Indholdsfortegnelse for May 2024 i Outlook Money

“ No investment product comes with a label that might fit your needs, so the choice is yours to make. In fact, the burden of taking decisions falls squarely on investors these days Excessive shopping has become a modern-day bane—it often becomes a financial burden and takes up too much time. Only recently, a friend was ruing how online sites end up affecting her budget and time. “Social media sites take me to these shopping sites. I sometimes spend hours browsing only to add a couple of things to my cart, which I don’t immediately need. But then comes a day when I am feeling a bit low or conversely am happy about a project completion or something else, and I end up clicking ‘Pay Now’, she said. The explosion…

Enter Correct Details EPF records must match the name and date of birth on Aadhaar. If there’s a disparity, a joint declaration along with the claim should be submitted to correct it, as per EPFO guidelines. Complete KYC EPF claims could be rejected due to incomplete KYC records. It's advisable to complete the KYC process before making any claims. Claims might face rejection if UAN is not linked with Aadhaar. Know The Date Of Joining And Leaving The Organisation Incorrect joining and leaving dates in the EPFO portal can lead to claim rejection. It’s advisable to approach the organisation for confirmations and corrections, or update the exit date independently in the EPFO portal. Be Careful About Bank Account Details Verify the bank name, account number, IFSC code, and branch details.…

Fast Growers: • These are companies with an earnings growth rate in the 25-45% range. • Understand if it is growing by taking up market share or increasing the market size. • Assess if growth relies on few products or innovations. • Confirm the company’s potential for further expansion and market growth. When should you sell them? • Decline in same-store sales or disappointing new store results. • Departure of key executives. • Overvaluation with high P-E and modest earnings growth projections. Stalwarts: • Large companies with moderate annual earnings growth (15-25%). • Ideal for investors seeking steady returns without excessive risk. • Investigate the company’s longterm growth rate and potential risks from diversification. • Review the company’s performance during past recessions and market drops. When should you sell them?…

Hindsight: People look back and they say, I knew the market was going to go down, so why did I put my money in? And then they feel regret. That regret is magnified because of the hindsight. But if they keep a diary on what they knew and why they made the decision, they will find out that what they think they knew, they didn't. Framing: This simplifies difficult problems. For example, when you are looking for a contractor, you may look at three to see which one of them offers a better price and looks like a person you can work with. But sometimes framing can mislead you. For example, when I feel like trading, I ask, if I buy this stock, who is the idiot who is selling…

Interest rates have peaked and central banks across the world have been able to bring inflation into the comfort zone. The US Federal Reserve had also in its recent policy meet in March 2024 hinted at three rate cuts this year. Now, bond yields are in the downward spiral because of anticipated rate cuts. As such, investors are in a dilemma whether they should continue sticking with short-term debt funds or move to long-term ones. If you are also in such a dilemma and want to take advantage of the existing market scenario with lesser volatility, you may consider ICICI Prudential All Seasons Bond Fund. Portfolio The scheme’s objective is to optimise returns through active duration management. It follows an inhouse debt valuation model to take duration calls in the…

MUTUAL FUNDS SOLUTIONS SERIES – PART 6 Many investors consider investments in equity mutual funds which invest in equities, as too high a risk for them, yet they ardently want higher returns than those of fixed income investments. But what if you had the opportunity to invest in funds which offered a higher return potential with slightly more risk? If you are keen for such an investment, then hybrid funds are for you. Hybrid funds provide you the potential for higher returns vis-à-vis fixed income by diversifying across asset classes. How is it possible? Here’s how. Take advantage of multiple asset classes Hybrid funds, as the name suggests, give you the best of the multiple worlds. They invest in multiple asset classes like equity, fixed income, silver and gold etc.…

Behavioural Finance I recently attended a wedding held by an extremely wealthy individual. In totality, seven receptions were held in different expensive venues across two cities. And on the wedding invitation, it was specifically stated that only blessings would be accepted, no gifts. Clearly, the family spent a fortune on this celebration. To which a friend commented that he is not really surprised about such extravagance after seeing the ostentatious pre-wedding celebration of billionaire Mukesh Ambani’s son. The point of this article is not about expensive weddings. It is about how we think about the money being splurged. A lot of people really do get upset at the “disgusting amount of money people spend on weddings”. But what is really disgusting? The opulence? The fact that they can afford such…

70% prioritise health expenses and children’s education On an average, people invest 17% of the total income. Within that, 21% is invested for retirement. This is even lower among those who are aged above 40 There is an equal split between investment growth products and guaranteed products 33% each There is least interest in government schemes focused on retirement. 13% have invested in small savings schemes 15% in NPS 76% of those focused on retirement invest in equity mutual funds 60%+ invest in low-growth-guaranteed-return products like insurance (68%), FDs (64%) Until recently, most Indians considered retirement to be a distant goal and often overlooked it with other goals, such as children’s education, taking precedence. However, with the growth in financial literacy and awareness, more people are now understanding the importance…

Equities can be a great asset class to invest in and build wealth over the long term. However, when you are investing in the stock market, it is important to understand the different segments of the stock market i.e., large caps, midcaps and small caps. Large cap investing involves investing in large market cap companies i.e. top 100 companies in the listed space. These companies typically tend to be industry leaders. The Nifty 50 or the S&P BSE Sensex represents the top 50 and 30 companies respectively and is widely regarded as the barometer of the country’s stock market. There are many benefits of investing in large cap stocks. To begin with, large cap stocks are well-established businesses that are comparatively less volatile than smaller companies. Second, large cap stocks…

Economic and financial cycles bring both challenges and opportunities for investors. Recognizing and adapting to these cycles epitomises ‘business cycle investing.’ By aligning portfolios with macro factors, investors can confidently navigate through growth, recession, slump, or recovery phases. Essence of Business Cycle Investing Economic and financial cycles are inevitable. Business cycle investing involves identifying turning points in economic cycles and aligning portfolios with macro and micro factors. For instance, investors who recognized the shift in Indian business cycle in 2014 reaped substantial rewards. Each phase of the business cycle presents unique challenges and opportunities, akin to manoeuvring through varied roads. Here is a closer look at the phases. 1) Economic conditions in full swing resemble cruising on an expressway, with favourable macros, low interest rates, and robust demand paving the…

Investing in mutual funds is considered one of the best ways to grow wealth over the long term. With a wide variety of schemes available in the market, investors often find themselves overwhelmed when choosing the right one. Many investors tend to focus solely on the performance of mutual fund schemes that are marked and shown by asset management companies (AMCs), or investment platforms, as part of their marketing strategy. This approach may not always be the most effective for individual investors. Understanding Risk Profiles Risk profile is an assessment of an individual’s willingness and ability to take on risk in their investments. It takes into consideration factors such as age, financial goals, investment knowledge, and risk appetite. This assessment helps determine the suitable investment options. Investors are categorized into…

Debt Investment The cover story on debt funds, Should You Invest In Debt Funds Now? (April 2024) was timely given the continuing volatility in the market. Overall, debt funds fared badly in the aftermath of the Covid-19 pandemic with the Reserve Bank of India cutting rates. This makes them all the more likely to be rejected by an average investor in the times to come. Also, I have seen that when it comes to mutual funds, people almost always think of equity funds and hardly ever in debt funds. Traditional debt products, such as fixed deposits, and government smallsavings schemes find more favour. However, there is alway a risk that the equity bubble could burst. After reading this article, I feel like taking some exposure in debt funds now, as…

Peter Lynch says in his book, One Up On Wall Street: “It isn’t safe to own just one stock, because in spite of your best efforts, the one you choose might be the victim of unforeseen circumstances. In small portfolios I’d be comfortable owning between three and 10 stocks. There are several benefits: If you are looking for 10-baggers, the more stocks you own the more likely that one of them will become a 10-bagger. Among several fast growers that exhibit promising characteristics, the one that actually goes the furthest may be a surprise.” Keeping in mind his wisdom, of the 20 stocks that we shortlisted quantitatively, we have handpicked six that can be bucketed under the six categories he advocates. 1. BASF India (Fast Grower): The company is a…

THE BUSINESS OF BULLION RESERVES India ranks among the top 10 countries globally in terms of volume of gold held in its reserves Map not to scale As on March 31, 2024 Source: World Gold Council Gold prices seem to be on a never-ending upward trajectory, breaching its own historical records and reaching new highs. They have been on a secular rally since mid-February. On March 11, 2024, the spot gold price on Multi Commodity Exchange (MCX) surpassed the psychological barrier of ₹65,000 per 10 gram for the fi rst time, and by the end of March, it touched ₹66,746, with a gain of 7.08 per cent in March alone. Now it is on the verge of surpassing the ₹75,000 mark; as on April 19, 2024, it closed at ₹73,280.…

Aditya Birla Sun Life Mutual Fund Financial empowerment is not just about having money; it is about having control over your money and overall finances, making informed decisions, and ultimately achieving financial independence. It is a state of being where you have the confidence and knowledge to manage your money effectively, leading to greater freedom and security in life. In its true sense, Living in Financial Empowerment (LIFE) is not just about survival. It is about moving beyond just surviving, and embracing a journey towards financial wisdom and empowerment. EMPOWERMENT OVER ENTANGLEMENT Choosing empowerment means avoiding entanglement—a life trapped in debt, struggling paycheck to paycheck, and being constantly anxious about finances. This decision determines our future path. For instance, someone who consistently saves and invests wisely is on the empowerment…

Banking The last few weeks saw some frenetic action in the credit card space. In February 2024, India went past the milestone of 100 million cards in force. In March, the Reserve Bank of India (RBI) issued wideranging instructions pertaining to how cards can be issued or used. But soon, concerns were raised about aspects, such as non-performing assets (NPAs), co-branded cards, and reward devaluation. Here’s breaking down the key changes to understand the takeaways for consumers. Growing Too Fast? In February 2020, there were 57 million credit cards in force. This has grown at 15 per cent annually, with concerns being expressed about the speed. The US, with about 1.1 billion credit cards and dues totalling $1.1 trillion, contrasts sharply with India’s 100 million cards and dues of $32…

It is the season of solar panel subsidy announcements. Right after the Centre launched the PM Surya Ghar Muft Bijli Yojana to offer subsidies to 10 million households to set up rooftop solar systems, the Delhi government has announced an extra capital subsidy of ₹2,000 per kilowatt (kW) to Delhi residents for rooftop solar panel installation. Both governments have caps on subsidies. Some other states, too, offer incentives on the use of solar rooftop panels. If you are one of the environmentally conscious people and want to install solar rooftop panels on your house, here’s how to go about it. Steps To Install Register online at the PM Suryaghar portal and apply for rooftop solar plant installation by entering your state, electricity distribution company, electricity consumer number. You can find…

The Outlook Money – Toluna Survey on retirement was conducted by Toluna India to gain insights into retirement planning and travel preferences among Indians. The study tried to understand the attitudes, behaviours, and preparedness of the target sample regarding retirement, with a focus on how they invest, and plan to enjoy their retirement. Target Segment: The target sample included individuals who met the following criteria: Gender: Male and Female Age Group: 30-59 years Cities covered: Delhi NCR, Mumbai, Navi Mumbai, Kolkata Chennai, Hyderabad, Bengaluru, Pune, Ahmedabad, Lucknow, Jaipur, Indore, Surat, Chandigarh, Patna, Visakhapatnam, Kanpur, Nagpur, Bhopal, and Warangal. Travel History: Have travelled within India for leisure once in the last year for a minimum of 3 days. Study Details: The survey employed an online methodology using a standard, structured, self-filled…

NITHYANANDA DEO, AMRAVATI I am a senior citizen and receive a pension of ₹60,000. I have a retirement corpus of ₹1.5 crore, from which I plan to spend ₹25 lakh on my child’s marriage. Additionally, I have around ₹60 lakh in fixed deposits, ₹30 lakh in the Senior Citizen Savings Scheme, and the balance in post office schemes and equity-linked savings schemes (ELSS). I have a health cover of ₹15 lakh and a life insurance cover of ₹80 lakh. My pension is more than I require. Should I invest the surplus amount in real estate or mutual funds? Please advise. Real estate as an investment has been yielding less in the past few years because rental income typically reaches a maximum of around 4 per cent. It is taxable, resulting…

A random search on Google on “Who is Peter Lynch” will throw up two pieces of information about him, among others: his outperformance as a fund manager at Fidelity Investments and his status as a best-selling author. His investment philosophy in picking stocks has been widely acclaimed. During his tenure, the Fidelity Magellan Fund clocked 29.09 per cent annual returns compared to 14.47 per cent of the S&P 500 index. However, few talk about how he underperformed in 1984, 1987, and 1990 versus the S&P 500, albeit by a small margin. Also, no one points out that because he didn’t manage funds directly for about 25 years, it is diffi cult to ascertain how his funds would have done if factors, such as value and momentum, were in vogue. Nevertheless,…

Behavioural finance was a subject of much debate in its early days. Can you tell us about your experience? I came to Santa Clara University at the beginning of 1980 and met Hersh Shefrin (Canadian economist who worked in behavioural finance), who was working on issues of saving, selfcontrol and mental accounting, and framing that in the context of savings. As I was listening to him, it thought that in that framework, we can understand the issue of dividends. Why is it that people care about getting dividends rather than creating what (Nobel laureate) Miller Modigliani called homemade dividends by just selling shares? What people do is use dividends as a self-control device. If they spend the shares, they think they might sell too many and not save enough. So,…

Investment Returns from small-cap and mid-cap (SMID) stocks, and funds based on them, have been superlative for a while. That is good for existing investors. However, this also calls for a reality check on expectations going forward. There is an expectation building up among a section of investors that the returns delivered over the last year will be repeated next year, too. But that is where one needs to check facts. Market Cap And AUM As of the end of February 2024, the assets under management (AUM) of large-cap mutual funds was ₹3.06 lakh crore. As on that date, the AUM of mid-cap funds was ₹2.96 lakh crore, while that for small-cap funds was ₹2.49 lakh crore. Hence, the combined AUM of SMID was ₹5.45 lakh crore, about 1.78 times…

Being a mother of a two-and-a-half-year-old daughter is not easy and I often grapple with the question of how to provide the best upbringing to her. Though my husband and I, like most other parents, strive to provide everything for her, sometimes it seems to stand in contrast with how I grew up as a millennial. My generation was accustomed to leading a modest lifestyle as shopping and eating out were restricted and other luxuries were not always available. Education was the biggest factor that our parents emphasised upon. This kind of lifestyle automatically helped instil financial prudence in us and we realised the value of hard work early on. The life of today’s generation is, however, very different from ours. With families having double income and better financial stability,…