Understanding the notion of a risk-adjusted return requires some maturity to think beyond mere returns. While comparing funds, a fund that offers a lower return with lower risk is better than one with higher return with higher risk. There are many risk-adjusted measures and one of them is the information ratio. The information ratio is a measure…
Continue reading →One of my favourite quotes about goals is by Harvey Mackay: “A dream is just a dream. A goal is a dream with a plan and a deadline.” That just about sums it up!! In this post, let us look at how to define a financial goal with the Audi as a dream car. It…
Continue reading →How to retire early in India safely by age 40 or age 50? If you have this questions, this e-book is for you! Retirement is an oft-discussed topic at freefincal with a fair share of exposure to early retirement. Here is a compilation of seven such posts in the form an e-book. This is the…
Continue reading →Question: When can you use an investment portfolio that cannot exceed an equity allocation of about 25%? Value Research classifies them as Hybrid: Debt-oriented Conservative. There are about 43 funds in this category and more than half of them contain the phrase “monthly income plans” (MIP) in their names. Some are called regular savings funds (not to…
Continue reading →This is a ‘how to play’ guide for the retirement ‘bucket strategy’ simulator that was published more than three years ago. Many have used the simulator and provided feedback. I thought it maybe a good time to revive the idea since more and more people are interested in post-retirement income strategies. They can be categorised into…
Continue reading →After spotting mutual fund underperformers in the portfolio, what is the next step? The options may seem quite obvious and there is not much to write about. I decided to write a post about it (instead of mentioning this in the last post itself) for two reasons: Handling underperformers in the portfolios has some interesting aspects of…
Continue reading →In a two-part series, I would like to discuss how to spot (I) and how to handle (II) mutual fund underperformers. I write this after suggestions on twitter and by Kunal Lal. The first step is to define underperformance. This is possible only if the right category of mutual funds is first selected for investment….
Continue reading →Radhey Sharma* who blogs at The Wealth Wisher recently compared critical illness insurance policies in India. The following is an expansion of my comment to his post. * He used to. It is now run by Madhupan Krishna. What is CI insurance? It offers a lump sum if the insurer is convinced that an individual…
Continue reading →If diversification is about ‘not keeping all eggs in the same basket‘, rebalancing is realising that ‘what goes up, will come down‘. Yes, investment portfolio management is all about simple common sense. In this post, I would like to revisit the topic of portfolio rebalancing and discuss what it is, why do it is, and…
Continue reading →Diversification refers to the simple common sense, ‘not to rely too much on one entity’. In this post, I discuss simple ways to build a diversified portfolio using mutual funds. The main purpose of diversification is to minimise losses, or rather the volatility in the portfolio value. This implies reducing exposure to an asset class…
Continue reading →Suppose you had invested in a mid-cap fund, say SBI emerging business from Sep 2010. Here is a tool with which you can compare the current performance of the fund with all other funds in the mid-cap category and its benchmark. I am not a fan of peer comparison after investing a mutual fund. Many other are….
Continue reading →If I choose a fund with a solid track record, what are the chances that it would deliver in future? Does past performance matter? This is a question on the minds of most mutual fund investors. Let us try and answer this question using annual returns of all diversified equity funds from Value Research. This…
Continue reading →The 10th version of the freefincal automated stock analyzer includes an easy-to-understand graphical analysis of the factors that drive return on equity (ROE) using the five-step Dupont Analysis. Return on equity is defined as ROE = Net income/shareholders equity. It is the profit for each unit of shareholders equity or the earning power of the company….
Continue reading →The correlation between mutual fund returns and the upside/downside capture ratios is discussed using Mid-cap mutual funds. It is no secret that I am a fan of the downside capture as a simple means of measuring downside protection, selecting and reviewing mutual funds. In this post, the recently obtained downside Capture Ratio of all Mid-cap Equity…
Continue reading →Dear reader, I write this to make two requests: (a) help beta test an Excel sheet that automatically downloads standalone or consolidated financials data (in new format or old) from MoneyControl, and (b) provide your feedback on how to improve the freefincal stock analysis spreadsheet. MoneyControl Financials Downloader The aim behind making this sheet is…
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