Risk Aversion Almost Always Implies Risk Ignorance!

If you type the following in Google: “Sukanya Samriddhi account risk averse”, you will find several articles that suggest that the Sukanya account is ‘suitable’ for risk averse investors. Such statements make me want to throw up. Risk aversion almost always means that the person does not understand the risk involved with a particular investment…

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What is Your Risk Appetite?

“Invest according to your risk appetite” is a refrain often seen in personal finance articles. This is as useless as it is meaningless. The single most important ailment among investors is their inability to recognise appropriate benchmarks and objectives inflation as the primary benchmark for long-term goals capital preservation as the primary objective for short-term goals tax-efficiency…

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Investor FAQs on Returns

Answers to a frequently asked questions on investment returns. 1. What return does the moneycontrol portfolio manager calculate? It calculates the absolute return. That is the percentage difference = (value-investment)/investment. This does not  represent how your money has compounded. Ignore it. Use Value Research portfolio manager to get XIRR returns (a measure of compounding when there…

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Long Term Goal-Based Investing – Part II

This is a sequel to the ‘step-by-step guide to long-term goal-based investing’ and is meant for those who have started investing for their long-term goals after, understanding how much to invest understanding how much to expect from each asset class used deciding on an asset allocation (how much in equity, how much in debt etc.) If…

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Are Mutual Fund SIPs Suitable for Disciplined Long-Term Investors?

Should disciplined long-term goal based investors use mutual fund systematic investment plans (SIPs) or rupee cost averaging? This question has been bugging me for long and personally, I hate a SIP I think it is a product tailor made for mutual fund distributors and sold to lazy people. Should intelligent investors buy SIPs? Here is…

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