This Akshaya Tritiya, Buy Digital Gold!

Dear Customer,

This Akshaya Tritiya, Invest in digital gold through MyWay Wealth instead of buying gold jewellery! Gain from appreciation in gold value without the hassle of owning & storing physical gold.

1. Overview: Buy the desired quantity of 24 karat gold above INR.1,000 and purchase it at live price quoted.

2. Trusted: We’ve partnered with IDBI Trusteeship Services, so you can be sure that we will always keep your interest at heart.

3. 100% safe & free locker facility: Investor will get a free & secure locker from BRINK’s, the global leader in gold custodian services with 100% insurance cover.

4. Easy Tracking: Select any gold product of your choice when you have more than 1gm in your gold locker and track your delivery.

5. Get delivery to your doorstep: Accumulate gold over time & get gold delivered to your doorstep with full insurance cover, whenever you choose.

If you have any concern, please write to us at ask@mywaywealth.com or call at 080 48039999we would be happy to answer your query.

Thanks,
Nirav (Head of Research)
MyWay Wealth

MyWay Wealth Weekly Update (Issue #30): Decoding the elections, corporate earnings revival & more

“If you can keep your head when all about you Are losing theirs and blaming it on you,”
“Yours is the Earth and everything that’s in it, And—which is more—you’ll be a Man, my son!” ~Rudyard Kipling (If, 1910)

The above verse is an excerpt from Rudyard Kipling’s collection and often quoted as Warren Buffett’s favourite poem that keeps him going through volatile times.

With many investors getting worried about the upcoming election results and the uncertainty it brings to the Indian political backdrop and consequently in the stock markets, this poem definitely offers some guidance.

Here’s an interesting perspective to how markets have reacted during the pre-election and post-election seasons in the past 38 years (10 General Elections).

Prima facie, one may concur either one of the following:

  • 70% of the times, SENSEX has either recovered from the pre-election slump or posted a growth spurt
  • 30% of the times, during problematic election results (eg: hung parliament), SENSEX dipped further

So, here’s the idea. Elections come & go, each time elections happen there are two events that manifest every single time – we always get a government and two, life goes on!

Equity, at a very basic level, is nothing but a part of a business and businesses do not come and go with elections. Businesses are here to stay, grow and create wealth.

And if you look at Q4 earnings this week, you’ll notice that we are perhaps at the cusp of an earnings revival and equity outperformance that comes along.

Company Name
Q4 Earning Result Date
Commentary
Results vs. Analyst Expectation
HDFC Bank
24-Apr-19
Reported a record quarterly net profit of 58.85 billion rupees ($848 million)
Reason: High fee & interest income
Beats Estimates
Ultratech Cement
24-Apr-19
Reported a quarterly net profit of INR.1,017 crore 
Reason: Acquisition of Binani Cements
Beats Estimates
Maruti Suzuki
25-Apr-19
Reported a quarterly net profit of INR.1,795 crore 
Reason: High foreign exchange rates and commodity prices
Beats Estimates
Axis Bank
25-Apr-19
Reported a quarterly net profit of INR.1,505 crore 
Reason: Provisions & Contingencies dropped by 62% Y-o-Y
Did not beat estimates
Tata Steel
25-Apr-19
Reported a quarterly net profit of INR.2,295 crore
Beats Estimates
Yes Bank
26-Apr-19
Reported its first-ever quarterly loss at ₹1,506 crore 
Reason: Total provisions during the quarter increased more than nine-fold. Bank has outstanding loan to Il& FS group
Did not beat estimates

 

For those wondering if it is the right time to invest given that elections are in progress and markets are volatile, here are my two cents:

Ask yourself another question – when would it be the right time to invest?
After the dust settles?
When will the dust settle? And, will it ever settle?

Equity markets are structured to be volatile and volatility is where real profit is made.

Governments come and go, but equities continue to grow.
Why sit on the fence when the field is so opportunistic?

Explore More

If you have any concern, please write to us at ask@mywaywealth.com or call at 080 48039999we would be happy to answer your query.

Thanks,
Nirav (Head of Research)
MyWay Wealth

MyWay Wealth Weekly Update (Issue #25): Markets have peaked – important action required?

“Do not wait until the conditions are perfect to begin. Beginning makes the conditions perfect.” -Alan Cohen

The new financial year has begun, and capital markets are abuzz with opinions on the upcoming election results, the liquidity situation, foreign inflows and similar talks.

While these economic events are crucial, I would like to reserve these discussion pointers for the posh boys at D-street and shift my vision to the topic that really matters – your wealth-creation journey!

The new financial year brought in a fresh breath of relief as equity markets rallied to touch meaningful highs (Nifty @ 11,700; SENSEX @ 39,100) – indices recovered and grew beyond what it lost in the last financial year. However, there has been an uncanny increase in the number of requests to address variations of a very specific investor query.

“Markets have peaked/tanked; what do I do?”

There is a good chance you opened this email out of sheer excitement to take an action on your investments. But, here’s why you must take a step back and think!

Action bias, or in other words – the urge to do something when something happens even though it does not necessitate you to do anything, is turning out to be the biggest factor to wealth erosion.

Given that the urge to take action is a typical behaviour-driven situation, I would like to quote a self-explanatory sketch from ‘The Behavior Gap’ by Carl Richards –

While this is a very crude sketch, it is perhaps the most powerful I’ve seen.

There is enough and more data to prove how profitable capital markets are, but the fact of life is that most investors haven’t experienced it first-hand and subsequently tilt towards believing that wealth creation by capital markets is actually a myth perpetuated by the industry.

But let me assure –  YOU (read as: your actions) are more responsible for your investment performance than the markets are. Following are the behavioural fallacies that lead to a not-so-good wealth creation experience.

Gap #1: Nobody can time the market, but many try to do so – albeit unsuccessfully

Back to basics. Price of an equity share is determined by the demand-supply mechanics driven by billions of dollars, billions of investors, millions of algorithms. Also, every optimistic buyer at a price point has a pessimistic seller. And hence, it is difficult for anyone to predict the market accurately since that would require predicting the movement of the expansive range of participants.

Gap #2: You can’t wake a person who is awake!

The number one rule for profitability is “buy low, sell high”. Now, I know this is common sense and you already know this. But what you may not know is that most investors tend to do the exact opposite by succumbing to their own emotions. The image alongside, again borrowing from Carl Richards, is how most investors manage their investments:

Gap #3: Time, and not timing, is your friend in the market

Wealth-creation is a long process requiring patience and persistence. It is best to try quick bets in the casino or at the race-tracks. Capital markets, contrary to popular belief, is a more of a wealth-building avenue than a money-minting machine.

Pick any index – perhaps Nifty for this case. In the short term, all you will see is high volatility across a chart reacting to various events. But, in the long term, you will notice an uptrend emerging! It is important to ride the uptrend and ignore the volatility. Be an investor, not a trader.

 Fig. 1.1  Nifty: Short Term : 5-day Volatility                                              Fig. 1.2  Nifty: Long Term : 5-year Uptrend

Like Benjamin Graham put it right on spot – “In the short run, the market is a voting machine but in the long run it is a weighing machine”

Here’s the bottom-line: The only reasons why you must take an action on your investment portfolio is if there is a change in your financial goal/plans or if your portfolio requires a rebalancing.

At a fund-level, we are already keeping a close watch on your investments and will notify you in case of any rebalancing required.

Explore More

If you have any concern, please write to us at ask@mywaywealth.com or call at 080 48039999we would be happy to answer your query.

Thanks,
Nirav (Head of Research)
MyWay Wealth

Are you worrying about your Job Loss? Here is what you can do!

The thought of losing a job is very scary, isn’t it? With the evolving technologies around and automation happening in every industry, it is but natural to be worried. Any of us can lose our job at any time and the worst part is we can’t do anything about it.

What you usually do to get out of this fear is you start talking to your peers, your friends, spending more time with your loved ones or you may watch a motivational movie etc which can motivate you. Each of them will motivate you but you would end up getting the perfect answer for what if I lose my job?
So here are some best ways to prepare for and tackle the job-loss situation:

Create your emergency fund:

Build your emergency fund out of your income. Transfer around 30% of your saving income into Liquid funds or ultra-short-term funds where risk is minimal, and your money will start growing on a daily basis. An ideal emergency fund should be equal to six months’ future expenses or if you are having any EMI’s going on, it should at least equal future six months EMI.
Another option would be to reduce the EMI amount & increase the tenure of the loan temporarily till the time things get normal. This is not at all beneficial for you in the long term so better have an emergency fund in place.

Fun Fact: There are certain mutual funds like Reliance Liquid Fund which provide instant redemption facility whereby you can get your money in just 5-10 min in your bank account 24*7. These funds can give you returns ranging from 6.5% – 8%.

Understand the employee benefits:

You should be aware of all the details of your salary, your unused leaves and their compensation, insurance etc. It will help you in estimating the future income.

Utilize your open-ended/Withdrawable Investments:

You should always have an investment which can be easily liquidated. In such critical times, your real estate, Public Provident Fund (PPF)National Savings Certificate (NSC) etc investments will not help as you can’t liquidate them but your investment in mutual funds safeguard you in such cases.

Use loan protection plans if you have any:

To safeguard investors from any uncertain events, banks do provide loan protection before taking any loan. This plan covers other critical events like illness or job loss. If you have this policy, redeem the plan’s benefit at times of job loss.

Make sure about your personal Mediclaim Policy:

You should always make sure that you are having your own Mediclaim policy other than the one which gets provided by the employer. Medical emergencies can arise at any time and will impact you majorly in your crucial times.

Look ahead for the opportunities:

While it is obvious to get frustrated by job loss but at the same time, you should also think about the skill set, the knowledge set required to qualify for the best opportunities in the market. Because, the above measures will help you in tackling the temporary emergencies, knowledge and skill set will give you permanent solutions.

Losing a job is a stressful activity, however proper planning & a balanced approach can help you in coming out of such cases.

Types of Mutual Funds

“Embrace those things that make you unique”

Absolutely! We are unique and so are our financial needs. Someone might want to build a house, while someone would want to save for their child’s education or marriage. Some might want to build a corpus for their retirement, and some might just want to invest to save and get better returns. When investment needs are so different, how can they all be served through a Bank FD or RD? We definitely need flexible plans that blend and suit our financial requirement. And this is possible with Mutual Funds. Mutual Funds have various categories of funds that serve different needs and this article will throw light on them.

The broad category of Mutual Funds includes:

  1. Equity Funds: Equity Funds invest in shares of companies that have different market-capitalization. They are meant for investors that have a long investment horizon i.e 5 years or more. Equity Funds generate high returns, which also indicate high risk, thus it’s important for investors with higher risk tolerance to opt for Equity Funds. Since investors under this category remain invested for a long period of time, there is sufficient time for the fund to overcome the market fluctuations.
  2. Debt Funds: Although Debt Funds have no guarantee of returns, they primarily invest in treasury bills and corporate bonds, therefore the returns earned by debt funds are most often predictable thus making them a less risky option than Equity Funds. Conservative investors who have a lesser risk appetite, looking for moderate returns and have a financial goal that is either short term ( 3 months – 1 year) or medium term (3 – 5 years), can opt for this option.
  3. Hybrid Funds : Hybrid Funds invest both in equity and debt instruments. They form a perfect combination, meaning they provide better returns than Debt Funds and at the same time are less riskier than Equity Funds, thus avoiding excessive risk and providing both income and capital appreciation. Investors who have a lesser risk appetite, but at the same time want their investments to have equity exposure, can opt for this option.

Mutual Funds can also be categorized based on Market Capitalization:

  1. Large Cap Funds: Large-cap funds are those that invest primarily in companies that have a large market capitalization, these are companies that fall into the top 100 ranks (as per SEBI). Investors who have a lesser risk appetite can opt for this option as these funds have fewer fluctuations when compared to Mid Cap and Small Cap funds. However, it is recommended that investors remain invested for a long period of time, say 5 – 7 years or more.
  2. Mid Cap Funds:  Mid-cap funds invest in companies that have mid-market capitalization i.e. companies that fall between the rank 101 – 250 (as per SEBI). In short, mid-cap funds lie between Large Cap and Small Cap funds. So investors who have higher risk tolerance and are willing to face higher market volatility than large-cap funds can go for mid-cap funds. However, first-time investors are not recommended to choose this option.
  3. Small Cap Funds: Small-cap funds are the riskiest and most prone to market fluctuations when compared to Large Cap and Mid Cap Funds. Investors who have high-risk tolerance and want aggressive returns can choose this option. However, it is highly recommended that investors only invest a portion of their portfolio in small-cap funds.

This is not all: Mutual Funds can further be classified on the basis of Risk levels, structure, asset classes, investment objectives, or even expense ratios. But the right way to choose a Mutual Fund must be based on the investor’s profile:

  • Investment horizon: duration of the investment
  • Risk Appetite: The level of risk an investor can tolerate
  • Returns: The percentage of returns an investor expects from an investment
  • Financial Goal: the objective of the investment

 

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