S&P BSE Sensex*	Re/US $	Gold Rs/10g	Crude ($/barrel)	FD Rates (1-Yr)
33,940.30 |477.33 1.43%	64.10 |0.25 0.39%	28,640 | 30.00 0.10%	64.20 |0.89 1.41%	5.00% - 6.75%

History repeats itself.

Though, stories change with time.

In 1980s, investing in the stock market was a nouvelle concept in India. While the aspiring investors were large in number, people who could facilitate and execute trades, brokers/middlemen, were only handful. And they monopolised the business. In fact at that time, the facility of screen-based trading wasn’t introduced.

Trades happened much like auctions, without any automation. Middlemen minted money from this business — irrespective of how wealthy the investors became.

Are you wondering how they did it?

Back then, investors would only know, four-price points——open, high, low, and close——no ‘per second’ updates like you receive nowadays.  So being a buyer, you were likely to be informed of a rate close to the day’s high; the opposite was true in case you were a seller. The brokerage happened to be as high as 5% in some cases, each at the time of buying and selling.

In the present scenario, some brokerages charge you a flat per trade fee, irrespective of the trade value.   

Considering all these malpractices, unless a buyer made at least 15% gains any trade was potentially a loss-making trade for him. Plus, there were scams, trade manipulations, and price rigging — investors had too many hurdles to clear. As a result, after burning their fingers initially, many investors turned away from the stock markets for decades.

The proliferation of Bitcoin trading, nowadays, is déjà vu all over again. For those who don’t know much about Bitcoin, it’s a cryptocurrency——virtual currency——which is free of any government and regulatory control and can be exchanged for real goods and services.

How did it emerge, and why is it gaining popularity?

As the major Central Banks across the globe tightened their grip on the global financial system, large investors started to lose faith in them. These days, governments are toppled like a house of cards, and monetary policy decisions have increasingly become political decisions.

Owing to this scenario, faith in fiat-currencies——the ones backed by the sovereign promise——is nearly at all-time low. To break the monopoly of policymakers, central banks, the global system felt the need for a free-currency like Bitcoin. There’re thousands of similar cryptocurrencies out there. Bitcoin is the most popular of all. In the year 2017, so far the Bitcoin has jumped 15 times. It jumped nearly 20 times at its peak. Such incredible highs and equally dramatic falls have raised many eyebrows. Surprisingly, the euphoria is far from abating.

Bitcoin skyrocketed over last 12 months…

Data as on December 21, 2017
(Source: CoinMarketCap.com)
On Wednesday, December 19th, Bitcoin globally dropped a staggering 10% in one day. This fall was further facilitated by a terrifying event of one South Korean Bitcoin exchange, that went bust after being hacked.

Apparently, the 2/3rd of the currency will be recovered and the exchange is to reimburse investors the remaining amount after filing a bankruptcy suite.

The recent fall has made many investors jittery…

Data as on December 21, 2017
(Source: CoinMarketCap.com)
These developments also impacted the Bitcoin trades in India.  

Co-founder and CEO of BuyUCoin, Mr Shivam Thakral  "The premium on rate (of bitcoin) in Indian market over its rate overseas markets was only Rs 10,000 or Rs 20,000 today (Wednesday) morning compared with Rs1.30-40 lakh just a day back. I have been talking to suppliers, who supply bitcoins to me. Today, no one is able to provide me with bitcoins. I think it is because the government has put some restriction and have sent I-T (income tax) notices to over 4-5 lakh cryptocurrency traders.”"The traders and suppliers coming under the scanner of the I-T department have cautioned many players in the market. They are being cautious while trading”, he added further.

Aren’t these revelations startling?

Investors in India are paying a premium of upto Rs 1.3 lakh to Rs 40 lakh to buy a single Bitcoin? What’s the guarantee that it’s not ‘havala’ money?

Do you know what it means in the plain language?

To buy an asset worth Rs 11.55 lakh, the price of one Bitcoin assuming Rs 65 as the rate of conversion against US$. And, investors were ready to shell out Rs 40 lakh over and above.

Isn’t it insanity?

Aren’t people facilitating trades, conjuring money out of thin air? If you start to question the  rationale behind all this, the answers may soon start costing more than a Bitcoin J .

Mr Satish Mugulavalli of YourNest Venture Capital said "I see a big correction coming and you have to see the events of this week – bitcoin futures got traded for the first time on the US exchange. Till now, bitcoin investors were happy because its prices were only going up but in futures people make money when there is a difference – that could be positive or negative." 

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Should you invest in Bitcoins?

PersonalFN is of the view that, given the findings by RBI and observations of the Supreme Court on virtual currencies and them raising a red flag, thereto, it would be best to avoid using Bitcoin to make e-payments or indulge in them even in the form of trading.

Although, it may enable you to transact at high speed and at a low cost. This is because virtual currencies are unauthorised by any central banks or monetary authority. They don’t  have a clear legal status, and the chance of misuse of e-wallet is high (through various ways).

This could result in an unintentional breach of anti-money laundering or combating the financing of terrorism laws, which can subject one to prosecution. 

Want to know how to strategically multiply wealth over next 7-8 years? Try PersonalFN’s  “The Strategic Funds Portfolio for 2025” based on the core and satellite approach to investing.

Here are 6 benefits of ‘core and satellite approach’:

• Facilitates optimal diversification;
• Reduces the risk to your portfolio;
• Enables you to benefit from a variety of investment strategies;
• Aims to create wealth cushioning the downside;
• Offers the potential to outperform the market; and
• Reduces the need for constant churning of your entire portfolio

‘Core and satellite’ investing is a time-tested strategic way to structure and/or restructure your investment portfolio.

Your ‘core portfolio’ will consist of large-cap, multi-cap, and value style funds, while the ‘satellite portfolio’ will include funds from the mid-and-small cap category and opportunities style funds. 

And that’s not all. You will also master the art of astutely structuring the portfolio by assigning weightages to each category of mutual funds and the schemes you select for the portfolio. PersonalFN’s  “The Strategic Funds Portfolio for 2025” is geared to potentially multiply your wealth in the years to come. Subscribe now!

Why India Needs A ‘Health Savings Account Scheme’

For every Rs 100 spent in India on healthcare, Rs 62 is out-of-pocket. More surprisingly, only Rs 8 is paid/reimbursed by insurers and the rest is borne by the Government. The global average of out-of-pocket healthcare expenditure is 18%. This happens despite the growing awareness about healthcare insurance.
 
Don’t you think insurance companies exclude more events and expenses from the ambit of cover than they let in? If you think so, you’re not alone. In fact you will find some heavy-weights on your side. Recently, KPMG and FICCI (Federation of Indian Chambers of Commerce & Industry) jointly published a report, “Health Savings Accounts in India”, highlighting a need for product innovation to bridge the gap between growing medical costs and affordability.

At present, Indian healthcare industry operates with a three-dimensional product structure — Government sponsored insurance schemes, group health insurance schemes and individual insurance schemes. All these segments, with differences more or less, only cover hospitalisation and associated expenses only. In the out-patient areas (OPD), limited treatments and limited expenses are covered.

However, expenses such as pharmacy bills, consulting, and diagnostic charges for the treatments that don’t involve hospitalisation are not covered by almost all the insurers. And as you must be aware, the cost of inflation in the area of healthcare ranges between 12%-15%.

To read more about this story and Personal FN’s views over it, please click here.

How To Claim Unclaimed Money Of Your Mutual Funds

Last year, you had to stand in long queues to withdraw cash from your bank account. Demonetisation was a dreadful experience for most.

This year, if you don’t link Aadhaar to your bank account or various other financial services, your accounts may be blocked. Another terrifying experience in the making.

Imagine not having access to your bank account or not being able to redeem your mutual fund units or being restricted from buying and selling equity shares. The liabilities can be unimaginable.

Indian citizens are getting frantic as the deadline to link Aadhaar to important documents and services is just around the corner.

While online facilities are available in most, imagine the woes of those who are not very tech savvy such as senior citizens or those who do not have access to the internet. Many cooperative banks, stock broking firms and insurance companies too, do not provide an online facility. Individuals will need to take leave from work to get their Aadhaar linked to these services.

To read more about this story and Personal FN’s views over it, please click here.

Planning To Invest In The Best Multicap Funds In 2018? Think Again

When buying a car, some prefer Sports Utility Vehicles (SUVs) that are usually more expensive, but the thrill of driving them is an owner’s delight. Others favour hatchbacks that are convenient to take the family around town.
 
Car manufacturers then introduced a new segment known as ‘Crossovers’. A crossover offers the features of a SUV with the dimensions and efficiency of a family vehicle. Such cars have been a big hit among those wanting the best of both worlds.

Similarly, in the mutual fund space too, there are large-cap funds that offer stability at one end. And at the other end, midcap and smallcap funds offer the excitement of supernormal returns, though being equally risky at the same time.

To read more about this story and Personal FN’s views over it, please click here.

Will Gold Shine in 2018? Know here…

Calendar Year (CY) 2017, so far has been another lacklustre year for the investors in gold worldwide, including India. In US dollar (US$) terms, gold has advanced merely 6.8%, while in Indian rupee (INR) terms, even moderate –––to the tune of 2.2%.

Gold losing sheen?

Data as on December 8, 2017
(Source: World Gold Council, PersonalFN Research)
The key factors that had a bearing on gold in 2017 were…

• Geopolitical tensions between the US and North Korea: The war of words and some feeler action from North Korea (firing test bombs and missiles into the Pacific Ocean) brought in geopolitical uncertainty. This worked in support of the precious yellow, which otherwise did not exhibit much sheen.  In fact, had this factor been absent, the precious yellow metal would have fared worse amid a period of risk-on.
   
• Strong performance of equities: In an attempt to generate better real rate of returnadjusted for inflation, investors flocked to equity as an asset class supported by upbeat sentiments and fundamentals. The S&P 500––––one the world’s widely tracked U.S. equity index–––––rose nearly 19% in 2017 so far.  Moreover, all major markets in the Europe and Asia generated appealing returns, which made gold look not so attractive from an investment standpoint.
   
• Hawkish monetary policies:The monetary policy in the US evolved on the pre-established path of normalisation taking cognisance of signs of economic vigour (GDP growth data, job data, business confidence, etc.) and inflation moving up, had the Federal Reserve (Fed)hiking interest rates thrice in 2017, 25 basis points (bps) each time (a total 75 bps increase in 2017). But accommodative stance maintained by the European Central Bank (ECB), Bank of Japan (BoJ), to name a few was an abetting factor.

To read more about this story and Personal FN’s views over it, please click here.

How To Link Aadhaar With LIC & Other Insurance Policies

Savers and investors can now breathe a sigh of relief as the Aadhaar linking deadline for various documents and services has been extended.

Through notifications issued in the first half of December 2017, the government extended the linking of Aadhaar with PAN, Bank Account, insurance policies, demat accounts and other financial services that come under the Prevention of Money Laundering Act, 2002. The new deadline to link Aadhaar is now March 31, 2018.

On December 15, a five-judge Constitution Bench of the Supreme Court, extended the deadline for Aadhaar linkage to March 31, 2018 only for non-Aadhaar holders opening new bank accounts. The deadline for linking Aadhaar with mobile number was also extended to March 31, 2018, from February 6, 2018. The court also extended the deadline for Aadhaar linking to avail 139 services and subsidies under Section 7 of the Aadhaar Act to March 31, 2018.

To read more about this story and Personal FN’s views over it, please click here.
 

Housing and Urban Affairs minister of state (independent charge) Mr Hardeep Singh Puri recently told the Parliament that, the Government has no intent to link Aadhaar with property deals. However, he admitted the Rural Development Ministry had a suggestion of implementing a consent-based Aadhaar Authentication. A few experts believe, linking Aadhaar with property deals was an avoidable step considering that bank accounts are linked anyway. Nonetheless, it’s important note that in rural markets, land deal transactions, especially in the case of agricultural lands, are made with hard cash. Let’s see how the Government plugs this loophole.

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Out-Of-Pocket Expenses: Out-of-pocket expenses refers to costs that individuals pay out of their own cash reserves. The widely used phrase applies to the costs required to maintain a fixed asset, costs incurred by an insurance holder when he receives medical care, work-related expenses that are later reimbursed by an employer, and personal expenses in several other categories.

Quote: ...not doing what we love in the name of greed is very poor management of our lives."- Warren Buffet