Many of us have trouble understanding how the growth of volatile instruments like equity, bonds gold or even real estate can be quantified. We come across many terms like CAGR, IRR and XIRR in this context. In this post, the similarity and differences between the CAGR (compounded annualised growth rate) and the IRR (internal rate…
Continue reading →It is important to diversify a portfolio, but it is even more important to understand that diversification will typically lower portfolio return and not enhance it! Technically, diversification is for risk reduction,or to be precise – reduce the daily ups and downs in the portfolio value (aka volatility). However, volatility reduction almost always results in return…
Continue reading →So, you have term insurance, health insurance, emergency fund, understand the need to beat inflation and have started investing towards that. Congratulations, you have reached the base camp! The summit still has to be climbed! Here are some ways to take money management to the next level. In the recently concluded Chennai investor discussion meet,…
Continue reading →When the markets start to move for a few days, investors tend to look at the index PE to check if the market is overvalued or not. Before we caution ourselves (and others) about ‘high PE’ levels, it would be quite instructive to pause and think about the historical evolution of the index PE . Before we…
Continue reading →It is possible to build a beautifully diversified equity portfolio with only sector mutual funds. The data first published with this idea in April 2014 has now been updated. Note: what is presented below is an investment idea presented with academic curiosity and not a recommendation to abandon your existing diversified mutual funds. Investing for long-term…
Continue reading →A smart beta investment strategy is one in which a stock index is built with specific rules instead of a simple market cap based allocation. The nifty strategy indices are examples of a smart beta investment strategy. In a series of posts, I had covered several of these indices including a rolling a returns tool…
Continue reading →This is a guest post by Bhavik Mehta. Bhavik is an avid Micro Cap Researcher and Personal Finance Writer. He has completed his CA and is a CFA (Certified financial analyst) and an FRM (certified Financial Risk Manager) . I requested him to write about how an investment portfolio is constructed. He was kind enough to…
Continue reading →Debt mutual funds are advertised as tax-efficient alternatives to fixed deposits. There is more to investing than tax-efficiency. Investors must be aware of the associated volatility and how it can impact returns depending on the duration. Post-tax debt fund returns may or may not be higher than post-tax fixed deposit returns. The answer to the…
Continue reading →My family has had more than its fair share of interaction with the medical community. In this post, I list some of our most important learnings. Trust is the most important ingredient in the doctor-patient relationship and in spite of all that has happened to us, we still manage to trust our doctors, but not blindly….
Continue reading →Rolling returns calculators provide a simple, easy to understand visual representation of how consistently a mutual fund has outperformed its benchmark. The freefincal mutual fund lump sum and SIP rolling returns calculators now include six nifty strategy indices (smart beta) for analysing mutual fund performance. As seen in a recent series of posts, Nifty strategic indices…
Continue reading →I have been holding an individual health insurance cover for my family for the last 10 years. In this post, I look at how the insurance premium has increased during this period. I hold a United India Platinum policy for self, wife and son and a Gold policy for my mother. Each year, I have…
Continue reading →The Motilal Oswal Value Index (MOVI) allows the investor to change equity and fixed income levels as per MOVI values. In this post, I try to understand how the MOVI is calculated. This is only an academic post about the MOVI and is neither a recommendation to use MOVI or Motilal Oswal Mutual Funds. MOVI-based indexing…
Continue reading →All of us have to deal with various types of recurring expenses – ones that knock on our doors, once a month, a quarter or a year. In this post, I would like to discuss some simple ways to handle these on auto-pilot with minimal maintenance. Perhaps this post maybe a bit too simple for experienced…
Continue reading →The NSE maintains 15 strategy indices, each of which are based on a unique quantitative method. Collectively, they are referred to as a smart beta strategies. In this post, I would like to present a short introduction to six of them which I believe could be more stringent alternative benchmarks for mutual funds. They could (and are)…
Continue reading →The Nifty Low Volatility 50 Index (NLV50) is a portfolio of 50 stocks that has the least volatility among all the stocks listed at the NSE. This is referred to as a smart beta strategy. Considering the way it is constructed, its performance (much of which is backdated) has been quite interesting and I think…
Continue reading →