Tuesday, June 5, 2018

Understanding SEBI’s new fund categories

In a move to make choices for investors simpler, SEBI came out with categories with defined criteria. This means that funds within a category will henceforth be mandated to stick to basic tenets of the category. Earlier funds had the freedom to move around categories when it saw the opportunity. Funds will now be more predictable in terms of their strategy and investors will stay more informed about where they are investing. So how do you, as an investor, keep up with this change?
With some categories being renamed and new category names being added, some of you may be confused as to how to match your requirements with the new categories. This article will take you through the changes and where different categories stand relative to each other, in terms of risk and holding period.

Equity

The new categories in equity are either based on market-cap segment or strategy. And that, in turn, determines the risk level of the category.
Major categories under equity have remained the same. The diagram below lists the categories in decreasing level of risk (red signifying higher risk and green signifying lower risk). Sector and thematic funds are the most risky because of their concentrated exposure to a sector which requires tactical calls by an investor. Index funds are the least risky as they merely track the broad market indices and are less risky compared to actively managed funds which tend to be more volatile.

As the average market cap of the category goes up, the funds in the category become less risky. Therefore small cap funds with lower average market cap will hold higher risk than a mid or a multicap fund. SEBI has introduced another category in this hierarchy, called ‘large and midcap’ category where a fund should hold at least 35% in large cap and mid cap each. This can result in funds which hold predominantly large cap ( upto 65%) and a relatively smaller portion in midcap (at least 35%) or predominantly midcap (upto 65%) and a relatively smaller portion in large cap (at least 35%) falling under this category. Since the category comprises both of the above, the risk level of the category is more or less the same as multicap. It is essentially above pure large cap and below pure midcap funds.  However, some of them may be closer to midcap while others closer to large-cap.
There are additions of other new categories based on the strategy which funds follow. Categories such as focused funds, dividend yield funds, value funds, and contra funds define the strategy that a fund manager needs to follow for funds within the category. Since these funds do not have a market cap restriction, they will behave like a multi-cap fund going into different market cap segments based on the strategy it follows. The risk level of these funds also stand same as multicap funds.
Categories under equity should be looked at only for your long term needs. A period of at least 5 years is required for equity funds to give you optimal returns. In terms of holding period, categories within equity do not differ much. But high risk funds tend to be more volatile and may require a longer time to recover in the event of a market fall and therefore require a slightly longer time frame.

Debt

SEBI has classified debt funds based on two criteria – duration and strategy.
Based on the average Macaulay duration of the underlying instruments, funds have to be bucketed into categories  such as, low duration, medium duration, etc. The Macaulay duration calculates the weighted average time before a bond holder would receive the bond’s cash flows. Macaulay duration is slightly lower than the bond’s maturity.
The second way of classification is to classify based on their strategy. For example, funds using low credit rated papers to generate returns will fall under credit risk funds; funds sticking to high credit profile to generate returns will fall under corporate bond and so on.
But for investors to align their requirements, we have bucketed the categories in terms of the time frame required for each category. The below diagram classifies the entire universe of debt funds into long term, short term, ultra short term and liquid funds.

Long term debt funds include categories with high average maturity such as long and medium duration funds as well as categories with strategies that require a longer term to play out such as credit risk and dynamic bond. This category requires a holding period of at least three years. These funds should be used  only as part of your long term portfolios. They can well witness volatility and even negative returns in the short term.
Short term debt funds include categories which have a Macaulay duration of 1 year or above. These funds should be used when you have a holding period of above 1 year. This time frame requires low risk funds which can provide stable returns.
Ultra short term debt funds include low duration and ultra short term funds which are suitable for holding periods between 6 months to 1 year. These are low volatile funds with shorter maturity. These funds can be used to park money which you will need in the very near future.
Liquid funds are for parking money for really short term requirements such as a few days up to 6 months. These funds have maturity up to 91 days and least volatile. Overnight and liquid funds fall under this category.

Hybrid

Funds which hold instruments from more than one asset classes will fall under hybrid category. The two most popular categories under hybrid are Balanced funds and Monthly Income Plans (MIPs). These two categories have retained their characteristics with a change in their names. Balanced funds which invest predominantly in equity (at least 65%) and the rest in debt will now be called Aggressive Hybrid funds. MIPs which invest predominantly in debt (at least 75%) and the rest in equity will now be called Conservative Hybrid funds.

Between these two ends of the spectrum fall other categories such as Dynamic/Multi Asset Allocation, Equity Savings and Balanced Hybrid funds.
Dynamic Asset Allocation and Multi Asset Allocation are similar in the sense that asset allocation in these funds are managed dynamically based on market conditions and they do not have to have specified allocation in a particular asset class at all times. Dynamic Asset Allocation manages between equity and debt whereas Multi Asset Allocation will include a third asset class, like gold, commodities,etc.
Equity savings funds have a minimum of 65% in equity and the rest in debt but a portion of their equity will be hedged making it less riskier than aggressive hybrid funds.
Balanced Hybrid funds will have about half their investments in equity and half in debt. This cushion of debt portion brings it in the bottom end of the risk spectrum after Conservative Hybrid funds.
Arbitrage funds continue to fall under equity category for tax purposes. However, the rules now clearly state that they need to hold at least 65% in equity. These funds typically hedge their entire equity position and take some exposure to money market as well. This can be considered the least risky in the hybrid category but with returns that are capped, given their hedged portfolio
Ritesh.Sheth CWM®
CHARTERED WEALTH MANAGER

              Helping you invest better...  

Allaudin Bldg Shop No 1,Manchubhai Road,Malad East,Mumbai - 400097.
Shop No.9,Param Ratan Bldg,Jakaria Road,Malad West,Mumbai - 400064.
Tel:28891775/28816101/28828756/28823279. CELL:9930444099  
www.tejasconsultancy.co.in | E-mail Us: ritesh@tejasconsultancy.co.in
Go Green...Save a tree. Don't print this e-mail unless it's really necessary
Disclaimer:
This emailer is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only and is not spam. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this emailer.The views are personal. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing.
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Source: Fundsindia

Friday, May 18, 2018

Checklist for children turning into majors.

Checklist for children turning into majors.

It is a Big Milestone in our lives when our children reach majority. At 18 years, the person is recognized as an adult eligible to cast their vote in  elections, have assets in their name without any mention of guardian and also can have their own driving licenses.
Many parents make investments in the name of their minor children for various reasons – from earmarking investments separately for children to saving taxes. However when the child reaches majority, the financial assets must have a re-look.
There are various processes which require submission of many documents to convert an account from minor to major. The two important steps to start the process is
  1. Correction or reissue of PAN Card with signature and photograph/ Application of new PAN in the name of major, if not already done.
  2. Obtain an Id proof like passport, Driving Licenses etc. with recent photo, signature and address updated.
  1. Request for new PAN Card

Since copy of PAN card is mandatory for most of the financial transactions, it is important to apply for a new PAN Card with photo and signature of the child included and address change, if any. This is important as copy of PAN is mandatory for most financial assets and it also serves as a proof of identity. However, the PAN number of the child remains the same.
Please refer the below link for more details:
https://www.tin-nsdl.com/
  1. Conversion of bank accounts from minor account to major/regular account
All banks have certain rules and regulations for minor account holder. Many banks even have certain accounts specifically designed for minors such as ICICI Young Star Account, HDFC Kids Advantage Account etc.  These type of accounts provide few privileges to minor account holder – with withdrawal and deposit allowed after 10 years of age, and debit card also issued after 10 years of age. They could also do the transactions and use the internet banking facility, kid friendly freebies and preferential rates of interest for some minor account holders.
However when a child turns major, these accounts have to be mandatorily converted to major accounts. It depends on the rules and regulations of the bank on how they convert a minor account to a major one. Some banks upgrade the bank account to a regular saving account using the same account number. Some banks request a new regular account to be opened and transfer the balance to this account and close the minor account. On having a regular savings account, the child will be issued a cheque book and debit card with her/his name on it. The guardian name given earlier will be removed.
The document required for conversion/upgradation from minor to major bank account are as below:
  1. Copy of PAN Card self-attested
  2. Age Proof like School Leaving Certificates of State Boards, ICSE, CBSE etc., Birth Certificate, Passport etc.
  3. Address Proof – Passport, Electricity Bill, Voter Id etc.
  4. Id proof such as Passport/Driving License/Aadhar etc.
Having a regular bank account for the child is highly important as this is required to change the status of Mutual Funds, Demat Accounts etc.
  1. Conversion/Transfer of assets such as FDs, RDs etc. in banks
The transfer/conversion of assets such as FDs/RDs in banks from minor to major is typically done after the bank account is converted to a major account. The process for change is similar to that of savings account. However, the linked savings account to which the maturity amount is to be credited has to be updated.
  1. Changing Status of Mutual Funds from minor to major
The most important step before change of status from minor to major is to get KYC done for the child. The required documents for individual KYC are:
  1. Updated KYC Form
  2. Copy of PAN attested with signature
  3. Address Proof(Passport, Electricity Bill, Voter Id, Driving License etc.)
Once the KYC gets done, to change the status of the Mutual Funds from major to minor, the following document are required:
  1. PAN Card copy with self-attestation
  2. Address Proof (Passport Copy, etc.) with self-attestation
  3. KYC proof
  4. Birth Certificate as a proof
  5. Bank Details showing change from Minor to Major account along with cancelled cheque with name printed on the same and should be self-attested.
A sample online form can be seen on clicking the link below:
  1. Shares and corresponding Demat Account
A Demat account can be opened and shares can be traded/held in a child’s name through a guardian. When the child turns major, the change/conversion to a major or regular account depends on the regulations of the brokerage firm.
Some firms request for a new account to be opened in the name of the major child and transfer the existing holding to the new account. The minor account is then closed.
Some firms allow the same minor account to continue but the child has to complete all the formalities required for opening a new demat account. The child also has to sign a new agreement with the Delivery Participant (DP) like NSDL or CDSL. The guardian details entered earlier will be deleted.
  1. Converting minor PPF account into major
PPF account can be opened for a minor by any of the parents or guardians. There are two options possible when the PPF account matures:
  1. When PPF account of minor matures before he turns major
In this case, the guardian can withdraw the maturity amount or choose to extend the tenure by any number of years If the tenure is extended, then by the end of the first extension tenure, the child would have turned major. The child has to submit photo, birth certificate, cancelled cheque with name included and address proof to change the status to major for a PPF account.
  1. When PPF account matures after the child turns major.
The child has to submit copy of PAN card, birth certificate, cancelled cheque with name included and address proof to change the status to major for a PPF account. The maturity amount in this case is tax free in  the child’s name.
  1. Post Office Monthly Income Schemes(POMIS) – changing status from minor to major
POMIS accounts can be opened in the name of a minor if the child is 10 years of age and above. There is a separate limit of Rs.3,00,000 for the minor apart from the limit of the guardian. On turning major, the child has to apply for conversion of minor account to major along with birth certificate, copy of PAN Card and cancelled cheque of the child’s bank account. After the conversion, all income arising from this account will be considered as income of the child only. http://www.indiapost.gov.in/mis.aspx
  1. Insurance Policies:
For insurance policies, many situations can arise for a minor depending on the policy, the policyholder and the nominee.
  1. When the nominee of an insurance policy is a minor
The policyholder is supposed to specify an appointee if the nominee of the policy is a minor. The appointee is entitled to withdraw the policy amount on behalf of the minor. In case no appointee has been mentioned, the minor has to wait till majority to claim the amount. On turning 18 years of age, the child has to submit age proof like School leaving certificate and birth certificate, bank account details with cancelled cheque and policy document mentioned.
  1. When a minor is the policyholder and life insured (in case of child policy)
When a policy is in the name of a minor and the policy benefits will be paid according to the payout terms in the policy. If the policy payouts are scheduled after the child turns major, the policy amount will be paid to the child’s bank account. To claim the amount, the child has to submit the age proof and cancelled cheque of own bank account along with a copy of the policy document to the insurer.However depending on features of the policies, some policies do make the pay outs to parents/guardians of the child to utilize for expenses related to the child.
  1. When the policy is a child plan with life of parent insured and nominee is the child
In such policies, the regular payouts if any are made to the parent to meet the regular expenses of their children. However on the death of a parent before the child turns major,  the proceeds will be paid to the children or the legal guardian or the appointee of the policy as the situation arises. The child will receive the benefits on turning major.
It is important to note that only child policies are issued in case of minors. These may or may not include life cover for the children. Also, the maturity benefits and regular pay outs if any,  for child policies are mostly paid after the child turns 18 years of age when the child enters college. Since there are a wide variety of child policies available with different features and policy terms, the procedures to change the status from minor to major is different for different policies or it may not be required at all.
As listed above, the procedure for changing the status from minor to major varies for different assets. However the most important prerequisites for all procedures is to have a PAN card with photo and signature of the child and a regular bank account in the name of the child who has attained majority.
It is also important to note that once the status of the assets are changed from a minor child’s to a major’s name, the parents/guardians would lose all rights on it. The child has every right to use, withdraw, redeem or close the accounts according to their  wish. Also if the assets in the child’s name generate any income which are taxable, the taxes have to be paid in the name of the child and will not  be clubbed with the parents’ income, unlike when child was a minor. Also, the parents cannot enjoy the benefit of tax-free income of Rs.1500 per year per minor child up to a maximum of two minor children

Monday, November 20, 2017

Keeping Good Records is Good Business

Keeping Good Records is Good Business

Maintaining good records is important to help meet your business and legal obligations. The right record keeping system not only helps satisfy these obligations, but it may save you money and time. Here’s what to consider for your record-keeping system.

Regulator has not given specific guidance as to the records that must be kept. Given that, everything that might be needed to demonstrate that the client’s best interests have been served should be kept on file.

‘If in doubt, keep it on file’ is the basic proposition when it comes to client records.

What Records Do You Need to Keep?

The first step is identifying the records you need to maintain. The obvious examples include leases, contracts, payroll and personnel records, and a range of accounting and finance information, such as invoices, receipts, payables, and inventory.

Second Step is to identifying your business needs as far as investment and insurance agents. I suggest keep clients primary details like name , address, date of birth, place of birth, family members details, marriage anniversary, family income, pan number, aadhaar number, bank details. After taking consent from client keep records of investment folios and insurance policy and any other info client want you to know.

Third Step is to identifying clients consent and his need how client want you to help him for example he want you to call when insurance premiums are due, he want you to call when his investment are getting matured or any specific need of client. I suggest as an agent you should provide service like reminder on due, assist client for maturity of investment, product information, wish them on birthday, anniversary, compliments on new situation like house upgrade, new car, clients child’s achievement, new job etc.

Forth step is to ensure that records of the following matters are kept in relation to the provision of the personal advice:
  • to prove that the best interests duty has been satisfied—the information relied on and the action taken by the provider that satisfies the steps in that subsection;
  • the advice given, including the reasons why it would be reasonable to conclude that the advice is appropriate to the client, had the provider satisfied the best interests duty;
  • Where the provider knows, or reasonably ought to know, that there is a conflict between the interests of the client and the interests of an adviser the information relied on and the action taken by the provider to indicate that the provider has given priority to the client’s interests when giving the advice.
  • Must keep the records required for 7 years after the day the personal advice was provided to the client.
  • One of the simplest ways to ensure that all relevant records are kept is to use checklists. A checklist allows the user to systematically ensure that they have kept a record of everything that needs to be contained within a client file. 
  • The checklist, with some sample data included, includes everything that client file should contain, from the time when the client is first contacted and provided with a financial services guide to the time when the client signs their authority to proceed. It also covers all correspondence after that. The checklist looks like this:
Description: https://4.bp.blogspot.com/-b5aMIiLOXrY/WhO4EDMiv1I/AAAAAAAAWZs/yAaoD-cT3Z0voL-Q6gxuo5C_GQx1MU5LACLcBGAs/s1600/client-file-checklist.png


In ‘the old days,’ when all files were made of paper, the simple way to proceed was to staple a checklist like this to the inside of the file used to hold the client’s information. These days, with digital files, the concept is still the same, but the process of keeping the checklist is perhaps the only part of the file-keeping process that has become less efficient with digitisation.

But it is not that much less efficient. In this digital age, the best way to ensure adequate record keeping is to save a blank copy of the client file checklist within each client file when that file is first created. Whenever the file is added to, it is then simply a matter of checking the checklist to see if it too needs updating.

For example, when a client first makes contact and the practice sends that client a copy of the 
fact finders sheet (FFS), the email containing the FFS should be saved within the client file. At the same time, the checklist is updated to show that this has been done, as in the example above.

A source document is essentially an original document. (In strictness, it is the document from which the relevant information is initially sourced). Whenever possible, a source document should be held on the client file. Critical details like pan no, aadhar no, bank details etc. 

Best practice states that the adviser should have a copy of the original document wherever possible. A good example relates to a client’s fact finders ask the client to nominate the name of their fund and the balance held within it. This is a good record, especially when the client has completed the fact finder themselves. But having a copy of the most recent statement – the document from which the client has sourced the information about their balance – is even better. Clients can misread their own statements, or be providing old data from a statement, etc.

getting access to source documents is critical in minimising mistakes. Clients will sometimes become confused or even tell you things that are not true. ‘Garbage in, garbage out:’ If you base your work on flawed data, then you run the risk of later being accused of providing inadequate advice. Gaining access to source documents is the best way to avoid this risk.


Fifth step please consult a professional with tax expertise regarding your individual situation.

How Do You Want to Keep Them?
Record maintenance can take three basic forms:
·         Paper-basedIt’s old school, but maintaining records in file folders stored in a metal cabinet may be sufficient. However, there is a risk of files being damaged or destroyed with no back-up.
·         Computer-basedmaintaining records on computers saves space and makes management easier. Consider backing up files and keeping them off-site.
·         Cloud computingStoring and managing records on the internet offers possible savings on software, reduces the risk of lost data, and provides access from any location.
What Software Should You Use?
The right software can make life more productive; the wrong software may cost you time and money.

When shopping for software, consider:
·         What is the size of your organisation? Do you want an easy-to-use package, or are you able to hire a dedicated employee to take advantage of a more sophisticated alternative?
·         What sort of training and support is provided? Without the right measure of either, your software may not be the productivity tool you envisioned.
·         Is specialized software available? The needs of different professions can vary greatly. Specialised software may have capabilities not available with more generic software.

·         Do you need mobile capabilities? If you operate your business from the road, you may want your software to have robust mobile features.

Friday, May 19, 2017

Bank Fixed Deposits vs Debt Mutual Funds

For most of us, our search for debt investments begins and ends at bank fixed deposits. When we have idle money in our bank, we invest the excess amount in fixed deposits. Bank fixed deposits are easy to understand. You simply need to walk into nearest bank branch to invest. Moreover, with net banking becoming more and more popular, opening a fixed deposit is merely a click away for a number of us.
Returns are fixed and guaranteed. You don’t really need to worry about whether banks can default. You believe that Reserve Bank of India, the banking regulator, will take pro-active steps or in the worst case, the Government will come to your rescue.
Hence, it is no surprise that a number of investors don’t look beyond fixed deposits for their debt investments.
Of late, you would have read a lot about how debt mutual funds can present a credible alternative to bank fixed deposits. Some argue, and correctly so, that the debt mutual funds are more tax-efficient than fixed deposits. Others counter that the returns from debt mutual funds are not fixed, face credit risk and thus your money might be at risk.
In this post, I will compare tax treatment of fixed deposits and debt mutual funds with the help of illustrations. I will compare fixed deposits and debt MF schemes on a few other parameters too.
Please understand I am referring to only bank fixed deposits. I advise readers to stay away corporate fixed deposits and fixed deposits from small co-operative banks.

Tax Treatment of Fixed Deposits and Debt Mutual Funds

This is an area where debt mutual funds score over fixed deposits.
Interest on fixed deposits is taxed at your marginal income tax rate. For example, if you make a fixed deposit of Rs 1 lac at 8% for 5 years, you will earn Rs 8,000 as annual interest.
You will have to pay tax on this interest income at your marginal income tax rate. If you fall in the highest income tax bracket, you will have to pay income tax of Rs 2,400 on this income (30% of Rs 8,000). I have ignored surcharge and cess.
On the other hand, in case of debt mutual funds, the tax liability arises only at the time of sale of mutual fund units. So, if you purchase debt MF units today, you won’t have to pay any tax till such time you sell those units. It does not matter how long you hold those units.
If holding period for debt mutual fund units (at the time of sale)  is less than or equal to 3 years, the resulting capital gains shall be treated as short term capital gains and taxed at the marginal income tax rate (income tax slab).
However, if the holding period is greater than 3 years, the resulting capital gains shall be treated as long term capital gains and taxed at 20% after accounting for indexation.

Tax Deduction at Source (TDS) for Bank Fixed Deposits

A bank is required to deduct TDS (Tax deducted at source) if the interest paid during the financial year exceeds Rs 10,000 across all its branches. TDS is the tax deducted upfront by the bank (from the interest) and deposited with the Government.
So, if your annual interest from fixed deposits (from a particular bank) is Rs 8,000, there is no TDS applicable. However, if the annual interest is Rs 13,000, the bank will deduct TDS at 10% i.e. Rs 1,300. I have not considered cess and surcharge.
If you have furnished PAN with the bank, TDS will be deducted at 10%. Otherwise, the bank will deduct TDS at 20%. Please understand TDS has no relation to your marginal income tax rate (income tax slab).

Friday, May 12, 2017

5 Financial Lessons From Baahubali's Blockbuster Success

From being patient to never letting emotions cloud one's judgement, Bahubali carries many important lessons for investors.

Like Baahubali, one must be ready to play the waiting game when investing.

In less than two weeks, the worldwide box office collections of 'Baahubali 2: The Conclusion' has surpassed the Rs 1,000 crore mark, making it by far the most successful movie in Indian history. The movie directed by SS Rajamouli, has been released in Hindi, Tamil, Telugu and Malayalam in over 6,500 screens across India, and in 9,000 plus screens worldwide.

While Rajmouli’s magnum opus continues its dream run at the box office, the story about a young prince (Baahubali) who lets go of short-term gains as a matter of principle has an important lesson for traders and investors.

Here are some important financial lessons from Baahubali that every investor can use:

Playing The Waiting Game
Baahubali forfeits his right to the throne but never loses sight of the kingdom. It took two generations to finally gain the kingdom. Similarly in the field of investing, the waiting game eventually pays off, Spend Big To Earn Big.

Baahubali pays a huge price throughout his life. He forfeits the throne. He also gives up a life of luxury to live among the commoners. Eventually, he also gives up his own life. While investing the same principles hold true as Most of us tend to trade and invest without understanding the actual costs and the opportunity costs. We hold on to our investments for a long time and get out at the wrong time.

Greed At The Wrong Time Can Be Your Undoing
Baahubali’s brother succumbs to greed and that eventually proves to be his undoing. Baahubali, on the other hand, was greedy at the right time. Similarly, in the investment arena you need to know when to be greedy and when to be fearful. Greed at the bottom of the investing cycle and fear at the top is positive. The reverse can be disastrous for you.You Don’t Need Superstars
Baahubali proved that you do not need big stars to create a blockbuster movie. That is true of your portfolio too. You need star potential; not just superstars in your investment portfolio.

Never Let Emotions Cloud Your Judgement
This was the underlying theme of Baahubali; the character. Whether he was confronted by his affection towards his mother or his commitment towards his wife, Baahubali never allowed emotion to get the better of his judgement. Emotions are your biggest enemy while investing, You normally tend to follow the herd mentality and you tend to get swept away by emotions. Like Baahubali, your investment decisions must be driven by cold logic and incisive analysis.

Friday, February 3, 2017

This time it's different...........There were four things that stood out in the Budget 2017.

The budget was wholly aimed at improving the infrastructure of the country, especially in infrastructure sector. The budget had many provisions addressing the rural segment of the economy.
Meanwhile, there was also driving force on entrepreneurship and rationalisation of tax structure for start-ups and new setups in the manufacturing sector.

Valuations getting better across the board, focus on themes like Focused Government reforms, Digital Money this all beneficiaries could benefit your portfolio significantly.

There were four things that stood out in the Budget 2017. 
One, focus on unsung India – rural poor & agriculture.
Two was continued focus on fiscal disciple,
Three there was focus on infrastructure spending and fourth was to bring transparency in transactions. Spending on housing and roads would help create jobs and in turn boost consumption, Only if consumption improves one will see an improvement in capex and corporate earnings. According to me, I look at it in the backdrop of global uncertainty and the fact that there has been quite a lot of difficulty in raving up domestic growth. The fiscal muscle available to the government was fairly limited. So I saw this Budget straddling the short-term and the long-term.
fourth was to bring transparency in transactions. Spending on housing and roads would help create jobs and in turn boost consumption.

Now, Lets Come back to Our Money… main topic.
So, The world of investing can be cold and hard. But if you do thorough research and keep your head on straight, your chances of long-term success are good. 

Aggressive strategy: We should look at 2-3 years horizon on Infrastructure sector adding money thru systematic investment basis. After recent demonetization effect we can expectant superior returns from banking and financial sector funds.

Moderate Strategy: We should look at 3-5 years Continue or add money to our existing funds like diversified equity Funds.

Conservative Strategy: Stick to Balanced Fund category with minimum time frame of 3 Years.

I strongly feel adding regular and disciplined investment in equity Mutual Funds will make good Long Term Wealth.

Just Reminded me quote by Sir John Templeton.

"The four most dangerous words in investing are: 'this time it's different.'

Follow market trends and history. Don't speculate that this particular time will be any different. For example, a major key to investing in a particular stock or bond fund is its performance over five years. Nothing shorter.


Please feel free to call me for more detailed discussion.


Regards,
 
Ritesh.Sheth CWM®
CHARTERED WEALTH MANAGER

              Helping you invest better...  

Allaudin Bldg Shop No 1,Manchubhai Road,Malad East,Mumbai - 400097.
Shop No.9,Param Ratan Bldg,Jakaria Road,Malad West,Mumbai - 400064.
Tel:28891775/28816101/28828756/28823279. CELL:9930444099  
www.tejasconsultancy.co.in | E-mail Us: ritesh@tejasconsultancy.co.in
Go Green...Save a tree. Don't print this e-mail unless it's really necessary
Disclaimer:
This emailer is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only and is not spam. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this emailer.The views are personal. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing.
To unsubscribe from future mailer Please e-mail: 
info@tejasconsultancy..co.in

Wednesday, November 30, 2016

2016 will be different

The domestic stock market has reacted negatively to demonetisation and opened lower after digesting the intense social media heat both for and against demonetisation. However, the market gained sanity later and reacted calmly by the close of the week. 

Much has been said about demonetisation but no one denies the pragmatic outcome of the same. Banks have started reducing interest rates and some of the private lenders have already reduced rates by 15 to 20 bps. 
The stock market is altogether an independent animal with has scant regard to demonetisation, if any. However, such moves should bring a positive shift towards a cashless economy. Combined with GST, it would possibly help tame corruption and a new era of meritorious society should emerge. 

In the stock market, open interests in index futures have fallen sharply and are running on the lower side of the annual averages. Volatility, too, is cooling down slowly, which is good for the health of the market. 

Stocks that are banned in the derivative segment stand at a negligible level, indicating a moderation in leveraged positions. Normalcy is creeping back into both the stock market and the economy. 


The stock market is limping back to normalcy. Greed and fear seem to have abated and all the external macro-factors have almost been discounted. 

The massive fall in stock prices on fears of a slowdown seems to be overblown from market’s perspective. It is well known that the market is a six-monthly forward discounting machine. 

Any negative event, whose effects are to be felt within one or two quarters, is almost always discounted. Thus, there is nothing that investors must worry about regarding the effects of demonetising high-value notes, as it has already been discounted by the market. 

The recent fall, therefore, creates a compelling opportunity to buy great businesses. 

Investors should take the opportunity and start purchasing Equity Mutual Fund for long-term portfolio.

views and recommendations expressed in this section are personal. Please consult your financial advisor before taking any position.