Difference Between Tax Free and Tax Saving Investment

Difference Between Tax Free and Tax Saving Investment

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Why you need Financial Planning

 Why you need Financial Planning ?

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Health Insurance - Your Shield Against Medical Emergency

 

  Health Insurance - Your Shield Against Medical Emergency

      

Let's  share a story , It was cold, windy evening of January 2012. Mr. & Mrs Arora (retired couple, both senior citizens) were enjoying winter evening & having a cup of hot coffee in their 3 BHK luxurious apartment in South Delhi when they received a phone call. Next 15 days were one of the worst period they experienced in their lives. Their son, Mr. Akash Arora in his late 20's met with a severe accident while driving a car on his way back to Delhi from Chandigarh due to intense fog. He incurred multiple fractures and was in hospital for 15 days. Fortunately he survived and recovered fully after 15 days of hospitalization, but the total medical bill made Aroras poorer by Rs.7 lakhs. Unfortunately Akash had medical cover of only Rs.3 lakhs assuming this would be sufficient for him at a young age of 27.

As Aroras belong to higher income group and have created wealth over the years, additional Rs.4 lakhs which they had to pay from their own pockets did not pinch them much but not all of us belong to that category. Can such type of incidence happen to any of us ? Are we in a position of bear cost of high hospitalization/medical bills on our own ?

You may argue that this can be an exceptional event and may not happen in everyone's life. But can we predict which family will suffer this trauma and which one will escape ? Another point worth highlighting here is lifestyle related health problems. In today's fast paced life when every one of us is a part of the 'rat race' and all of us want to win that race, we are leaving healthy living habits behind. Eating junk food, irregularity in eating habits, high pressured work culture resulting in incidences like heart attack at a young age or diabetics or blood pressure problems. These have become very common in India now.

Unfortunately in India we mostly realize importance of medical insurance only when something of this sort happen either to us or to our near & dear ones. Why to leave things to destiny when you can cover the risk through medical insurance, popularly known as Mediclaim.

Understanding the Basic Traits of Health Insurance:
Health insurance is a contract between insurance company (insurer) and insuree who takes insurance coverage against any medical emergency by paying a specified price (called premium) depending on multiple factors. Health insurance is nothing but passing risk of bearing medical cost to insurance company against the premium paid.

So medical insurance is nothing but passing risk/cost of medical treatment to insurance company by paying premium. So in event of any medical treatment, your insurance company will pay you to the extent of insurance cover against the premium paid by you.

Raja Bhattacharjee

9830146206

https://www.investmentjunctions.com/

 

The Rabbit and the Turtle

The Rabbit and the Turtle

Most of us have read the tale of “the rabbit and the turtle” in our schooldays. Let's recall the tale and refresh our childhood.

Once upon a time, there was a rabbit, who was overconfident because of his abilities. The rabbit used to boast about his skills and he used to make fun of a turtle since the latter was very slow. The turtle got really annoyed with the rabbit's behavior and one day, he challenged the rabbit for a race. The rabbit on hearing this, mocked the turtle believing that there is no chance that he can win, and they agreed to race.

The next morning, they reached the starting point and the rabbit pulled up his socks, still mocking at  the turtle. They started and the rabbit instantly picked up pace, while the turtle started the race taking baby steps, the rabbit leaped high and left the turtle far behind in no time.

Midway, the rabbit saw a restaurant, and he was feeling hungry too, he looked around and the turtle reached nowhere near him, so he decided to stop by and eat something. After the meal, the turtle was still out of his sight, and he felt lazy after the meal, so he decided to take a nap. The nap turned into a long careless sleep, and he did not realize when did the turtle ran past him. 

The rabbit suddenly woke up, alarmed, and started running as fast as he could to catch up in the race. But when he reached the finish line, he saw the turtle waiting for him. His head hung in embarrassment.

Moral of the story: Slow and steady wins the race

Let's try to relate this story to the life of an investor, how we manage our investments and understand its implications on our financial health. Let's see why the rabbit, in spite of being better positioned lost to the turtle.

• The rabbit leaped very high initially, like the investors who have  money and are pumped up to make more out of it.  They do not think and start putting in their money, in order to reach the finish line earlier. You have a good start doesn't mean you'll experience same trend all throughout your investments in long term. Your strategy should have a balanced approach to meet your long term goals as per your risk profile. There should also be a differentiation between short-term and long-term goals and planning should be done accordingly of where you want to reach and when.
• Overconfidence: There is a thin line between confidence and overconfidence and once the line is crossed, it can cause only harm. There are investors, who are overconfident on their knowledge about the markets and products and often their views are biased between different asset classes. They go very aggressive in their preference of any particular asset class, often debt and equity, and then risk their money. One has to realise that both asset classes are for different time horizons and suitable as per differing risk profiles of the customers. Going overboard on any particular asset class will put your capital to risk, and this includes investments in Bank FDs which carry of risk of loosing 'real value' over time due to inflation.
• The turtle was slow but was steady at the same time; our mutual fund SIP's are based on the same theme. SIP  investments are most suitable for small investors who can regularly invest irrespective of worrying about market levels. The turtle investor will be disciplined and will invest his regular SIP amount, no matter what comes his way, he will not get carried away by a restaurant (another hot investment opportunity) or need for a nap (other personal aspirations like desire to travel, or buying a car, etc). He will meet his other aspirations only after providing for his investment commitment. While a rabbit investor gets carried away by the restaurants and the need for nap falling in his way.
• The rabbit should have been vigilant even if he wanted to take a break. He got so overwhelmed with his hunger and nap, that he forgot his ultimate goal, and when the clock struck 12, he tried his level best to meet his goal, but to his dismay, the turtle was already there. Similarly, the investor who keeps his life goals ahead and religiously follows his investment plan, will meet his goals in time, while others who lose track for other things that come their way, end up repenting. At times, there is no way the investor can make up for his losing vigil, that he can't achieve the goal, no matter how hard he tries.
• The rabbit shouldn't have overlooked the power of patience that the turtle had. The rabbit investor invests and expect instant returns, he does not realize that it is not a magic wand, rather it is a seed which is just sown and will need time to turn into a tree and reap ripe fruits. The rabbit panics and sells at lower prices when the market falls and gets excited when the market rises, and buy more at higher prices. The turtle invests and then wait patiently, he too faces highs and lows but with patience, he keeps a control over his emotions and wins the race.

The story throws light on issues that we face when we become the rabbit and how we should adopt the virtues of patience, discipline, confidence, vigilance and balance of the tortoise in order to win the financial race.

Raja Bhattacharjee

9830146206

https://www.investmentjunctions.com/

 

5 Long-term Strategies For Wealth Management

 

       

      5 Long-term Strategies For Wealth Management

Our relationship with money starts at an early age when we notice or parents exchanging coins or notes for all sorts of stuff we like. The understanding of money grows as we start getting our pocket money. Slowly, we get more exposed to money and we start forming our financial behavior and habits as we progress through these years. Once we start earning, we perhaps either continue or form new behavior and habits, depending on our knowledge, understanding and our live-style needs. These experiences and beliefs may last throughout your life. The challenges however only multiply as we continue in our lives, have families, dependents and life goals.

Some concepts are very important when we talk of any investment journey. Having a good understanding of these concepts and ideas will go a long way in developing a strong foundation for our future financial well-being, irrespective of our age.

In this article, we will talk about 5 important concepts and ideas for wealth management. These can also be viewed as long-term strategies which, when practiced diligently, can help us strengthen our finances and reach the goal of financial well-being earlier.

1. Have an Evolving Appetite for Risk

William Faulkner said: “You cannot swim for new horizons until you have the courage to lose sight of the shore.” Investing is an art that is backed by logic. To master this, one needs to have an appetite to take calculated risks. Perhaps the biggest risk to your financial well-being is not taking any risk. Your willingness to take thoughtful and calculated risks is in disguise an opportunity to build wealth as you grow.

You must remember that to create wealth, you have to earn ‘real returns’ - returns above post-tax, rate of inflation on your investments. Anything below that is in fact losing wealth. For eg., even if you are earning say 8% on your bank FDs and fall in the highest tax bracket, the post-tax net returns would be just 5.6%, meaning with inflation at say 6%, you are reducing your wealth by 0.4% every year! Always calculate your real returns as a test.

2. Patience and Discipline

To yield good returns on long-term assets such as mutual funds, one needs to have patience. This will come from understanding the asset classes and their behavior. There is no shortcut to success, similarly, any appreciation in assets takes time. Being impulsive and investing without adequate knowledge can lead to financial losses. Discipline when investing in equities can lead to superior returns, as ups and downs in equities is a normal phenomenon, staying invested in quality assets is key to value creation. One very good way of having discipline in investments is to invest through SIP in equity mutual funds for long term wealth creation.

3. Diversify Your Funds

The best English proverb when it comes to investing is ‘don’t put all your eggs in one basket. This is an old yet effective way to explain the importance of diversification when it comes to investments. Diversification, whilst not fully guaranteeing losses, helps spread the risk of investments to help reach long-term financial goals. Diversification can come across different asset classes and with different funds/products within a chosen asset class. Broadly the asset allocation is always between equity and debt. Some may even add gold and real estate to this equation. Diversification is dictated primarily by your risk profile, investment horizon and returns expectations. It helps provide contingency to adverse effects in one asset class. Your MF distributor or investment expert shall in a position to guide you on the level of diversification required by you.

4. Have Equity Exposure

Investment should be made keeping in mind your risk appetite. This is influenced by many factors including; life stage, income, age and experience of investment. However, for wealth creation, the equity asset class emerges as the undisputed winner amongst all asset classes. For young individuals with income, taking higher risk is recommended as compared to a retired individual with limited or no income. As said, the choice of an asset class is dictated by risk appetite and investment horizon. However, when it comes to returns expectations or required returns for achieving financial goals, the most likely outcome will be equities. There is also a lot of ease, convenience, flexibility and tax advantage while investing in equities as compared to physical assets like real estate and gold or debt investments. However, it is a more volatile /risky investment and hence prior understanding, risk assessment and guidance from experts may be required.

5. Focus on Financial Plans

Lastly, we strongly recommend having a working financial plan, always. You won’t reach anywhere, achieve your life goals, financial independence, unless you have planned it first and are regularly tracking the same. It is critical to start investing in opportunities that are aligned with your larger financial goals. One should be focused on staying on track to reaching these goals through remembering that long-term value creation takes time. Get in touch with your financial guide /expert /distributor to know more about this.

Raja Bhattacharjee

9830146206

https://www.investmentjunctions.com/

MAKE YOUR OWN LAWS OF LIFE

                          MAKE YOUR OWN LAWS OF LIFE

Sometimes it is good to have some mental laws framed in our minds. These laws when practiced in our lives has the power to influence our life and make it better. Strong personalities always abide by some rules/laws of their own. Living life without personal laws does not sound exciting and it indicates that you do not have a strong character, dreams or strong beliefs. Here are a few laws which you can think of adopting in your own lives:

[1] Law of Failure: By failing to plan, you plan to fail. Having no plans or goals in life means having a life devoid of achievements and successes.Plans can be made for every aspect in your life, be it studies, career, relationships, life events/goals or financial well being – no matter how big or small they are. Make it a law to plan for everything in life from life goals/events to monthly budgets.

[2] Law of Belief: Whatever you believe, becomes your reality. Your actions, feelings and intuitions will be guided by your beliefs. It is said that mountains can be moved if you truly believe and there was a man who actually did that. Make it a law to believe in yourself and the things which you dream of today, will be yours sometime in the future.

[3] Law of Sowing & Reaping: As you sow, so shall you reap. This is true for relationships, businesses and even investments. The quality of your life, relationships or financial well-being at any given moment, is a result of what you have done in the past. Make it a law to sow only good deeds and make only good decisions in life for a better future.

[4] Law of Accumulation: Every single thing you do, positive or negative, accumulates. Everything that you do, you tend to repeat, and things that are repeated over time will become your habits, and it is habits that influence and shape your life. Make a law to do and accumulate good actions and avoid the bad ones.

[5] Law of Attraction: You will always get attracted to people and circumstances that are in harmony with your dominant thoughts, whether positive or negative. Whatever you think about, you imbibe into your life. Make it a law to think about only positive aspects, people and outcomes in your life.

[6] Law of Cause & Effect: Everything that happens in life has a cause behind it. Every success or failure is the Effect of a cause. Success & failures do not happen by accident. Make it a law to set good causes/action into motion.

[7] Law of Creativity: You are limited only by your imagination. All positive changes and progress in your life begins with new ideas. The supply of ideas and innovation guides your potential. Once you have unlimited -ow of ideas, your potential too becomes unlimited. A big part of your happiness, success, relationships and future depends on the quality and quantity of the ideas that you have. Make it a law to generate quality ideas.

[8] Law of Control: You feel positive about yourself to the extent you feel you are in control of your own life. If you do not hold the strings of your life, you tend to become weak. Make it a law to get your entire life in your control.

[9] Law of Emotion: Every human decision is likely to be based on an emotion. Stronger emotions tend to dominate the weaker ones, which in turn will determine your decisions and actions, more than rationale. Make it a law to keep your emotions in check and not let any particular emotion dominate while taking a decision.

[10] Law of Luck: The more you work hard, the more lucky you become. There is no pure luck or chance worth waiting for in life. Once we are focused, committed and work hard, luck shines upon us. Make it a law to do more hard work to be lucky.

[11] Law of Destiny: When you truly work towards achieving something, the whole world conspires to help you get it. If you are dedicated to a single cause so much so as to make it your only passion, your life, then there is nothing in this world, that can stop you. You will find that slowly everything will start falling in place. Make it a law to have your own future and destiny decided to act whole-heartedly towards it.

[12] Law of Memory: If you do not repeat soon what you have learnt you will easily forget. But if you practice, do what you have learnt, you will remember it for long. This is true for any knowledge or skill that you learn in life. Make it a law to repeat and to practice what you have learnt.

[13] Law of Use: Whatever talent, ability, or gift you possess becomes stronger and better with exercise. If you don't use it, you lose it. This is the reason why most gifts and skills which we had as children tend to disappear with time. Make it a law to use your gifts and skills often and to not lose them with time.

[14] Law of Reaction: For an action, there would be a reaction. Every action of yours, be it good/positive or bad/negative will tend to have a similar reaction. Even if the reaction is not visible, there will be an impression made which will be hard to erase in life. Make it a law to take actions which brighten your's and others' lives.

[15] Law of Time: Each one of us has the same number of minutes and hours. But the actions and work done varies from person to person. The idea is to manage time and work effectively, in a way that there is little spare or idle time left. This will make sure the time needed to do a particular task keeps reducing, while the number of tasks done keeps increasing.

[16] Law of Company: You become the company you keep. You tend to think, act, behave and even dream similar to your company. Having an intelligent, aspirational and motivating company will inspire you to grow yourself into a better person. Make it a law to have a company of people similar to what you aspire to become.

[17] Law of Compensation: You are always compensated in more than equal measure for what you do. The more you give, the more you get. As long as you are doing good for other people, others will do good for you.

[18] Law of Expectations: What you expect is what you get. You do not get what you want or desire but what you expect. Expectations though have to be grounded on reality. If your expectations are just and well placed, you will get what you deserve and you will not be disappointed. Make it a law to have realistic expectations in life.

[19] Law of Karma: Keep doing good deeds without expecting fruits. Your hard work and good deeds will eventually pay o and you will enjoy the true fruits of labour. However, doing something while keeping results in mind might obstruct your vision. Make it is a law to do good without worrying about fruits.

[20] Law of Forgiveness: Bad experiences, pains, grievances and complaints are only burdens that you tend to carry unknowingly. You are mentally healthy to the degree to which you can forgive and forget. Your willingness to forgive others and to let go of the past grievances is the single most important determinant of whether or not you are free of burdens to act optimally with utmost freedom. Make it a law to not carry any burdens in life.

[21] Law of Habit: Your actions repeated over time become your habits and your habits in turn de fine your character. Your character ultimately shapes your destiny. In the absence of a specifi c decision on your part to change an aspect of your life, the natural tendency will be to go on the same way inde finitely. Make it a law to make good habits in life to transform your life over time.

[22] Law of Subconscious Mind: The subconscious mind is a powerful tool and when used properly can do wonders. It goes to work immediately on whatever you plant in your mind to bring it into reality. The subconscious mind makes all words and actions t in a pattern consistent with your self-concept and your dominant goals in life. Whether positive or negative, good or bad, if you hold an image continuously, make it emotional, and visualize it in your conscious mind, it will begin to organize everything around you to make it come true. Make it a law to create and shape yourself in your subconscious mind.

Raja Bhattacharjee

https://linktr.ee/investmentjunctions

 

 

6 Benefits of Financial Planning

                               6 Benefits of Financial Planning

What is the first thing that we do to accomplish our career goals and other goals? We plan. Planning is the first step towards fulfilling our goals. Similar is the case with our finances and financial goals. Financial goals are the goals you hope you to achieve and money plays an integral part. 

Proper financial planning will help you achieve these goals. Financial planning is a step-by-step process to fulfil various financial goals. Just like any other plan, a financial plan acts as a guide to navigate the various financial aspects of your life.

Let us take an example. If you want to plan your child’s education and the current cost of the course is Rs.20 lakh. If your child’s education is five years away, you may have to accumulate more than Rs.20 lakhs, say Rs. 25 lakhs. Financial planning will provide with a step-to-step process to save up money to fulfil your child’s dream education while covering other important aspects of your finances. 

Benefits of financial planning

There are many benefits of financial planning. Financial planning will help you to:

1.Streamline your savings and expenses

Creating a financial plan will give insights about your income and expenses. While we have a fair idea of our income, most of us have trouble figuring out our expenses. When you check your expenses, you can find out the ways to cut down your costs and save more. In this way, you would spend money consciously and take a disciplined approach towards your money.

2.Prepare for emergencies

Emergencies come unannounced. Creating an emergency fund is one of the first steps of financial planning. An emergency fund with at least 6 months of expenses can help you tide over emergency situations such as job loss, urgent car or home repair and accidents. An emergency fund will also help to keep your savings earmarked for other goals safe.

3.Secure your family

Having an adequate insurance cover is also an essential step in financial planning. It will provide peace of mind for you and your family members. In your absence, insurance cover will take care of your family’s needs and help them fulfil their goals with no hassles. Health insurance will cover your hospitalization expenses so that hospital bills do not affect your savings and you can steer clear from debt.

4.Plan for your goals

As financial planning opens up money saving avenues, it is important to use the money to save towards your financial goals.  Financial planning will help you understand your goals better, impact of the goal on other areas, prioritise your financial goals and plan your goals.

Financial planning will check the various parameters of your goals such as timeframe, current cost and future cost and chart out a route with the required investments. You can track the development of goals and revise your plans accordingly. Buying a house, children’s education and marriage, foreign vacations are some financial goals that need planning.

5.Plan for your retirement

Financial planning will assist you to plan for your retirement. The earlier you plan for your retirement, the lesser amount you will need to save to accumulate the same amount. This is the power of compounding. Financial planning will help you figure out the amount that you might need after retirement to maintain the same standard of living and invest accordingly.

6.Save tax

If you pay a lot of tax, you can lower your tax outgo by taking advantage of the various tax saving options. Financial planning lets to plan for your taxes in advance, invest in tax saving instruments and take other legal avenues to reduce your taxable income. Low taxable income may translate into higher savings towards your goals.

Conclusion: If you are serious about having a disciplined financial life and fulfil your life goals, financial planning is a must. Proper financial planning with us will help you to fulfil your financial goals, save for emergencies, get adequate insurance, plan for retirement and save tax. So, consult us for your comprehensive financial planning .

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Combination of EMI and SIP can save you lot of money

What if your Home loan tenure is reduced without increasing EMI, even if the interest rate remains the same? Sounds interesting? Read it.

In year 2010, I bought the flat into the Ahmedabad for which I took the home loan of Rs 48 Lacs from one bank. At that time the interest rates were around 10.5%. So I decided to take the loan for the maximum tenure available, i.e. 20 years as I could afford the EMI of Rs. 47922/-.

The bank RM came to my office for completing the paperwork. While filling the forms he asked me about the tenure which I would like to go for. I told him to go for maximum tenure i.e. 20 years. Bank’s RM told me, “Sir maximum limit is not 20 years it is 25 years”. According to my calculation I was ready for paying  Rs 47992/, an EMI amount for 20 years of tenure considering 10.5% interest and Loan of Rs 48 Lacs.

So if I chose to go for 25 year, EMI would be lesser. I tried to do the exact calculation and ended up with some unique Idea which I am sharing through this article. The EMI for the 25 years tenure was worked out to be Rs 45302/, resulting into the saving of Rs 2600/ per month  into the EMI. So I decided to go for the longer tenure i.e. 25 years.

Now financially and mentally, I was ready to pay for Rs 47992/ of EMI per month. So I decided to start an SIP of this Rs 2600/- (saving in EMI due to increased term) and to use the amount accumulated through this particular SIP to repay the Loan into the future.  I did some calculation in excel to check with the help of this combination of reduced EMI and SIP, how would it affect my loan repayment schedule.

My older SIPs were giving me some 18% kind of a CAGR, while doing the calculation I assumed that my future SIP would generate 15% CAGR. I found out that with this combination and assumed return of 15% CAGR from SIP, I can repay the loan in just 18 years and 2 months.

Sounds interesting?

Let me explain,                                                                                               

Case 1: 20 years loan – Outflow (EMI – 47992)

Case 2: 25 years loan + SIP of saving into the EMI (EMI 45302 + SIP 2600 = Total 47992)

In both the above cases my monthly outflow is same, only difference is into the methodology. In first case I am only paying EMI in second case by increasing tenure I am making saving into the EMI and doing the SIP of that saving, making my monthly outflow same as that in case 1.

After 18 years and 2 month, the value of my SIP of Rs 2600/- per month assuming the 15% CAGR* would be approximately Rs 26.29 Lacs, which I can use to fully repay the Home Loan outstanding. In other words, the outstanding loan principle amount would equal to the Fund Value of SIP after 18 years and 2 months.

In the whole process I would pay 22 EMIs less compared to Case one, making an absolute saving into the EMI worth Rs 10.54 Lacs. Though Bank charged me 10.5% interest but for me the effective interest worked out to be only 10.03%.

If you are planning to buy the Home loan and if you have decided to take the loan for shorter period then you can use the above idea to save some EMIs. So if you have decided to go for 15 years of tenure and your bank is ready to provide you maximum tenure of 25 years, I suggest you to go for the higher tenure and utilize the monthly saving into EMI due to increased tenure to start an SIP into the some good diversified equity mutual fund.

If you have already taken the loan you can still utilize the above idea by asking bank to increase the tenure or you can also transfer your loan from one bank to another and while doing so, go for the maximum tenure.

I transferred the above said loan to some nationalized bank at the time 22 years of tenure was pending in earlier bank. I opted for 30 years of tenure in my second bank where I transferred my loan, further reducing my EMI. I added that saving also into the SIP and that would again save few more EMIs.

Thus, by selecting the maximum tenure and doing the SIP can help you repay your loan earlier. The return assumed into the above calculation is not the guaranteed return but I can safely assume that kind of return from SIP into my portfolio. My current portfolio has a CAGR of around 18%, while in calculation I have assumed 15% CAGR only.

*The return showcased is the assumed return and is not to be treated as any assurance or guarantee.

Raja Bhattacharjee
9830146206
investment.junctions@gmail.com
 

Do not Limit Yourselves

 

Do not Limit Yourselves                                             
                          

What is the strongest factor that, impacted our thought while investing? and simple answer is what we will get after the term or kitna deti hai ?

Thus, kitna deti hai really matter, while investing?

If someone had done a fixed deposit (FD) at 12% CAGR for 5 years in year 2000, why 5 years here because we are living in a short-term world, and we never have such forward thinking to do investment for 10 or 20 years. So, we had did FD for 3 or 5 years respectively, and for calculation purpose we considered 5 years here, from 12% CAGR to presently bank FD rates are now stand at 6 % CAGR. If the individual had kept renew his/her FD after completion of 3 years for next 3 years and do this practice for till date than what’s his/her CAGR on FD portfolio?

The right answer is 7% (approx.) or much lower CAGR and for your information it’s not 12% CAGR! So kitna Deti Hai really matters to us? Thus, return percentage are just a nor only!

And when we talk about mutual fund or equity mutual funds than also our practice is same. Like which fund how much giving in term of return percentage. Where equity mutual funds are a volatile instrument and bearing market risk also. Now Kya Mutual Fund Sahi Hai?

Now think for a moment!

What were we trying to do with investments? Where in term of return percentage % is same as future return percentage? but future return is always to be lower than today. We already know that how FD return percentage are coming down from 12% to now at 6%. So, our expectations are much higher from mutual funds & equity mutual funds!

Thus, if FD returns are reduced over a period than equity returns also reduced in same period! Like if we considered SENSEX performance since 1979 to till date than we could found that, equity returns also reduced significantly. HOW?

Considered; Sensex return percentage from 1979 to 1989 than 1989 to 1999 than 1999 to 2009 than 2009 to 2019. Then we could find that how Sensex return percentage are gradually coming down in completion of every 10 years respectively or how Sensex’s compounding effect are gotten low to lower year by year!

Now answer yourselves, have return percentage have any value in your investment decision? Then your answer is NO then now our thinking is towards real-estate must be, but story is same in real-estate also! We cover it in detail in another blog post.

Now we could realize that investment practices are how complex? With above experience how we could archive our future financial goals than?

Now we could realize that an investment professional or MFD (mutual fund distributor) had did how much struggle for our goal not for his/her goal. But his/her main goal is how could we get happiness with our money truly.

Thus, till now one thing is clear that what we could see as return per% today. It will be much lower in tomorrow truly. So, then why we limit ourselves to with certain return numbers. Which had no value in our investment practices truly.

 

Then What?

Simply ask for right investment process, what all about asset allocation is. Thus, asset allocation is the only tool that, promised 90% of our investment objective would be achievable if we practice a solid asset allocation. But must remembered that asset allocation is only copy-right of a professional.

Thus, we could see entire post in different perspective also; how many draw-down or bear phase will be coming in our investment cycle we don’t know! But a solid asset allocation simply generating extra return through rebalancing in every draw-down with much lesser downside effect for a portfolio.

If someone had practiced a solid asset allocation since year 1979 to till date, then their portfolio returns percentage is more than Buffett’s return percentage truly. So why we limit ourselves by return numbers?.

Raja Bhattacharjee

9830146206

investment.junctions@gmail.com