Might some unforeseeable economic shock such as now can trigger another recession so severe that it would destroy our faith in the promise of investing? Excessive confidence in smooth seas can blind us to the risk of storms. There is little certainty in investing. As long term investor, however, we cannot afford to let the short term events frighten us away from the markets. For without risk there is no return. Another word for “risk” is “chance”. Here’s a dialogue by Chance, The Gardener that stuck.
As uncanny as it may seem, the word “chance” struck a chord that reminded me of ‘Chance, The Gardener’. For the ones who have never had the fortune to read this gem of book, ‘Being There’ by Jerzy Kosinski or watch the movie based on it, the plot revolves around a rather simple man – Chance, the gardener whose knowledge about the world is defined by what he has watched on TV and everything he has observed while tending to his garden. By twists of fate, he reaches a situation where he has high-ranking state officials seeking advise from him and interpret his simple words as a metaphor about the economy.
Back to the scene that stuck with me for long – When asked about the stressed state of economy, he said – “In a garden, growth has its season. There are spring and summer, but there is also fall and winter. And then spring and summer again. As long as the roots are strong, all is well and all will be well”.
Well, when you look at markets, economies (and also gardens), you would appreciate the simple yet profound truthfulness of the statement.
In an attempt to draw a parallel, I started rummaging through the internet ocean and found a beautiful illustration (Courtesy: Visual Capitalist) that clearly reflects that as long as the world economy is healthy, financial crises may come and go, but the economy will only bounce back stronger – offering a much larger opportunity each time.
Perhaps, the fact that the global economy has gone through a longer period in economic crises than uninterrupted growth. However, like Chance put it right, economies and markets only continued to push upwards with periods of crises seeming like nothing more than simple seasonality in hindsight.
I remember reading about at least ten black swan events where the S&P 500 declined by a quantum of anywhere between -5% to -60% only in the past fifty years. Events include the Oil Embargo ’73, Iranian Hostage Crises ’79, Black Monday ’87, Gulf War ’91, 9/11 Attacks ’01, SARS ’03, Sub-Prime Crisis ’08, Intervention in Libya ’11, Brexit ’16, and Pandemic’19. However, it is interesting to note that $100 invested in 1973 in S&P 500 is worth almost $3,000 today – which seems pretty healthy considering the number of financial crises we just recounted.
As an investor, you may choose to focus on the periods where people lost money and redeem with a higher probability of converting notional losses into real losses, or ride the tide only to emerge victorious as the world pushes ahead towards progress.
Investing can be a scary endeavour without a road map. Each investor has a different mindset when they invest. The final goal of an investor must be to choose funds planned as per his/her financial goals and strategies. Here is the breakdown of how one should opt for active or passive funds when it comes to investment.
Active investing is a strategy that involves buying and selling assets to make profits that outperforms and sets the benchmark in the index. A fund manager is an example of an active investor.
Investors in actively managed funds will have to pay higher annual charges for the expertise of the fund manager, the interest is usually between 0.6% to 1.5%, and sometimes it could be more, depending on the type of the portfolio they are running. So it is up to you to decide whether the cost of a fund investment is worth the potential returns you could receive.
Cricket is the most popular game in the world undoubtedly, and it’s the world’s greatest sport. It’s a gentleman’s sport, full of sportsmanship. An epic journey where players and fans get to know each other over days of play, where respect is the golden rule, and integrity is very much alive. And on the contrary, Investing in the Mutual Fund is helps you to create wealth in the long/short term and helps in achieving your financial goals.
Besides entertainment, Investing is like a game of cricket.
“Your Team→ Your Portfolio
Your Players→ Your Securities.”
In this article, let us use the analogy of a cricket game in investing. When it comes to cricket, We ‘Fans’ always feel like the cricket team could have done a better job, when it comes to us, we fail to create our investment portfolio and financial success.
Making a will can save your loved ones a large amount of money and stress. A will is a legal document that stipulates your wishes as to who will receive your property and possessions when you die. It is important that you have a valid will to ensure your estate is distributed to those you wish.
The statistical data says that 80% of Indians do not have their wills made and the reasons for it are many. Here are some of them:
When you buy something, you will always try to cut expenses. Suppose if we buy any product online, you prefer to have free delivery. Why you do that? In order to reduce costs, you’ll try to cut the additional expenses which you don’t want to incur. Here, you do the same with the Mutual Funds.
In Regular plan, you buy mutual funds through an intermediary such as brokers, distributors or advisors. And these agents will charge a commission for the services they provide where your expenses on investments will be high. As you know that these brokers will never sell you the products that you need. They always try to push the schemes which earn a good profit to them.
Now let’s look at Direct Plans. Direct Plan is a new regulation which is enforced by SEBI on January 1, 2013. In the Direct Plan, as an investor, you can directly buy the mutual funds from the Asset Management Company (AMC), where there will be no involvement of any brokers or intermediaries and these funds which you buy are commission free.
The great advantage of Direct Plans is that NAV (Net Asset Value i.e., the value per share) is more when compared to Regular Plan which means that you earn more on your investments.
For example, if you invest Rs 10 lakhs in both the Direct Plan and Regular Plan. The direct plan offers 17- 19% of returns whereas the Regular Plan offers 14-15% of returns. Thus, With Direct Plans you can earn 1-15% more returns than Regular Plans.
And here you have a platform to make an investment in Direct Plan- MyWay Wealth with zero commission and zero fees. MyWay Wealth offers you a wide range of funds and helps you to choose the right one that suits your investment needs. To look into more features of MyWay Wealth – download the app, complete KYC and get access to top recommended funds.
So don’t miss out on those 1.5% extra return. Choose MyWay Wealth and begin your journey to fulfill your dreams.
You are unique and so is your Investment!
Getting equity exposure is about following the rules for holding the portfolio to see index-plus returns( high returns). Take a considerate decision on investing in Equity and understand that the Equities are the best way to create wealth.
You can invest in Equity Funds through MyWay Wealth. They are professionally managed by expert professionals who spend quality time in researching about the performance of these funds.
Thus, put your money to work for the long term. If you’re a good financial planner then you would have already planned for your Emergency funds and medical cover. So, you have taken away the need for keeping money in liquid and you can risk for investing in Equity Mutual Funds.
Here, you have the best platform -“MyWay Wealth” to invest in Equity Funds and create wealth for the long term. Use MyWay Wealth to discover, track and invest in Equity Funds.
We have heard our elders saying that “Invest in Real estate, the future value of the property will fetch you prosperous wealth.” Is it true?
Let us now discuss how a Real estate as an investment option.
Yes, Investment in Real Estate can generate a regular income, and you can see capital appreciation over a period of time. People think Real estate as an investment option is good only because they look only into the returns ignoring the other factors.
Thus, these are the disadvantages of having investments in Real Estate. But is an alternative? Yes! there are better options to invest such as Mutual Funds. Direct Plans, SIPs, Gold Funds or Equity Mutual Funds help you with wealth creation in the long term. Use “MyWay Wealth” to discover, track and invest in Mutual Funds.
Don’t invest in better, invest in the best!
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
Asset allocation is mutual funds that are invested in a varied assets class. The asset allocation could be in the form of equity oriented, debt-oriented, or even asset classes like gold, other metals, and commodities. One can say that asset allocation is a balanced combination of a bond, equity, which includes stocks, bonds, real estate, and equity funds.
The work of the fund manager is to keep track of the investments and to make necessary changes based on market performance. We all are aware of that, equities are considered to be the highest return generating asset class. But there is the highest degree of risk involved and also a fixed deposit is considered to be less risky but we also there is a low return on investment. So investing in across different asset classes can earn returns by minimizing the risk.
Diversification is where the money is divided into different investments to reduce the risk. Diversification is a strategy that can be summed as “Don’t put all your eggs in one basket”. You are better diversified if you spread your investments within each asset class. Which means holding a number of different stocks or bonds, and investing in different industry sectors, such as health care, consumer goods, and technology. So if one is doing poorly, you can balance it with other holding sectors that are doing well.
The main aim of asset allocation is to benefit from more than one asset as well as to reduce the risks that are associated with one particular asset.
Static allocation funds have a decided percentage of fund allocation in the different asset classes. One of the most popular funds is a balanced fund which invests their 65% of their assets in equities and rests in debt.
These allocation funds return is more than fixed deposits or debt funds because they invest in equity. Dynamic funds are riskier than fixed deposits as well as debt funds. The returns from equity-oriented dynamic asset allocation funds enjoy a favorable tax treatment in comparison to debt or fixed deposits. The returns are tax-free if sold after a year.
The investor can invest in different asset classes and can diversify their portfolio.
In asset allocation funds the investor can invest in different asset classes and therefore it earns better returns.
We all know the equity asset class helps to beat inflation. But on the other hand equity investment are not stable funds. Asset allocation investment is been divided into two categories one is the funds which are invested into asset clause and others are invested into equities. This helps to generate stable returns while reducing the risk.
There is 20 percent taxation with indexation, for long term gains of 3 years and over.
The main idea of allocation of asset is to benefit the appreciation of more than one asset as well as to reduce the risk which is associated with one particular asset. However, it’s also important to make investments based on your risk appetite and investment horizon. After all, you are unique and so are your investments.
Debt mutual fund invests mainly in debt or fixed income securities such as treasury bills, corporate bonds, government securities, and money market instruments that have various time horizons. Investors choose these funds as they are unaffected by market volatility, provide stability to asset portfolio, receive a tax deduction and have high liquidity. The reason behind investing in debt fund is to earn interest income and capital appreciation. Here is the debt mutual fund classification.
Wherein these debt funds are invested in instruments with shorter maturities, ranging between 1 to 3 years. Short term funds are for conventional investors where are not affected by the movement in interest rate. Ultra short-term mutual funds are those which invest in fixed-income earning instruments of maturity up to six months.
Liquid funds are being invested in debt instruments with maturity, not more than 91 days. Liquid funds are risk-free funds, liquid funds are better than saving your money in the bank account because rarely they have negative returns.
Income funds can also take a call on interest rates to invest in debt securities with different maturities, but often income funds are for long term maturities. The average maturity of income funds is around 5-6 years.
Dynamic bond funds keep changing portfolio composition according to changing interest. These bonds have a fluctuating average maturity period because it takes interest call into consideration and invests for longer as well as shorter maturities.
Gilt funds are invested in government securities, where high rated securities with low risk. They provide moderate returns as they invest in an asset with better quality. Though the returns are considerable, they are not fixed as they are subjected to change due to interest rate fluctuations.
Fixed maturity plans are closed-ended debt funds. These funds also invest in fixed income securities like corporate bonds and government securities. They are lined with time duration. An investor can only invest in the initial offer period. They are considered the same as a fixed deposit which gives tax benefits but doesn’t guarantee the returns.
These funds are newer debt funds. Unlike other debt funds, credit opportunities fund don’t invest according to debt instruments. These funds earn higher returns by taking a call on credit risks or by holding lower-rated bonds. Credit opportunities are risky than debt funds.
To get access to top recommended Debt Mutual Funds, MyWay Wealth is a one-stop destination. From liquid debt funds which are lower risk funds, Gilt- a medium and long term which are government securities, short term – where you can park your money for 1-3 years, Ultra short term wherein you can park your money for 3-6 months, and credit opportunities wherein there are corporate bonds and debenture. All you need is a few minutes to complete your KYC process, input your contribution and you’re all set to invest in MyWay Wealth.