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STP – investing in the volatile time

STP Transfer

STP stands for “Systematic Transfer Plan”, which means, one doesn’t want to invest in one GO, but in Parts, over a Period of time. For instance, you have 10 lacs in hand and seeking investment avenues for the entire 10 lacs. Easiest way is to shortlist a fund & invest fully (i.e. entire 10 lacs). But in the current market scenario, where market is swinging every second month (since last one year);is it a wise decision to invest fully?

STP comes as a rescue, where one can make this volatility work for your own benefit. First & foremost, let’s understand, one cannot ever time the market, therefore no point acting like a cowboy, or getting ideas based on celebrity talk-shows/ articles.


OH my GOD…. SENSEX at 35k levels!

OH my GOD…. SENSEX at 35k levels

If I’ll be you, I’ll not panic… Why?

If you look at the chart below, since June 28th, when SEXSEX was at 35,037 level, it climbed to a peak of 38,896 level by Aug 28th, i.e. in just two months a gain of 3800+ points or 11% UP. Did we question that point of time…why so suddenly the market went UP?

Again, if you look at chart below, from beginning of the year, i.e. 1st Jan, SENSEX was at 33,812 level, and from there it went to a peak of 36,283 level by 29th Jan, a gain of 2400+ points or 7% UP. And a correction or a reaction to the budget (key trigger), for the next 2 months slide.


My Mutual Fund is Losing Money

loosing money in mutual funds

I’m investing in the best performing mutual fund schemes, but after I invest, the fund’s performance starts degrading. What do I do?

This is the story with each one of us. When NAV is low, FEAR factor surrounds us (what to do now?) & when NAV is high, we have GREED (to hold on or to buy more?).

It’s like planting a tree, once the seed is planted, we virtually see it every day, to check on the growth. First few days/ weeks are very exciting, when we see a small bud, leaves sprouting; but after few weeks or a month, it becomes frustrating, as growth is small & we want to see a big tree right away. Whereas it will take years, before the tree is fully formed, will bear flowers & fruits, and above all it must withstand harsh weather& other factors.


Equity Market Panic

Equity Market

Equity market reacted to two key events yesterday, with Sensex going down 1314 points intra-day or 3.5%.

  • There was a significant sell-off – starting with Yes Bank (down 29.5%) and then spreading to,
  • Dewan Housing (down 45%) and other NBFCs, banks and also the broader markets.

While Yes Bank corrected because of RBI’s denial of tenure extension to the CEO Mr. Rana Kapoor, the fall in shares of DHFL was driven by sale of the company’s debt by a mutual fund at higher yields.

What comes out is the fact that, in the broader markets, this was a knee jerk reaction and prices of most stocks should stabilize once the panic subsides.However, the sharp volatility witnessed, highlights the underlying fragility of the market.

It’s true that the selling was largely sentiment driven with no fundamental negatives in most stocks. However, the price action with almost no buying interest characterizes a market where risk appetite is low.

CAGR, IRR, XIRR, Absolute return – I am confused?

CAGR, IRR, XIRR, Absolute return – I am confused?

As an investor in Mutual Funds, we all come across these terms, very often.

What it means?
Which one to use?
Which one is the best?

Let’s simplify…

CAGR; stands for “Compounded Annual Growth Rate”, and works on a compounding formula, based on a single transaction. Usually CAGR is used for estimating future returns, based on historic returns or assumptions, for a time range.

IRR; stands for “Internal Rate of Returns”, and used for calculating returns for multiple transactions, which are equally spaced in time (past or future). Usually IRR is used for calculating returns for SIP transactions.

XIRR; stands for “Extended IRR”, like above, only difference being, when your transactions are not equally spaced in time. For instance, calculating returns for transactions, which may include SIP, Lumpsum, STP, SWP, etc.Absolute returns; refers to the amount of funds (gain or loss), that an investment has earned, over a period of time. Also referred as the “Total Return”, the “Absolute Return” measures the gain or loss experienced by an asset or portfolio.

Rupee Free Fall against Dollar


Its shocking to see Rupee’s free fall from 65 to 70,& within last few days to 72 today, against USD. Some of the key reasons which are supporting this downfall, are international events. Experts fell that this volatility will continue for some time to come (one to three months) and stability by Mar-19 or earlier, where Rupee to become stable or under 69.

Some of the key events:

USD & Crude Gaining Strength: USD is gaining strength back home with quantitative tightening & interest rates, leading to drying liquidity. This easy money earlier was chasing emerging market assets (in order to generate higher returns). Rise in crude prices on the other hand is playing spoilsports.