I would like to discuss the dangers of investing in debt mutual funds without understanding risks in the next few posts. There are two problems associated with putting all eggs in one basket and we only talk about one – the basket coming apart. The second and equally important problem is the search for the…
Continue reading →When it comes to an actively managed market linked instrument, the ideas of downside protection and upside performance are easy enough to understand and expect. In particular, with respect to active mutual funds, downside protection refers to the fund’s losses when compared to benchmark losses. For example, during a period in which the benchmark dropped by…
Continue reading →Last week I had posted a comparison of large cap funds with few relevant indices. This time let us do the same with mid-cap funds – compare SIP and Lump Sum returns over the last 1,2,3,4,5,6,7,8,9 years. As before, a passive mutual fund is just an index (either cap-based or strategic). The expenses associated with…
Continue reading →An exposure to equity is not necessary to beat inflation or finance our future if we know how to account for inflation by other means. It is merely a choice. Many of us did not have any equity exposure when we started managing our money. We read about it; thought it might a be a…
Continue reading →The corpus obtained when buying “low” or when the Nifty is below its 200 day moving average (dma) is compared with the corpus from buying “high” (nifty above 200 dma). Apologies for yet another post on this subject, but I had to satisfy my curiosity. Kindly bear with me. Before we begin a clarification on nomenclature. As we…
Continue reading →The previous two studies on buying “low” vs. buying “systematically” pointed to the surprising regularity with which systematic investing does better (or at least as well as – good enough). In response to this, many suggested that in order to ensure buying “low” wins, I should ensure the cash that is put away waiting for…
Continue reading →Here are few charts based on a systematic investment in gold. I did this primarily to satisfy my curiosity after a similar study with S & P 500 and Nifty: Buying “low” vs Buying “systematically: Surprise, Surprise! Regular readers may be well aware of my stand on gold: that it is riskier than Stocks! I had also suggested understanding…
Continue reading →Here is a comparison of SIP and lump sum returns of active and passive large-cap equity funds over the last 1,2,3,4,5,6,7,8,9 years. I shall follow this up with other categories – mid-cap, small-cap etc. and repeat this study from time to time. Before we begin, would like to point out that our new book, You Can Be…
Continue reading →Each December, I conduct a personal finance audit. As part of this years audit, I thought of updating my mutual fund investment journey, in particular, the rise and fall of my retirement corpus. The idea behind this post is not to boast or claim how intelligent my investing strategy is. It is only to study…
Continue reading →A mutual fund is not an LIC policy. One buys an LIC policy for 20 years to receive money-back every 5 years or so. One does not choose a mutual fund to invest for 20 years. A mutual fund is also not a stock. One need not read a balance sheet or understand the business model…
Continue reading →In the second part of the buying “low” vs buying “high” study, I consider return differences for identical investment amounts. And guess what? The results are most surprising! For those who have not read the first part, I request that you head over to Equity: Buying “High” vs Buying “Low” and then come back. Some definitions: 1 Buying…
Continue reading →Bond yields have been dropping rapidly since the demonetization announcement. As a result, the NAV of long-term gilt mutual funds has been on the increase. At a time when many investors want to benefit from this move, Mr Srinivasan Sundarajan, in this third guest post, cautions to look before you leap. +=+=+=+ About 10 days ago,…
Continue reading →Suppose you invested in a stock market index only when it was “high” and compared the return obtained with that from an investment made only when the index was “low”, how much do you think the returns would vary? How would these returns compare with an investment made regardless of index levels? Let us find out. In…
Continue reading →“Blessed is he who expects nothing, for he shall never be disappointed”, said British poet Alexander Pope. This applies to investing as well. Low return expectation is the key to minimising effort associated with money management. I have published a series of post on ‘what’ and ‘how’ to expect when you are expecting .. er returns….
Continue reading →Reinvesting stock dividends can make a huge impact on your wealth over the long term. To illustrate this, we first consider how a total returns index is calculated by assuming dividends are reinvested. Thanks to Prof. Robert Schiller for making monthly S & P 500 data available from 1871 for calculating the Schiller PE with the trailing…
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