style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;">
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">No commission direct funds.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">One AMC has both, a good, low-risk debt fund and low tracking error Nifty Index fund, both with low expense ratio.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">There is no exit load on these two funds.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">It is possible to switch between these two funds with exactly one click!</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Most importantly we have a good and reliable indicator of Market direction.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">The market will always provide more than sufficient liquidity for this strategy. There is no liquidity risk.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">While we are out of the Market we avoid capturing the downside and also increase the investment.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Corporates and MF cannot adopt this strategy due to regulations and volume.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">There are limited switch-in/switch-out, less than ten in a year, which makes it possible to follow this humanely.</span></li>
</ol>https://finance.ekvastra.in/index.php/post/Managing-own-equity-portfolio#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/15Timing the marketurn:md5:9f5f27e734e7091e148dbf65eaa47e9d2020-09-02T13:40:00+09:002020-09-04T10:47:17+09:00JyotiMutual Funds <p>The only thing that can be said with certainty is that it is always a good time to get rid of your poor funds and switch to better funds, they will make up your losses faster. By switching you are not injecting new money but only making your poorly performing investment move to a better investment tool. There is no reason not to do this at the earliest except in cases when you will have to reap huge losses to exit the poor fund, you may wait for a certain time in such case and exit when the loss becomes tolerable to your mind.</p>
<p><br />
There is one more certain thing, it is always a good time to invest in your long term goals. For a long term goal like 8-10 years away, the timing for dips is pointless, look at the nifty chart for ten years and you will see that the largest dip is also wiped out in no time and the market continues its uptrend. Yes, it can hurt more when it falls and you might even miss that extra buck but waiting for the big dip is an impossible task, it is just impossible to predict -- that is like the market, it is not about your intelligence.</p>
<p>And there is one more thing if I may say, purchase or 'invest' new money when the market is going up, it could be the rock bottom and the start of a new bull market or it could be the middle of a bull market, but invest in a bull market. Do not invest when the markets are tumbling down.</p>https://finance.ekvastra.in/index.php/post/Timing-the-market#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/14Long Term Investment Adviceurn:md5:3ed1a4db062cbbbdfe9f276c2c6ec02b2020-07-14T14:32:00+09:002020-11-06T12:56:26+09:00JyotiMutual Funds<p>This post will talk about guidelines for managing your investment in the long term (longer than ten years) and what all to bear in mind while planning your long term inflation beating investment.</p> <p><meta charset='utf-8'></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Equity investment is, by its nature, inflation-adjusted. It is essential to have equity investment for the </span><em style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">long term</span></em><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;"> to beat inflation. We should remind ourselves that we cannot manage returns directly hence<em> what we intend to manage is the risk</em>. <strong>Risk management is done by asset allocation (or called asset diversification) that is aligned with the timeline of the associated goal.</strong> Equity typically needs ten years to give a yield better than PPF and EPF like schemes. For retirement insurance NPS, APY and EPS should be maintained and SSY should be maintained for girl child goals. We can, not only manage the risk we undertake, but also control how much commission or entry load we pay. Hence we choose direct funds. Also, <em>typically funds with low expense ratios will beat a similar one with a higher expense ratio in the long run</em>! Timing of entry into the market may (or may not) reduce the downside of the equity funds. The (potentially) reduced downside is better for mental health. Yearly or half-yearly monitoring is essential and for doing proper monitoring we must have a simple plan, to begin with!</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Rebalancing every year or two years is part of de-risking. This happens inherently in an Aggressive Hybrid Fund (typically) every month, hence it is inherently less risky as is borne out by its significantly low standard deviation. Yet it has beaten the NIFTY conveniently! Rebalancing manually involves tax incidents.</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">The NIFTY index is well diversified and represents the state of the entire economy. ETF has a low expense ratio and less internal expenses. Effectively this makes it near impossible for any active fund to beat an ETF index fund. <em>Any strategy fund cannot keep generating alpha over an index fund for a long period of the market. This is the very nature of the system -- arbitrage opportunities close themselves!</em> Midcap and Smallcap funds may have high returns, but it has not happened recently, what they have is the highest standard deviation meaning highest risk.</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;"><em>Markets will offer high returns from time to time and reaping those benefits is also part of the plan</em>. Since it takes about ten years for an equity fund to rise so much (there is no real compounding, compounding happens in PF, not in MF) that its effective CAGR (or XIRR for individuals) exceeds the one offered by PF post-tax deduction, we must </span><em style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">invest early</span></em><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;"> and </span><em style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">stay in the market</span></em><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;"> <em>as per a plan</em>. SIP does not help in increasing returns, as a matter of fact, it invariably reduces returns compared to large lump sum investment done early. This is not guaranteed, but the high probability of this event makes this statement generally applicable. Timing the market is impossible for trading, it is the very nature of the system. But finding a less risky (more rewarding) time to make a long term investment is possible. Hence do not do SIP, do simple lumpsum investment every half-yearly or yearly. This can potentially reduce the downside of the (equity) funds.</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Buying more when the market falls and </span><em style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">selling</span></em><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;"> equity when the market is high is called <strong>timing the market</strong>. It needs discipline and it has tax implications. <em>The act is the same as rebalancing but it is undertaken based on market condition instead of a fixed review interval.</em> Rebalancing by ‘timing the market’ is slightly better than fixed-interval-rebalancing because it offers you an opportunity to learn when to eventually exit equity (completely). You didn't think of that, right? <strong>Remember that the market will offer you returns but also take it away if it is not harvested.</strong></span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">In NPS Tier 1 we can change our asset allocation twice in a year without any penalty or tax implication which makes it a suitable experimentation field for ‘timing the market’. But there is a catch, once every year, on the date of birth of the subscriber, NPS does rebalancing. Hence here we may do a ‘timing the market’ by shifting the allocation percentage once a year instead of just submitting the same asset allocation proportions resulting in the 'ideal rebalancing’ act. This changes the allocation of new contributions and also moves funds between assets. The birthday rebalancing will bring in strict alignment with the allocation strategy yet again. By selecting Active choice instead of Auto choice for NPS and then deciding to alter the allocation to reduce the risk by ‘timing the market’ instead of only auto-rebalancing on the birthday (which also changes allocation based on life cycle allocation in Auto choice but not in Active choice) <em>while still more than ten years away from the redemption is a reasonably safe exercise</em>. This is possible in NPS (and not otherwise) because:</span></p>
<ol style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;">
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;">There are funds available for such switching.</li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">It does not have a switching load.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">It does not have tax implications. </span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">It is a very very long duration instrument.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">It has significant (accumulated) investment.</span></li>
<li style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><meta charset='utf-8'><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">There are only two switches allowed in one financial year, so this can't get overwhelming.</span></li>
</ol>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"> </p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;; list-style-type:decimal;"><meta charset='utf-8'><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">Because there are only two switches allowed in one financial year, you can </span><em style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;">harvest</span></em><span data-preserver-spaces="true" style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;;"> one bull run in a financial year. It has to be a significant one with a high degree of certainty to be worth the trouble. A high degree of certainty because you have only one chance a year and you do not want to lose to a bear run which you mistook as a bull run! This means typically that we are looking at a bull run after a significant market correction. After a huge crash generally, there is a strong rebound bull run. This has a high degree of certainty and this rebound bull run is likely to run long and fast. Two switching a year allows us to leverage only this kind of opportunity. A secular bull run has lower certainty. We may miss that good secular bull run but that is the price we pay for this NPS strategy!</span></p>
<p style="color: rgb(14, 16, 26); background: transparent; margin-top:0pt; margin-bottom:0pt;"> </p>https://finance.ekvastra.in/index.php/post/Long-Term-Investment-Advice#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/13Lumpsum versus SIPurn:md5:6311f142e77f93060bfec8c2ae960fcb2020-06-25T12:38:00+09:002020-11-07T14:55:50+09:00JyotiMutual FundsMutual FundSIP<p>In this post, we're going to break the myth that SIP is always superior to Lumpsum. Most likely, it's only as effective as a lump sum investment for long-term investment, but it robs you of the opportunity to think for yourself and sometimes misses that nice lumpsum investment.</p> <p>If the market continues to grow, then lump-sum investment yields higher returns, whereas if it continues to fall, SIP investment is better (fewer losses than lump-sum investment in such a scenario). It depends on the future return sequence that the investor gets.</p>
<p>Due to their structural nature, SIPs reduce this risk of being wrong as investment spreads. So asking if this is the right time to invest in SIP is immaterial as SIP spreads out your investments. Your returns will, of course, depend on how markets play out during the spread-out period.</p>
<p>SIP is also suitable for small investors in terms of their cash flow perspective. They rarely have access to a large lump sum that is 'surplus enough' to be available for long-term investment. Remember that SIP is a tool to optimize your returns and match your investment needs with your cash flows. It's not the magician's magic to generate superior returns to lumpsum investing.</p>
<p>A smart investor would recognize the bottom-up market and invest in one go. But we're not all smart. So if you're not sure if it's the right time to invest in one go, you can even deploy your lump sum gradually. One way is to invest the lump sum in the debt mutual fund and gradually deploy the money using the STP or Systematic Transfer Plan to the equity fund.</p>
<p>The Franklin Templeton Mutual Fund introduced SIP more than 15 years ago. It was a simple idea to buy mutual fund units every month for a fixed amount of money. When markets are low, you'll be able to buy more units, and in high markets, you'll be able to buy fewer units.</p>
<p>It is generally seen that most people are investing their money in a lump sum. Lump-sum means your large amount of money or a large part of the money you've saved, which is invested entirely. So, major people have the perception in their minds that if they invest their saved money entirely in investment activities, they will get much better returns in the long run. They're right. One-time large investments for a longer period will provide them with a much higher return when they are withdrawn at their respective maturity periods. Although one could only invest a lump sum of money if he had a good amount of money with him. No one can think of investing in a lump sum in the absence of a fair amount of money. So it's essential that if you're thinking of investing your savings entirely at one go, you should first have a proper money-saving plan, and then you should have a long-term plan.</p>
<p><strong>Who should invest in the lump sum plan?</strong></p>
<p>Those who earn fairly every month and have a fair amount of savings left. Those who have the objective of investing for five years or a long period.</p>
<p>The more time you spend on the investment, the higher the amount accumulated since the power of compounding increases as time passes. Giving your investment more time is wiser than taking undue risks to make an extra 1 % annual return.</p>
<p>With an annual return of 15%, Rs 15 lakh would be worth around Rs 60 lakh at the end of 10 years. Assuming the same annual rate of 15%, your monthly SIP of Rs 8,000 would yield around Rs 22,30,000 at the end of 10 years. However, it all depends on how much money you have in your hand at the moment. If you have Rs 15 lakh to invest, you should ideally park your money in a liquid fund and start a Systematic Transfer Plan (STP) over the next 50 weeks. That's Rs 30,000 per transfer. This method will help you invest all your money and earn cash returns using a reduced balance method. The amount invested through STP should be in a diversified equity fund. You would be fully invested at the end of 50 weeks. If you don't have a lump sum to invest, you should take the SIP route.</p>
<p>The SIP does not reduce investment risk in any way whatsoever. They reduce the risk of irregular income for mutual fund houses and their salesmen. We can only invest if we have the money. If I don't have a lump sum, I don't care about that. If I have a lump sum, then I should ask, "Is there any benefit in spreading that lump sum over a few weeks, months, or years (some would recommend it!), instead of putting it on the market all at once?" There is not much difference between a lump sum and a few weeks or months of investment (STP). Amusingly, this is true in the short or long term!</p>
<p>Use MFs with caution for medium-term (less than 10 years) objectives. Of course, stay away from them for short-term objectives. Just because you've started a SIP, it doesn't mean you're going to achieve your goal. There's a strong enough chance you're not going to and a decent chance you're going to lose money! Choosing an equity-oriented balanced fund for a 5-year investment period is madness.</p>
<p>There seems to be a common perception that those who invest via SIPs are expected to do nothing but invest systematically. Thanks to some "advisors," many investors believe that all one has to do to get "good returns" from equity is to continue the SIP through market ups and downs. Then it will all turn out to be all right in the end. This is an amusingly simple assumption. Then some incorrectly believe that SIP is a method of minimizing market risk, while all it does is buy at random market levels every month. The accumulated corpus via SIP is exposed to all the ups and downs of the market.</p>
<p>There is no such thing as compounding in a mutual fund or a share or anything related to the market. After a while, you buy at the current price and sell at the current price. The selling price may be higher or lower than the purchase price. We use compounding mathematics to understand how much investment has increased (or declined). Apart from that, there is no magic of compounding. Don't take the nonsense of sales guys seriously. If you want to enjoy the power of compounding, get a fixed deposit, a recurrent deposit, a PPF, etc.</p>
<p><strong>I am planning for a 15-year investment and want to hold 60% equity in the initial years. What can I expect during this investment?</strong><br />
If you hold 60 percent of equity, expect the entire portfolio to fall by at least 40-50 percent (not to make it up). It won't be easy for anyone, an expert, or a novice to face.</p>https://finance.ekvastra.in/index.php/post/Lumpsum-versus-SIP#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/12Appointment linksurn:md5:d9c01b715a379f91cfd242b4e2b3a8152020-04-17T18:14:00+09:002021-01-15T21:57:11+09:00JyotiBusiness<p> </p>
<ol>
</ol> <p>You can reach out regarding your financial queries using any of the following channels:</p>
<ol>
<li>Call or SMS me on 079010 81630.</li>
<li>Send an email to admin at ekvastra dot in.</li>
<li>Add a comment to this post providing a valid email id to reach you.</li>
<li>Telegram Discussion channel: <a href="https://t.me/EkvastraDiscussion" hreflang="en">https://t.me/EkvastraDiscussion</a>.</li>
</ol>
<p> Thank you!</p>https://finance.ekvastra.in/index.php/post/Appointment-links#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/11MF Rebalancingurn:md5:0b0a8580f31aab6b7e5d0c69056713862019-11-21T19:29:00+09:002019-12-04T19:52:36+09:00JyotiMutual FundsMutual FundRebalancing<p>Rebalancing is possible only if you have prepared an investment portfolio and its asset-allocation and categories in each asset is also planned.</p> <h3>Can you Rebalance your MF portfolio?</h3>
<p>Rebalancing is possible only if you have prepared an investment portfolio and its asset-allocation and categories in each asset is also planned. Also, you must have equity as well as debt component to be able to Rebalance. Debt helps you to cushion the negative returns of equity as debt is less volatile.</p>
<h3>What is Rebalancing?</h3>
<p>Rebalancing is the act of keeping your plan on track, when you can still call it a plan - it helps you plan your risk and reap maximum benefits. Regular rebalancing provides definite gains in portfolio value over time. Rebalancing works as a risk-minimizing strategy for you as an investor because you harvest ripe asset category and invest more in asset class that is in the making again. As markets move, your asset allocation proportion changes. Your equity allocation could have gone up if markets rally for a long time, or it could go down when markets correct. The allocation between different asset class may diverge from the original. Rebalancing an investment portfolio of mutual funds is a simple strategy to 'buy low and sell high'.</p>
<h3>What is 'cyclical market'?</h3>
<p>I would have loved to talk about 'cyclical markets' but for the sake of simplicity I will summarize it by noting that 'cyclical market' is a real world phenomenon for which there are no exception. It is studied in detail in Universities. Not all asset class are cyclical in nature but the large cap asset is largely full of sectors that are cyclical (and not 'essential' like healthcare and cooking gas) in nature. Hence most equity based asset class will rise and fall in a cyclical manner, broadly speaking. This means Rebalancing your portfolio periodicaly will help you tide over volatility and deliver superior returns! It will help you book profits in a rising asset class and investing in another, which has not risen yet! Remeber that when you’re bringing in money to any fund, ensure that the underperformance was because of market factors rather than the fund’s own underperformance.</p>
<p>When you rebalance, you would actually be booking profits in the asset class that has rallied and getting into the relatively undervalued one. Rebalancing when equity-debt gets out of sync is better than trying to redeem based on market conditions. In trying to time markets, you may end up redeeming before you have sufficient gains, whether in debt or in equity. You have then successfully sold the winners and bought the losers - a sound investment strategy!</p>
<h3>How often should you rebalance?</h3>
<p>If you just keep to a time line then you might find that the damage has been done in the past 4-5 months. You should rebalance or at least take a look at your portfolio after every fall and every rally. This is much simpler to follow and implement.</p>
<h3>How should you Rebalance?</h3>
<p>When equity is growing faster than fixed income - which is what you would expect most of the time - you would periodically sell some equity investments and invest the money in fixed income so that it goes back to the portfolio you had planned. When equity starts lagging, you periodically sell some of your fixed income assets and move the money into equity. This implements beautifully the basic idea of booking profits and investing in the beaten down asset. You essentially switch from the asset class where the allocation has gone up disproportionately into the asset class where the allocation is lagging behind. Does this sound like fund switching? Perhaps it does because it was meant to help out in this process! You also score a benefit by reaping yout gains upto ₹1 lakh in a financial year which are tax free! This is a per year limit so you beneift from this in some years (where equity has swelled) by saving additional ₹10 thousand in taxes -- provided you are rebalancing and not merely taking out the investment (unless you are nearing your goal).</p>https://finance.ekvastra.in/index.php/post/MF-Rebalancing#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/8MF Empanelmenturn:md5:97fe92c4bb372ef7a50817339f187d2f2019-11-21T15:38:00+09:002019-11-22T22:56:25+09:00JyotiMutual FundsABLSAxis MFEmpanelmentKotak MFMirae AssetSBI MF<p>Once you have an ARN (AMFI Registration Number) you have to empanel with AMC (Asset Management Company) to actually distribute MF.</p> <p>I am now empanelled with ABSL (Aditya Birla Sun Life), Mirae Asset, Axis MF, Kotak MF and SBI MF. Which means I will be able to distribute the funds from these AMC using my ARN number. Any MF Distributor (holding an ARN) can continue to provide recommendation for any fund in direct mode. There is no need to empanel unless you want to recommend fund in regular mode (instead of direct mode). In regular mode the distributor gets a commission, in direct mode the distributor does not get any commission. A distributor may charge some fees for recommending direct mode funds.</p>https://finance.ekvastra.in/index.php/post/MF-Empanelment#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/7Insurance that encourages healthcare for girlsurn:md5:481990f6ee036ce6e0ecabb6f628cb232019-11-19T19:28:00+09:002019-11-21T16:05:34+09:00JyotiInsuranceFloater PlanGirl ChildMedical Insurance<p>New India Assurance - Asha Kiran Policy provides insurance of parents and upto two girl child with discounted premium for gilr child and accident cover for parents online.</p> <p>New India Insurance Asha Kiran Policy is a Floater Health Insurance plan designed for a family having girl children. Features such as discounted rates for girl children, ease of cashless settlement, critical care cover, Personal Accident insurance and reimbursement for emergency ambulance makes it an attractive deal.</p>
<p><a href="https://finance.ekvastra.in/public/Prospectus_-_New_India_Asha_Kiran_policy.pdf">Prospectus - New India Asha Kiran policy</a></p>https://finance.ekvastra.in/index.php/post/Insurance-for-improving-healthcare-for-girls#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/6Long Term Third Party Only Insurance of vehiclesurn:md5:5dbba75e2f2e7059b51b881a20531d862019-11-19T19:03:00+09:002019-11-19T19:10:00+09:00JyotiInsuranceLong Term InsuranceThird Party Liability Insurance<p>Recently IRDA has allowed Long Term vehicle insurance. It has come as a boon. It makes the process easy and also provides good discount to the end user.</p> <p>Many insurance companies now offer long term, meaning three or five years vehicle insurance also. By law you are only required to take Third Party insurance. Many of us are looking for such policy for our old vehicle or second vehicle. Please note that it is presumed that you are have insurance for personal accident for <span data-dobid="hdw">statutory</span> reasons. New policies also make it simple to get a personal accident cover along with TP insurance.</p>
<p>I am a fan of public insurance company for their no-nonsense approach. They don't call you hundred times. They charge you the least commission. They don't promise you the moon. They will even discourage you from taking wrong policy. I am also a fan of do-it-yourself online policy. Online policy are inherently cheaper and easier to renew. It also means you will enter all the details properly, no annoying wrong address or spelling mistake in names anymore.</p>
<p>From 4th June 2019 new rates were published by IRDA: <a href="https://finance.ekvastra.in/public/Motor_TP_Premium_rates_for_the_FY_2019-20_-_Order.pdf">Motor TP Premium rates for the FY 2019-20</a></p>
<p>Given my earlier bias towards DiY online approach I have narrowed down to The New India Assurance -- it is a public sector company and provides Long Term TP insurance online.</p>
<p> </p>https://finance.ekvastra.in/index.php/post/Long-Term-Third-Party-Only-Insurance-of-vehicles#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/5e-Insurance Accounturn:md5:8c6b3c18ab07cfde49c11cabc6e6b3192019-09-30T07:36:00+09:002019-09-30T11:08:55+09:00JyotiInsuranceeIAInsuranceIRDA<p>IRDA or Insurance Regulatory and Development Authority of India has introduced e-Insurance Policies in the interest of the policy holders.</p> <p>A private citizen may:</p>
<ul>
<li>Store and retrieve his policies electronically.</li>
<li>Modify or revise his insurance policies with speed and accuracy.</li>
</ul>
<p>This will reduce the cost of issuing and maintaining insurance policies.</p>https://finance.ekvastra.in/index.php/post/3/e-Insurance-Account#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/3Welcome to finance.ekvastra.in!urn:md5:91cbef320526373c6fe8960678fe9ddd2019-09-17T07:48:00+09:002019-11-19T19:16:07+09:00JyotiFinanceAMFIMutual FundNPSPFRDARetirement <p>I am an AMFI registered Mutual Fund Distributor and I also hold a Retirement Advisor license. I would be happy to help you in your financial planning!</p>https://finance.ekvastra.in/index.php/post/4/Welcome-to-finance.ekvastra.in%21#comment-formhttps://finance.ekvastra.in/index.php/feed/atom/comments/4