Author: Abinash Patra

How Global NCAP 5-star rating and Financial Planning are related?

Late in India global 5-star rating became famous and people started looking at the safest vehicle.

For a car to be safe on the road is this the only safety thing that matters or something else also?

Think Again!!!

Yes, you got it, it’s your efficient driving skill as well. 

If I say, give a score out of 10, how much you will give it to both?

It is Driving Skill 6 and Safety Car 4 if you are on the highway

It Driving Skill 7 and Safety car 3 if you are in an open, less traffic city 

Its Driving Skill is 8 and its Safety rating is 2 if you are in congested traffic cities like Bangalore, Delhi, etc. 

In addition, so much so forth. 

It’s always many permutation combinations, whether it’s in a village in a hilly area, or desert, etc. 

Driving learning skills are also available on YouTube, Twitter, Instagram, etc. Still, you need to learn it on your own from some consultant. Again, when rules change, you need to update it. In addition, you need to adapt too many real-time situations when you are in a car on the road. Isn’t it!!

Simple Car driving is so complex.

Let me consider this in financial planning. 

Everything today is available on the internet free. You are learning this and DIY. When real-time situations like recession, Covid, etc. happen or some regulatory rules change, you need to adapt.

Every day new types of products are being launched. Apart from that, many non-regulated high-return products are also available in the market where your principal is at RISK.

In real time, you need to control your emotions to deal with your investments. 

So in this regard, you need either a paid mentor or a mentor who should get some commission out of your investment. 

The call is yours!

Warren Buffet has an advisor group led by the Late Charlie who later becomes his partner.

Sachin Tendulkar had a mentor.

All big sportspersons also have their coach and trainer.

Lord Krishna was the mentor of expert Arjun. 

Do you know the world’s best gynaecologist never operates on his wife or daughter because emotion may hamper his performance in operation theatre? 

When it comes to money, also a similar situation happens. 

“DIY is overrated and Financial Planning is underrated 

5-Star safety is overrated and driving skill is underrated”

Just think once and let me know if I can help you in any regard for your financial well-being.

The Investment World is difficult in Social Media Age

In today’s world where so many investment products are available , we got cluttered with doubts and dejection many times . At last we try to do lot of research but later we invest depending on our personal guts and sometimes gets profit and most of the time mediocre return or pure loss.

Do you know why it generally happen ?

The answer is from our childhood we have been told that we should not depend on anybody and do on our own , which is self reliance .

But think once while you perform/invest are you doing the same ?

Definitely NO!!

You saw some youtube channel and insta shorts or some twitter thread etc and then invest . In this modern social media age its easy to influence anybody as people are 24/7/365 days staying with mobile . Even in your bed also you watch this before sleeping which impacts severally to your subconscious mind and deepen conviction .

Actually this is not “swadhaya” . Actually it means self study and retrospection .

Its always borrowed conviction and knowledge which will hardly make you wealthy .

Recently i discussed with one guy who called me and told want me to invest in mutual fund and told “INDEX Fund is safe”

Do you think really INDEX Fund is safe ? Kindly do a swadhaya .

What is Small Cap 250 Index and should we invest in this Fund?

The Small Cap 250 Index is From NIFTY 251 to NIFTY 500 stock. By nature these stocks are very small in market cap and less liquid stocks.

Index Re-Balancing: Index is re-balanced on semi-annual basis. The cut-off date is January 31 and July 31 of each year, i.e. For semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of change.

Should you invest in this?

No if you just started MF investment journey

No if you have not completed minimum 5 years in any mid cap funds.

Yes If you have time at your side which should not be less than 12 years to be on safer side .

What funds should you invest?

Personally, my risk appetite does not allow me to invest in small cap and hence I do not invest.

If you want to invest, please make sure you hire an advisor or have an MFD to support you at mental level during crash.

You can invest in small cap 250-index fund

OR

Any Active small cap fund

That’s all from me for today, Thank you Abinash J

One Up In Wall Street- Preparing to Invest(Ch-1 to Ch-5)

The Major Points Peter Highlighted in first 5 Chapters where he is trying to create an investment mindset for new investors .

The points are as below:

1.    
Do not overestimate the skill and wisdom of
professionals like fund managers or high rated stock investors .At times they also do wrong.

2.    
Take leverage from what your know

3.    
Look for Value investing .Means Off the Rader stocks if
you have good skill in picking companies when they are young.

4.    
Please have a house before investing in stocks directly.
Sometimes people in overconfidence invest all of their hard earned money in stocks and are ruined.

5.    
Invest in companies that are not in stock market. This
might be very risky but highly rewarded if you are smart and highly skilled to analyze.

6.    
Ignore short-term noise from social media and TV channels .Just stay the course once you have done your homework proper.

7.    
Large Profits can be made from common stocks. In Indian
market sticks like HDFC bank, Asian paints etc have given 4x-5x return in 10 years horizon

8.    
Large Loss also can be made in well-known stocks .Ex:
Kingfisher, Satyam Computer and Yes Bank

9.    
Nobody can predict economy and stock market correctly
either in short term or in long-term .So please do not try to time the market .That is foolishness.

10.  Historically Long term returned from stocks are greater than FD and bonds. So First plan and invest your money.

11.  Once you buy stock need to analyze in regular interval. You need to have high risk profile .The stock price can fall 50% and later rise 4 times as well .At the same time it may fall and stay there for decades.

12.  Direct Stock buying is not everybody’s cup of tea .So stay away if you relying on speculation rather than own idea and analysis.

13.  Always look for common stocks and don’t run behind some fancy stories to pick stocks.

14.  Buy only those numbers of stocks, which you can analyze. Do not over crowd your stock portfolio. Remember the number of stocks from different companies are like your babies. Please keep those numbers of stocks that you can manage peacefully and not in chaos.

My sincere advice to readers are if you don’t have time and have a day job better hire an advisor or Invest through MFD in well diversified Mutual Funds or BONDS after calculating your Risk profile and closing your Goals. Remember Good Return is not Goal.

Please subscribe my twitter and telegram channel if love my knowledge sharing writeups .Stocks discussed are here for educational purpose and not buying ideas.

That’s all from me , Yours Abinash 🙂

What is NIFTY150 and mid cap fund? and Should you invest in this?

NIFTY 150 starts from NIFTY101 stock and ends at NIFTY250 MCAP stock.

By SEBI definition this is mid cap funds .

These are more volatile than NIFTY50,NIFTY NEXT50 or NIFTY100.

Should you invest in this ?

Yes If you have already invested in NIFTY50 / NIFTY NEXT50 /NIFTY100/Large cap funds for minimum 5 year consecutively.

Yes , If you are starting and doing it by Advisor or by an MFD .

NO, If you are starting and doing it by yourself because in downfall , these category fall more than large-cap and you may get panicked . Also you may get blood pressure after looking volatility in NIFTY 150 mid cap index. As a result you may either STOP or REDEEM your investment .

In these case you will not be able to catch benefit of bigger return in this category.

Which NIFTY150 mid cap fund is good ?

Kindly check with your advisor on this .

I feel one NIFTY mid cap index fund

OR

One actively managed  mid cap fund as in majority case as of now Active funds are giving better return than index fund.

OR

All of the above (advise as per human psychology)

What is NIFTY50 , NIFTY NEXT50, NIFTY 100 and Large Cap Mutual Funds and Where to invest?

All NIFTY Funds has been categorises on the basis of Free Float Market Capitalization method.

Ex- RIL with highest MCAP is NIFTY1 company.

Like wise in NIFTY50 consist of NIFTY1 to NIFTY50 , in which India’s biggest companies are available.

Same way NIFTY NEXT50 consist of NIFTY51 to NIFTY100 companies.

NIFTY100 having stocks of NIFT50 and NIFTY100.

But NIFTY100 is not equals to NIFTY50 + NIFTY NEXT50

Ex- In NIFTY 50 RIL allocation is 12% where as in NIFTY100 RIL allocation is around 8%

Hence NIFTY100 return will differ from NIFTY50 + NIFTY NEXT50

Large cap fund by definition can have any stock from NIFTY100 with whatever allocation Fund Manager wants capped to maximum 10% for single stock.

Which one we should invest ?

You need to check with your Advisor or MFD

Else

I prefer one NIFTY50 FUND and one NIFTY Next50 fund in portfolio.

Or

One NIFTY100 fund also suitable.

Or

Mix of all of the above

Or

One Large cap fund after carefully chosen because majority funds are unable to beat bench mark .

One Up in Wall street – The Making of a Stock Picker-2

In this chapter Peter Lynch tell us

  1. There is no such thing hereditary knack of stock picking . You have to make your own path.
  2. History and Philosophy is more important in stock picking than statistics and mathematics.
  3. You don’t need to be a CA or economist to become a stock picker . You can be a fourth grade and still be a stock picker.
  4. To understand stock investing you must start with investment rather than discussing with others .You will get firsthand knowledge by doing your own.
  5. Never buy a stock just because everybody is buying , better read understand and analyze and then take wise decision 
  6. If you are buying a stock better analyze on regular interval and check the health of the stock with respect to its fundamentals .After that take buy/sell decesion .

One Up In Wall Street – Millennial edition starts -1

One Up In Wall Street is a investment book written by Peter Lynch . As I read and learn , so I write here in regular interval for this book .Peter Lynch tell us how we can invest in stocks with our knowledge .

  • If you don’t understand a business better to stay away if at all later you regret for missing the opportunity. Ex: Cisco in 480 fold stock that Peter Lynch missed while analyzing.
  • An amateur investor can pick stocks by looking at the development in his surrounding office , market place etc.Don’t buy a stock just because you are using its product .Ex: People bought YES bank just because they have salary account with yes bank.Please give some effort in learning business.
  • If you do all your homework right also still there is no guarantee that you will make money from all your investments .Its just to reduce probability of mistakes in the long journey.Ex- If you bought 10 stocks , 5 may fail miserably , 3 may give you moderate bank interest rate return and 2 may give you multi fold return in long run.
  • Something will rise one day – This type of mindset is not investing rather its gambling . If you can not do hard work better stay away from stocks and buy mutual fun as per your taste.
  • Now a days due to news overhead stock prices fluctuate more than 1% on daily basis . So its normal in short run, Don’t panic if you have done your home work while selecting business .If you sell in panic and later sock started moving upward then you may miss total investment journey if you sum-up all above points . In short you will reach at the same place after many years of investing also and get frustrated .

Please keep in mind 3 points

  1. Never allow noise and nuisance to to ruin your good portfolio
  2. Your portfolio also should not ruin your leisure and vacation , hence always stick to good fundamental stocks.
  3. Always have sufficient cash with you (May be 15 months emergency funds which will give peace of mind in case market fall either in buying more or mainlining your lifestyle for sometime if you loose job and market fall at same time )

Weekly Update on Mutual Fund (17Jan-23Jan – 2022)

1.DSP Mutual Fund launches global NFO
2.With a fear of interest rate hike money is going out of equity globally which in turn resulting into market correction but this can be a best opportunity to achieve rupee cost averaging for MF investors.
3.Edelweiss mutual fund to restrict flows into recently listed IPO fund
4.Motilal Oswal Mutual Fund launches Nifty200 Momentum 30 ETF, Index Fund
5.UTI Mutual Fund launches UTI Sensex Index Fund
6.Navi Mutual fund launches Nifty Bank Index Fund

What Corona Virus Taught us financially?

Coming to 2020 , the entire year was full of virus ,death, quarantine ,lockdown ,testing and vaccine…..

Loss of job , economic turmoil all happened due to this virus.

Well, almost. There are time-tested lessons in personal finance which have been staying relevant for ages, but often not well understood or realized as certain things are learnt well in tough times only. And 2020 was indeed a tough year to forget soon. lessons for lifetime are as follows:

  • Trying to predict the future (of market, or for that matter of anything) is the stupidest thing to do.
  • Having no health insurance, depending solely on employer provided health cover or having a health cover of less than sufficient amount with never read terms and conditions – are as good as inviting the worse to happen.
  • Spending as much as if there is no tomorrow and delaying savings as if the future will always be kind to us – can be a catastrophe.
  • Making ad hoc investments without any plan whatsoever may also land us in trouble such as not being able to liquidate investments when required.
  • Assuming that the party (source of income) will go on forever like as before – is going to fall flat sooner or later. That does not mean we should panic; that means we should remain prepared.
  • Need of asset allocation in one’s portfolio: We have discussed this in length several times. As not all assets out-perform or under-perform at the same time, it makes lot of sense to invest in assets which are negatively correlated to each other. The more this allocation is process-oriented and automated, the better.
  • Need of having an emergency fund: Yes, this doesn’t sound attractive at start, but can come real handy when everything else go wrong.
  • Need of adapting to changes: Here, by ‘changes’ I mean ‘technological changes’. Things have already changed and are going to change very fast – technologically. And for most part, it is for our benefit. The sooner we get comfortable in using technology in our day-to-day life, the better. Technology has made managing investments and insurance much more convenient and safer in the year 2020.