Category: Personal Finance

The edges of being a salaried Investor

Bored with your job ? Sick of taking orders all day ? You are not the only one who is thinking of becoming full time investor, but before you take the plunge, I want to persuade you to remain in your job and continue as salaried investor (SI)

A salaried investor has tremendous edge over a full time participant in market, What are those edges ? Let explore them

Your bread is not dependent on returns from markets

This is an obvious edge, bear market or bull market, you take home a salary thereby ensuring basic necessities of you and your family is taken care of, you don’t have to sell your shares in distress to pay bills.

You will be less stuck to the screen

In any competitive job, no company will leave you without extracting 60-80 hours a week, which means you will have limited time outside work. This is great as you will miss the daily swings in markets, as Daniel Kahneman wrote in “Thinking Fast and Slow”

Closely following daily fluctuations is a losing proposition, because the pain of the frequent small losses exceeds the pleasure of the equally frequent small gains. Once a quarter

… Read the rest

Why I maintain a free subscriber only Model Portfolio ?

After my last monthly newsletter to blog readers, I got few questions on Model Portfolio. I am penning this post to answer most of those broad questions that came my way

What is Model portfolio ?

Model portfolio is a collection of businesses at a point in time which in my humble opinion has ability to deliver superior returns over a three to five year time frame over benchmark indices (mid cap / small cap). The operating word here is ‘ability’ (not promise)

Investors should very carefully decide his/her risk appetite and the returns expectations, as not everyone’s situations is same. As a prudent investor first

  • Determine your willingness to take risk  – Are you an emotionally a person who can handle risk ?
  • Ability to take risk – Does you economic situation allows you take risk by investing in equity

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How to build additional sources of Income

Updated – 16.04.2015

What is diversity of your income sources ?

A typical salaried employee’s graph would look like below

[visualizer id=”501″]

Highly concentrated with income from salary. If you are able to increase your salary 20% year after year, don’t read any further you have cracked the code, see you later. If not continue reading

Cicra 2010

Still in college, one of our most revered professor, seeded the idea of diversifying our income sources. He stated

Diversity will not only provide extra stability and improve your life style it will also enable keep the inquisitor in us alive beyond your college days.

I decided I would aspire to have at least 2% of my income incrementally from sources other than salary after first two years at job till my 7th year. Hence reaching a healthy ratio of 90-10

[visualizer id=”502″]

Circa 2012

I was amazed by the concept, however was not sure how can we add additional income, given that most of jobs demand at least 60 hours a week or more. Spending additional time looking for a weekend job was not a viable option. I had to rely on other means. My chosen areas of bring diversity to … Read the rest

5 things I like about moneycontrol portfolio manager

Moneycontrol is one of my favorite personal finance website, it has greats tools to analyze stocks, however in this post I want to discuss one of the most important features of website – moneycontrol portfolio manager.

Here are five things that I use moneycontrol portfolio manager for

1. First and foremost ability to create a watch list – As an investor you will keep getting ideas here and here, the best way to store them is to add it to your watch list.

MC-1

2.  Keeping a tab on the Management view of my investments – As a practice, I like to read what management of the company has to say about it’s present or future. Portfolio manager is a great place to read about all your investments at one place.

MC-2

3. Brokerage recommendations – Although broker recommendations have to be taken with a pinch of salt, I like this section as many a times you will find one brokerage recommending to buy while other recommending to sell, you get diversity of opinion and kicks in tangential thought process. This also helps you to cross check your hypothesis on investments

Shilajit is certainly one among the overnight cheap viagra top listed … Read the rest

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How much would you allocate to bonds ?

This is my third and final post on debt series, to read previous ones click here and here

In this last post on Debt investments, I would cover allocation or in Simple words – How much of the portfolio should be in invested in debt instruments

Situation 1 – I know I need to double my portfolio in 6 years after paying taxes so that I can meet my personal needs

Here you know the target return on investment, i.e. 12% pre-tax on a compounded basis to double your portfolios in 6 years. Now first one has to understand on an average historical basis  how much debt and equity has returned. In India if look at last ten years data

Debt has given approximately 9% pre-tax return that equates to post tax return of 7.2% ( Assuming you pay 20% income tax)

Equity has given approximately 14% post tax return

Based on above one has to invest 70% in equity and 30% in debt to achieve their goal of attaining 12% pre-tax compounding return

But should you get obsessed with past performance? Understand past is not a guarantee of future performance, however one has to start somewhere and the best … Read the rest

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Download an excel for debt investors

This is part 2 of debt investment series, to read part 1 click here

Today we give you  Bond Analysis  excel to play with and find out what suits you, Quickly understand what these columns mean

Category – Defines what kind of instrument – NCD , Zero Coupon bond , Infra bonds etc

Exc = Exchange they are listed on

Issuer Name , NCD Name  = Self Explanatory

Credit rating = As provided by rating agencies when the instrument was issued

Coupon rate = rate of interest

Coupon frequency = How often interest is paid

Maturity date = When they will return you principal

Face value = Self Explanatory

LTP = Last trading price as on 24.03.2014

YTM = is the internal rate of return (IRR, overall interest rate) earned by an investor who buys the bond today at the market price, assuming that the bond will be held until maturity

Maturity amount = How much you will receive at the end of maturity, often equal to face value

Next coupon due = When are you getting next interest payment

Now, this excel can be easily used to find whatever kind of investment you are looking for, lets look at … Read the rest

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Investing in bonds & debt instruments

One of my most popular post has been on parking short term cash from last year. I have always believed that any successful investor should invest a portion of his portfolio in debt.

I will be writing on debt in three parts to do justice to this asset class. Today’s post is part -1

When investing in debt securities you are effectively lending money to businesses or governments or banks. Returns typically comprise interest and changes in the market value of the security.

Today we are going to cover

a) What is the risk of investing in debt instruments

b) What feasible options are available to retail investors to invest in debt instruments

There are few risks which we should be aware of

1. Loss of entire capital – Also know as credit risk or default risk. In unfortunate circumstances if the businesses or governments or banks are unable to return what you have lent them. To guard against this most of the debt instruments are rated by independent agencies,an investor should carefully understand what each ratings account for.

2. Loss on account of reduction in price of security – IFprice of the debt instrument goes  down, you may face … Read the rest

Investing for short term

That was quite a break

Image source – Indian Moms . After a big rest for 6 months finally up with a new post.

Now many of us have short-term funds (cash) that is mostly lying in our bank accounts or at home as emergency need. While there is no harm in keeping some contingency money always as cash however we can invest even some portion of this amount to earn additional return. I have previously written about how to generate extra cash by using your credit card here .

Now let us look on how we can increase our return on short-term cash

  1. Opening saving accounts with bank which offer higher interest rates – With Reserve Bank of India lifting law on fixed interest rate to savings account holders, Many of the modern private banks aka Yesbank, Kotak Manhindra  are offering higher interest rates for having a savings accounts with them. Few banks also offer additional interest if you keep a balance of over INR 1 lac. While traditional biggies aka SBI,ICICI still offer 4% on your savings account , we should carefully examine if we are in need to continue to use their banking services or else  we
… Read the rest

Investing in Gold

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Gold is often considered as an investment and given the astronomical returns gold has given in last 9-10 years It deserved one whole post to itself.  Gold prices have fallen from peaks over last 3-4 months – Is the right time  for a wily investor to make a move and buy Gold?
There is no straight forward answer (A regular reader knows – We don’t have quick fix answers), First we have to be clear whether we are Gold consumers or Investors. Many a times a gold consumer believes he is an investor.
Who is a consumer? – 
… Read the rest

Investing Tricks from Tr – Guru

If you are reading than give yourself a pat on back, you have chosen to be master of your finances.  Life or Investment we should always know three fold answers to Why we are doing it ,  What are we doing  and How are we doing

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At Tankrich we have spent considerable amount to time to understand Why investments are necessary, What are these investments, Today we are gone to discuss the most pertinent question that remains unanswered how to invest.
 
With this question in mind lets go to trGURU  our in house investment Zen
trGURU   : An individual investor can invest in predominantly in three ways  –  Trying to time market (TTM) , My Price Investment (MPI)  and Systematic investment plan (SIP) . All three
… Read the rest