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 #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

Real Estate vs Mutual Funds

A famous quote that many people believed in. People could not stop bragging enough of how their land and houses which cost peanuts before, were worth so much in a few decades. We’ve all heard the stories and rantings, but is it really true? Mr. Will Rogers, the famous American actor, made this quote in April 1930; over 80 years back! Since then there was a World War, India gained independence from the British and went through fourteen Presidents. How relevant are his words in our present scenario?

Most of us are familiar with the past stories of real estate; how a piece of land in the 60’s cost peanuts and is now worth a thousand times more but is that the story? Or was it the only story worth listening to? Real Estate is still considered one of the greatest investments because it provides several tax incentives, it can be financed or used to leverage for cash when needed. But that’s not all that it has, let’s look at the other side of it.

The value of real estate is clearly unpredictable; the property you buy today may be worth 10 times more or completely worthless years from now. The tremendous amount of time and energy that you spent on real estate with payment of taxes and utility bills, keeping it in good condition and also selecting new tenants as and when needed.

It allows the investor to gain value through modifications, but such value add-ons do not guarantee you anything in return. The everyday news carries dispute cases that have been under litigation for years for fraud, title, contract breach, etc. It can be used as leverage for cash, but when looking to sell it, it is difficult to find a buyer and the urgency of the situation may lead you to sell at a much lower value.

Still, want to put your investment in Real Estate? Let’s look at the current market. The total demand for urban real estate is estimated at 4.2 million units during the period 2016-2020 across the top cities in India. Sounds great right? But know this too, over 4.5 lakh homes remain unsold in the cities of Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru and Chennai, despite the huge demand in the market. The homes are either priced higher or are not placed in a good location. Considering all of this, real estate is not the best investment.

But how about Mutual Funds?

This is a vehicle to invest in diversified avenues of investment. It has the added benefit of cover from inflation in the market, and the premise of diversification there is much less to worry about. Mutual Funds has a range of funds that cater to the investor’s return and risk appetite which is professionally maintained by the fund manager. It provides various tax benefits and has high liquidity. Moreover, the number of AMCs have doubled over the past 3 years or so, and according to Association of Mutual Funds in India (AMFI), over 70,000 new distributors have started to offer mutual funds over the recent years. Now that is a market worth investing in!

If rewards are the cheese and you are the mouse looking for it then Real Estate is the trap that promises you the tasty treat that tricks you to an investment that is ultimately a liability. The pain of dealing with realtors, settling legal disputes, having to put all your money with no immediate benefit is not what you need from an investment. So rather than having a facade investment that will eventually turn out to be a terrible decision, 

Don’t invest in better, invest in the best!

The Portion of Debt in Your Investment Portfolio/ Basket

Did you know that even as a kid in school we had a portfolio of investments? We’d divide our pocket money to get our candy and our favorite cake, sometimes we would have small savings to buy those shoes, or even loan it to a friend for a while. So as we grow our portfolio becomes bigger in terms of scale and range of investments. We focus more on security and future. But how much of our total portfolio should go into these channels? Why do we have to have debt instruments?  Diversification was the first rule learned in investing. The story of when we put all our eggs in one basket and it all breaks when the basket falls down, is familiar to all investors. But perhaps you never got to the part of how many eggs and in which basket should we put it in. 

Debt is the basket which offers you security. But the word itself doesn’t give a ring of security because it is often associated with words like ‘loans’. In truth, however, it is essential for every person to invest in some debt instrument in his lifetime. The different products include Public Provident Fund, Fixed Deposit, Bonds, etc.

So when it comes to giving a slice of your portfolio towards debt instruments here are a few things to keep in mind:

  1. The choice of the debt instrument is vital. So ask yourself what do you want it to do? The answer should either be to providing money on short notice or provide stability to long-term investments, both of which is given by debt instruments.
  2. Focus on just the top debt instruments and leave the rest. If you try to pick too many of debt funds you tend to have a mediocre investment which gives high safety but low returns. Don’t try segregating eggs in that debt basket so much.
  3. The allocation of your investment in Debt instruments should be in proportion to your age. The younger you are, the better it would be to invest in growth-based schemes(equity). When you get older you must focus more on stability(debt).

When it comes to Provident Fund or Pension Fund, that are retirement schemes by the Government of India, its sole purpose is to set aside money from a person, preferably during his employment and return it back in a lump sum along with a small amount of interest.

The Public Provident Fund is one of the kinds of PF accounts for any individual at any age, even for an infant. The greatest benefit of this is the returns which are completely tax-free. The account stands as your loan to the Government at the advantage of receiving a tiny amount of risk. It allows you to invest a minimum of Rs.500 to a maximum of Rs.1.5 lakh per year so as to ensure the account remains active for the lock-in period of 15 years. The PF or Pension Funds are to safeguard your lifestyle after retirement, but they are not the only debt instruments you can rely on. Read more about PPF on the MyWay Wealth website.

A Fixed Deposit is a popular stowaway for your money which saves upon a fixed rate of return during its term. It is applicable for tax and is affected by inflation in the market. It is suitable to use as an emergency fund. Suppose you have a wedding to host or pay for your parent’s medical bills it can be immediately withdrawn to meet those expenses at a reasonable penalty. Whereas, as an investment, it is not a suitable option as it guarantees neither safety nor growth. To know more read the article at MyWay Wealth’s Blog about Fixed Deposits.

It’s quite a dilemma, isn’t it? The PF or PPF is an important long-term savings scheme for a retirement corpus. However, as mentioned before if the expectation from your debt basket is to help in cases of emergencies a Fixed Deposit would work much better. The PF focuses to help you in the long term and the FD will be more reliable as an emergency cell. Click here to know more on that.

Wouldn’t it be great to have one that serves as both in the long-term and act as an emergency fund? In uh a case Mutual Funds are the way to go! Specifically, the Debt Funds in the Portfolio that invest mainly in bonds, giving you security, relatively higher returns, and high liquidity.

Investments in real estate…Not very realistic

Home Sweet Home. It’s such a secured feeling to own land and have your property on it. The pride is immense and overwhelming.

Brokers also use these emotional flavours to sell properties. The ease with which one gets a loan these days has lead the masses to invest in real estate easily, but not wisely!!

We have heard our elders say, “Invest in real estate, the future value of the property will earn you a fortune”.

Is this really true?

Here are 6 reasons not to invest in Real Estate.

 

  1. Low Liquidity:

 

We buy property with the hope to sell it at a higher cost. But what if an emergency arises and we want liquid cash immediately. Remember your urgency in selling a property is a treat to a potential buyer. Because, your dire need for cash would lead you in selling your property at a lower price than its true value.

  1. Low returns

Most real estate investments fetch you the same amount of return as that of Fixed Deposits. Lines from Nishant Agarwal (managing partner and head (family office), ASK Wealth Advisors )“Considering the rising interest rates and high maintenance cost and tax on rentals and capital gains, I would not suggest investment in physical real estate”.There is no guarantee that you would find occupancy if you are depending on getting income in terms of rent.

Which means, it’s obvious you’re not getting index beating returns..

  1. Unpredictable

I remember my dad saying  “20 years before if I had bought this house in Kammanhalli, I would have been a crorepati today”. Why?

Because rates increase in real estate depending on the property’s location not on how much you spend on the house, or how does the property look, which makes real estate an unpredictable asset class.

  1. Tracking is a pain.

Mutual Funds are managed by Professional Fund Managers, you have apps to give you alerts, even if you owned more than one scheme.

But how would you track real estate? How do you know that the broker dealing with the property is not a fraud? How would you track your property? You can’t track it daily, can you?

  1. Government Regulation

But the recent disruption announced by our Prime Minister, through “Demonetisation” has curbed the circulation of Black Money by stripping the status of our currency unit.

People don’t even let properties on lease these days, then forget buying a property. Thus reducing the demand of real estate in the market.

  1. Additional expenses.

You need to shell out a bomb to buy a property. Many opt for loans. But in addition, there are other expenses that come along with a property:

  • Maintenance charges
  • Finding a tenant
  • Commission to brokers
  • Utility Bills
  • Taxes

This is exhaustive both financially and physically.

The next time you want to Invest in Real Estate, Think!!

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.

The Debt Story

Parents always warn us not to be in Debt. “Better to go Hungry to bed than to wake up in Debt” is what our dads would say in a stern tone. But why?
It has a simple reason! The word Debt is often referred to as borrowings such as a car loan, home loan or credit card loans. It reminds of the hunting calls from the credit card companies.
But, these are conventional thoughts.

As for the newer ideology… DEBT means products with “ RETURNS”.

The usual feeling that comes with “Investing” is “Fear”. They are normally two sides of the same coin, to most investors. But like Warren Buffett says
“Risk comes from not knowing what you’re doing.”
Knowledge is what you require to make your first move in investing in Debt Instruments. The finance part, you will eventually figure it out once you are familiar with Debt and stop fearing it.

Here are few Debt Instruments and also a set of alternatives that will help you in your course of investing:

1.Savings Bank Account: Savings account is a necessity, not an instrument anymore. They encourage savings, are highly safe with their moderate interest rates and are flexible when it comes to withdrawing your money when you need it.

2. Bank Fixed Deposit: These are the most trusted funds because they give moderate yet periodic returns with Average interest rate of 4%-7 %. You get your principal amount back once your term is over. All this with zero risks. This fund is essentially useful when you want to park your money aside for an Emergency. One of the easiest ways to invest is to opt for smaller Fixed Deposits so that you don’t lose the entire interest on your deposit when you have to break it for an Emergency.

3.Provident Funds: If you are employed then Provident fund is your pie. Provident fund is the accumulated amount one gets on retiring from his/her job. The accumulated amount is the contributions one makes during the employment period.

Public Provident Fund: This instrument is provided by the Central Government to employees who are self-employed and those at the unorganized sector. These are long term savings scheme that provides income security at your old age. This investment is famous for guaranteed returns, tax benefits, withdrawals after lock-in periods and is voluntary. Both Provident Funds and Public Provident Funds are definite items in your investment list as they secure your life after retirement.

4.Recurring Deposit: When you hear Recurring Deposit, remember SAVINGS. Recurring Deposit is quite similar to fixed Deposits. The difference is that in recurring deposit you deposit a fixed sum every month in a recurring deposit account for a fixed tenure and you earn interest on these deposits, thereby you practice the habit of saving.

Warning Bell: The usual jazz that brokers give when they sell schemes is “Higher Returns”. Ever wondered how, say for example, Real Estate manages to provide high interest rate. The trick is, Higher Returns is a sugar coating for the Hidden Risks. An easy thumb rule is to keep the Interest on Bank FD as your benchmark. Any scheme providing an Interest rate higher than that a Bank FD, will have the factor of higher Risk. However there is a way to earn higher returns with Debt too with the help of Debt Mutual Funds.

Have you started saving for uncertainties?

Vijesh is 48 years old, an engineer working in a MNC and he is the only working member in his family. One day while returning from work in his car, he met with an accident. Unfortunately, he died. He was survived by his wife, Meena and two children. Meena has lost his life partner and she has to take care of her children. Now she is struggling to get a good job which would serve 3 lives.

Imagine something like this happening to you. What happens to your loved ones when you are no longer there? Death is an inevitable part of life. Invest in a life insurance plan and put these concerns to rest. Your insurance investment will take care of your family in any situation and will help in replacing lost household income, paying for the education of your kids or even providing financial support to your spouse if something happens to you.  

What is Life Insurance?

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person.

Types of Life Insurance

1.Endowment Policy

  1. Unit Linked Insurance Policy
  2. Term Insurance
  3. Money Back Policy
  4. Whole Life Policy
  5. Pension Plan

Let’s know more about its 3 major types:

  1. Term Insurance Plan- Term insurance is a type of life insurance policy that provides coverage for a certain period of time or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active – or in force – then a death benefit will be paid. Term insurance is initially much less expensive when compared to other life insurances.
  2. Unit Linked Insurance Policy- A Unit Linked Insurance Plan or ULIP is a product offered by insurance companies that, unlike a pure insurance policy, give investors both insurance and investment under a single integrated plan. You can withdraw only after lock-in-period of 5 years. Advisors say not to mix insurance with investment. Mixing the two will give you less than moderate returns from both.
  3. Endowment Policy- An endowment policy is a life insurance policy which apart from covering the life of the insured, helps the policy-holder save regularly over a specific period of time so that he/she is able to get a lump sum amount on the policy maturity in case he/she survives the policy term. This maturity amount can be used to meet various financial needs such as funding one’s retirement, children’s education or marriage or buying a house. The premium payable is usually much higher than that of whole life insurance or term insurance. It does not have the renewability (a few companies do provide renewable endowment policies subject to a maximum issue age) or convertibility option available in term insurance.

Claim Settlement Process

On the happening of the event, the beneficiary is required to send claim intimation form to the insurance company as soon as possible. Claim intimation should contain details such as Date, Place, and Cause of Death. On successful submission of claim intimation form, an insurance company can ask for additional information about

  1. Certificate of Death
  2. Copy of Insurance Policy
  3. Legal Evidence of title in case insured has not appointed a beneficiary
  4. Deeds of assignment

On successful submission of all the document, the insurance company shall verify the claim and settle the same.   

 

 

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.

Be the perfect Santa to your family! Act NOW!

Be the Santa to your family

Why one should invest in SIP through MyWay?

Fund recommendation engine:

Invest in Funds which have constantly outperformed market.

Real-time tracking:

Track/monitor your investments with a click of a button anytime, anywhere.

Portfolio Rebalancing:

Get your risk covered by periodically balancing your portfolio.

Do-It-Yourself:

You can invest in over 5,000 direct plans in your own way.

If you have any concern, please write to us at ask@mywaywealth.com or call at +918048039999, we would be happy to answer your query.

Team MyWay wishes you Happy New Year 2019!

MyWay Team wished you great new year.

Why one should invest in SIP through MyWay?

Fund recommendation

Fund recommendation engine:

Invest in Funds which have constantly outperformed market.

Real-time tracking

Real-time tracking:

Track/monitor your investments with a click of a button anytime, anywhere.

Portfolio Rebalancing

Portfolio Rebalancing:

Get your risk covered by periodically balancing your portfolio.

Do-It-Yourself

Do-It-Yourself:

You can invest in over 5,000 direct plans in your own way.

So, what are you waiting for? Signup now to start investing:

If you have any concern, please write to us at ask@mywaywealth.com or call at +918048039999, we would be happy to answer your query.