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Blockbuster Friday

Like a blockbuster movie’s Day1 opening, today’s announcement by our dear FM Nirmala Sitharaman, pulled the market up by 2000+ points, like there is no tomorrow, snapping losses of last few weeks in a historical single day gain (in last Ten years).

Sensex settled at 38014, a gain of 5.32% percent!! Aggressive buying was seen in banks, auto and metal stocks. IT shares lagged the broader rally, as rupee edged higher at 71.12.

Asian stocks also ended higher on Friday, as economic stimulus around the world eased fears of economic deceleration. On the trade front, Chinese and U.S. delegates are meeting Thursday and Friday ahead of higher-level meetings expected early October to resolve the year-long trade dispute.

Stimulus announced by FM Nirmala Sitharaman on Friday are:

  • Corporate tax slashed to 22% for domestic companies, subject to condition they will not avail any incentive or exemptions (the effective corporate tax rate after surcharge will stand at 25.17%).
  • Manufacturing companies set up after October 1 to get an option to pay 15% tax (17.01% inclusive of surcharge & tax)
  • Listed companies that have announced buyback before July 5, 2019, tax on buyback of shares will not be charged
  • To provide relief to companies availing of concessions and benefits, a MAT relief by reducing it from 18% to 15%
  • Higher surcharge will also not apply on capital gains on sale of security including derivatives held by FPIs

Reverse EMI

Which is better – EMI or SIP (monthly savings)?

Can I buy IPhone-11 on Sept 27 th ?

Last night we ganged up for dinner, to celebrate my dear friend’s birthday. Amid talks on life, markets and bosses, one specific topic that caught everyone’s attention was that our birthday girl gifted herself a Scooty!

She narrated her story on how she was saving for over a year to buy this Scooty, and how her travel will now be so damn easy. Sounds so nice.

As usual, one of us, the Wise-guy interrupted, giving Gyan on using the EMI option, thru which the birthday girl could have got the Scooty much earlier. To this, our birthday girl smiled and replied that she doesn’t like a loan on her head, also the interest on the loan would just add up on the burden. Saving is easy for her, living with a loan (however small), is difficult. Though that’s her perspective, but not many of us bought this logic last night 😉.

It’s the same story across the millennials, where instant gratification is the buzz word. IPhone-11 will be launched on Sept 27th, and I know many of us are just waiting for the day to grab & show the latest asset around.

It all looks attractive (EMI I mean), but none of us gets down to calculate the devil in it, the interest we end up coughing, to achieve this goal. Let’s understand this thru a very basic example, i.e. Rs.5,000/- paid as EMI for 12 months and Rs.5,000/- saved as SIP for 12 months.

EMI Option: Rs.5000/- EMI per month, for 12 months means that, one can purchase product worth Rs.56,275/- only, as rest of the amount i.e. Rs.3,725/- will be paid as Interest to the bank. Noting comes free.

Savings (SIP) Option: Rs.5000/- saved per month, for 12 months goes to a RD account in bank, @8%, end of year one will have Rs.62,665/-in the account or Rs.6,390/- extra compared to EMI above. On the other hand, if same goes to Mutual Funds, with higher returns, depending on tenure & risk profile, this extra amount could be more.

Idea is not about the last minute purchase, but the discipline to start savings at the first instance, i.e. first salary… which also means, since I started saving from day 1, I can literally buy my IPhone-11 costing 65k on Sept 27th 😉.

Stranger on a Train

It’s not about the 1951 Alfred Hitchcock psychological thriller, but about my commute, and an invigorating conversation with a stranger 😉.

Few days back, while travelling home from the office, a co-passenger in metro asked me directions to an address. The chat started through an address, which I explained him descriptively. He shared some details about him business travel and told that he learns new routes every time he visits a new city. When he asked me about my whereabouts, I introduced myself as a Mumbaikar and a financial advisor.

He couldn’t wait for me to complete… and started discussing his equity and mutual fund portfolio. This wasn’t new for me, as I had many such experiences in the past. In India, whenever we see a doctor or financial advisor, we start with our illnesses or portfolio discussions.

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Sensex down to 36500 – Adversity or Opportunity?

With so many things happening around us; major political decision today on Kashmir, US-China trade war escalation again last-week, and corporate earnings showing no sign of revival, market is on a downward spiral since July-beginning.

Instead of asking, what should we do? Let’s look at from another viewpoint, i.e. seasoned player like Warren Buffet, what will he do in this kind of market?

  • Invest for Long Term“Only buy something that you’d be perfectly happy to hold if the market shuts down for 10 years.”

This quote sums-up our investing philosophy perfectly; that all the long term investments usually are in equity, and short term (1-3 years) are in debt or liquid funds, which are not affected by market melt-down or swings. Do we need to worry?

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Sensex down 2000 points

Since the budget announcement on 5th July, Indian stock market has had a downward run, leading to 2000 points drop in Sensex, from its peak.

How long this will continue?

Indian stocks are driven by two key parameters, i.e. FII money in-flow & Domestic growth numbers. Whether you call it a bad-luck, or chain of events; first with the recent budget announcement, FII growth or money in-flow has reversed in July-19. Almost 2billion USD, has been sucked out of the stock market, resulting in others (domestic investors) also getting into a panic of selling & adding to this pressure.

On the other hand, Domestic growth since last six months is under pressure, resulting in another bad quarter (Apr-May-June 19). Further adding fuel to the selling pressure, resulting in the stocks tumbling.

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FALLING STOCK MARKET – Mistakes Investors Make

Falling Sensex or Nifty

STOP SIP – The most common mistake, an investor makes in a falling market, is to first get into a panic-state, and second, stop the monthly SIP. Whereas one tends to forget the basic premise on which the SIP is built, i.e. “Law of Averages”, where in a falling market, SIP is helping you to pick mutual funds at a lower rate, and thus helps you to earn more in the future years.

DIVERSIFY PORTFOLIO – Another mistake, on account of falling market, where one gets to hear on stocks or mutual funds available at a low price, making one believe that it’s time to go “Bottom Fishing”. This leads to stretching the size of portfolio, from few selected stocks/ funds to many stocks/ funds now, resulting in an average return due to the bigger portfolio in-hand.

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A Goal without a Plan is just a Wish

MANAGE YOUR MONEY BETTER
  • Antoine de Saint-Exupery, a Frenchman
  • In French – Tout objectif sans plan n’est qu’un souhait

Learning a language can be a thrilling experience, it brings with it, it’s lifestyle, cuisine, history, and culture, which is completely different from where we are to be discovered!

While learning French, one discovery led to another, and it so happened that I fell deeply in love with the French art and immersed myself in the culture for seven long years! Through my expertise, I even got the opportunity to teach this language to young adults in a college. 

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Budget 2019 – $3 trillion economy by fiscal 2020

Budget 2019

Key Announcements on Income Tax:

  • Empty bag for salaried, as old slabs continues
  • Super rich to be squeezed more (2 crs & upward) with additional surcharge
  • Additional deduction of ₹1.5 lac on home loan interest paid offered – but for affordable house of ₹45 lacs borrowed, on or before March 31, 2020
  • PAN & AADHAAR number now becomes inter-operable
  • Pre-filled Tax return form to be available soon
  • EV purchase loan benefit (electric vehicle) – 1.5 lacs interest benefit on the loan
  • Cash withdrawals over ₹1 crore a year will attract TDS of 2%
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Why the word “Diversification” is given so much importance in Financial Planning?

diversification Importance

There’s very common saying “Do not keep all your eggs in same basket. Diversification means same, do not invest in only one asset class/only one sector. In India people generally prefer in investing in only two asset classes which are Gold & Real Estate.Historically they are known to give good returns & less risky,But in order to secure your portfolio from all ends & to earn more than inflation rate “Diversification” is very important.

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