 |
| January 01, 2016 |
| |
| |
Impact 
If you were quizzed, “What does the year 2016 have in store for you?”, you might find it’s an absurd question. We know you aren’t a fortune-teller, but when the question is modified to “What do you wish to achieve in 2016?”, it seems easier to formulate an answer. Like most of us, you prefer actionable plans and certainty.
But the unpredictability associated with life isn’t necessarily intimidating and troublesome. A few people may actually love it. If you enjoy watching thrillers, you’d agree. In 2006, Casino Royale starring Daniel Craig , was released. The storyline of the movie was based on a novel published in 1953 authored by Ian Fleming. The protagonist of the movie, a secret agent, 007 a.k.a James Bond, is on a mission to ruin a gambler who finances terrorism. The story takes many twists and turns, and it’s really a thrill to watch the poker(face)-play between the hero and the villain. Agent 007 losses many a times to his opponent, but in the end manages to win the biggest gamble. A few lines written by Ian Fleming steals the show, really.
"There was only oneself to praise or blame. Luck was a servant and not a master. Luck had to be accepted with a shrug or taken advantage of up to the hilt. But it had to be understood and recognized for what it was and not confused with a faulty appreciation of the odds, for, at gambling, the deadly sin is to mistake bad play for bad luck. And luck in all its moods had to be loved and not feared".
Even in gambling, your skills matter and it isn’t just Lady luck. Consider answering the question posed at the beginning of this article. You may still not know how the year 2016 will turn out, but what you entered 2016 with would chiefly decide how the year would be for you, won’t it?
Don’t you think the same is applicable even in stock investing? In reality, however, people do the exact opposite of this. They blame bad market conditions for their failures and many are aspired to take credit for what is a play of good fortune.
On the New Year’s Eve, many self-proclaimed experts begin to give you market lessons; you would be better off ignoring them.
The point of discussion is, if someone brags optimistically about markets or shocks you with dreaded comments, pay minimum attention. PersonalFN believes you should know where you started from and where you are headed. Your choices make all the difference in the end. If you invest in a bad stock or a mutual fund scheme, even good market conditions may not yield rewards. So thinking about where the markets are headed in 2016 doesn’t hold much merit.
Still, if you want some guidance, PersonalFN brings to you insightful assessment of market conditions.
Expectations were sky-high in the first quarter of 2015, but markets began to lose momentum due to flattish growth in corporate earnings throughout the year. The reform agenda of the Government didn’t help to keep investors excited. The investors had expected Modi Sarkar to blaze the markets with fireworks, but in the end, it proved to be a damp squib. As a result, bellwether Index S&P BSE Sensex lost about 6% in 2015. Mid and smallcaps did selectively well. Inflows from Foreign Institutional Investors (FIIs) have started to lose steam and the market rally has already petered out.
Prudent expectations...
On this backdrop, equity markets are unlikely to do well in 2016, unless corporate earnings grow faster than expected, and the Government manages to pass crucial bill such as GST and Land Acquisition to name a few. Other reform measures will also carry weightage. Lower inflation and stable Rupee are the pre-requisites for stable markets now. State elections 2016, will affect the market sentiments as well.
PersonalFN is of the view that you shouldn’t let emotions drive your investment decisions be it 2016 or 2066. Basics of investing are eternal and don’t change with the calendar.
Secretes of equity investing in 2016
- Avoid following market momentum
- Keep in mind asset allocation recommended by your financial planner
- While investing in equity mutual funds, prefer the Income slab detailsSystematic Investment Plans (SIPs)
- Rebalance your portfolio when it’s absolutely needed
Good investments need not be exciting. For excitement, watch James Bond spy thrillers. Like him, investments haven’t lost their charm with age.
|
Impact
After nearly four years, in the year 2015, the Reserve Bank of India (RBI) began to ease policy rates abetted by cooling inflation. A total of 125 basis points (bps) reduction was witnessed in 2015, against which banks passed only around 60 bps to its borrowers.
But Dr Raghuram Rajan, the Governor of RBI, set the new rule for banks for effective and transparent transmission of policy rates. So this 2016, don’t be surprised if your bank reduces interest rates on deposits (as base rates are reduced). Thus far, banks have refrained from reducing interest rates on deposits fearing that they would lose to Small Saving Schemes (SSS), where interest rates are placed relatively high. Banks are pushing the Government to reduce interest rates on small savings products, so as to enable banks to be more agile in reducing interest rates on deposits. However, the Government is moving slowly and cautiously on the proposal, so as to not hurt the weaker and vulnerable sections who often invest in SSS.
If inflation continues to descend and RBI continues to be accommodative in its monetary policy stance, interest rates on both –term deposits (offered by banks) and SSS will reduce.
Amid such times, PersonalFN doesn’t suggest looking for high debt market returns. There will be many financial advisors / relationship managers / investment agents who will try to lure you in, with a spotlight on high yielding debt instruments. Even debt mutual funds may risk their portfolio to low rated debt papers in the attempt to clock better returns. But avoid getting into Ponzi schemes and/or anything too risky, while investing in debt instruments, which can risk your long-term financial wellbeing. Financial advisors / relationship managers / investment agents over the years have ill-advised you investors, rather than acting like your 'financial guardian'. PersonalFN has always provided unbiased and honest views. Taking a leap forward, we are working on an initiative that will help you find honest financial advisors.
|
Impact
There are people who are addicted to making money, and in some cases, to making money by any means possible, even unethical means. So, all those people who take undue advantage of their positions in the Government offices are addicted to earning an ‘extra-income’. If work needs to get done, you have to grease their palms. They feel it’s perfectly acceptable to ask for ‘benefits’ or ‘kickbacks’. And the common man has no reason not to label these officials crooks.
This is not to say that corruption prevails only in Government departments. It’s everywhere, but in Government departments it is openly prevalent. There’s another prominent category of crooks—financial advisors. This includes financial planners, mutual fund advisors / distributors, insurance agents, and stock brokers among others. Wouldn’t it be great if their New Year resolution is being ethical in the dealings with their clients?
To ready more about this story and PersonalFN’s views over it, please click here.
|
Impact
Festival time ushers in the joy of giving. You celebrate with your family and friends and buy them thoughtful presents and in return your dear ones surprise you by showering you with gifts. The feeling of receiving a pleasant surprise can’t be explained, it must be experienced. But, there are some inconveniences. Whenever you go out, you have to carry your barbell of a wallet with you. Isn’t a wallet as heavy as an exercise barbell? We dump almost everything in it—coins, cash, slips/bills/notes, debit cards (yes, at least 2-3), at least 2 credit cards, identity cards, shopping cards, gift cards, driving license and what not. If you are using a smart phone; you wouldn’t need to carry so many things with you.
Digital wallets —The Alternative to physical wallets
You carry hard cash because you never know when a paper-money transaction will be necessary. You carry coins because change is hard to come by these days. You have a number of cards; of which some allow you to avail special discount with a particular retailer, while the rest are debit and credit cards. Putting these together, you may increase your purchasing limit. But there’s a threat of losing all these belongings, if you lose your wallet. So, if you use a smartphone, a laptop, or a desktop, you should opt for digital wallet.
To know more about digital wallets and which ones to select, please click here.
|
If you are a retail investor, this 2016 you will be able to invest vide ‘direct plans’ of mutual funds online. Mutual Fund Utilities India (MFU) will be allowing direct plans also to its online investors starting today i.e. January 1, 2016.
Until last year, one could invest in mutual funds vide ‘direct plan’ only physically, visiting the respective mutual fund’s office. MFU allowed investment in direct plan only through the offline mode.
What you need to invest vide a ‘direct plan’ online?
To invest directly a Common Account Number (CAN) is needed.
“The existing CAN holders need to apply separately for online transactions. Likewise, all CAN holders for future CAN also need to separately send a written request for online access, if the customer so desires, since every CAN that will be opened will be in a physical mode by default. MFU will not market online transactions to customers. The request has to be initiated by the customer”, says V Ramesh, MD & CEO, MF Utility.
PersonalFN believes in opting for ‘direct plans’ when investing in mutual funds can help investors clock a little better returns compared to ‘standard plans’ (routed through mutual fund distributors / agents / investment advisors) due a 0.50%-1.00% lower expense ratio per annum. But investors may take some time to get accustomed to buying into a direct plan of a mutual fund online. |
Ponzi Scheme: A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.
(Source: Investopedia)
|
Quote : "Wealth consists not in having great possessions, but in having few wants."
-Epictetus
|
| |
| © Quantum Information Services Pvt. Ltd. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of PersonalFN is strictly prohibited and shall be deemed to be copyright infringement.
Disclaimer: Quantum Information Services Pvt. Limited (PersonalFN) is not providing any investment advice through this service and, does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. All content and information is provided on an 'As Is' basis by PersonalFN. Information herein is believed to be reliable but PersonalFN does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. PersonalFN and its subsidiaries / affiliates / sponsors or employees, personnel, directors will not be responsible for any direct / indirect loss or liability incurred by the user as a consequence of him or any other person on his behalf taking any investment decisions based on the contents and information provided herein. This is not a specific advisory service to meet the requirements of a specific client. Use of this information is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. All intellectual property rights emerging from this newsletter are and shall remain with PersonalFN. This is for your personal use and you shall not resell, copy, or redistribute this newsletter or any part of it, or use it for any commercial purpose. The performance data quoted represents past performance and does not guarantee future results. As a condition to accessing PersonalFN's content and website, you agree to our Terms and Conditions of Use, available here.
Quantum Information Services Private Limited Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 101 Raheja Chambers, 213, Free Press Journal Marg, Nariman Point, Mumbai 400021. Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 CIN: U65990MH1989PTC054667 |