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Stock Market-Time for Shopping?

In India, long before anyone knew the word corona virus, Quarterly GDP was falling. Markets started the month of February 2020 on a negative note after the Union Budget 2020-21 announcements failed to meet investor expectations. Markets continued the downtrend for the second consecutive month in March 2020.GDP was going down but markets were making new peaks. I wrote a blog almost a year back (3rd june 2019 to be precise) predicting correction in stock market. You can read it by clicking here. Whenever stock markets start trading in high valuation zone, market start finding reasons for correction. Coronavirus is one such scape goat.

Corona virus threat coupled with falling oil price created panic in world market.   Finally, markets are corrected 20-25% and reached in bear phase. WHO declared COVID-19 as Pandemic.

No one knows for how long this bear phase will continue. However, market is offering huge discount and it is the right time to start shopping in stock market for quality stocks. Presently, (12.03.2020) Nifty 50 is trading at PE ratio 21.83. It is good time to enter the stock market and buy quality stocks with 3 to 5 years investment perspective. Defensive investers must start their SIP’s in mutual funds.

Does Corona Virus will have all negative impact on Economy?

Countries across the world, including India and the US, are imposing travel restrictions, fuelling fears of a global recession. There are expectations that the loss in trade, tourism, and fresh investment can drag GDP growth.

Read more at:
https://economictimes.indiatimes.com/markets/stocks/news/why-is-coronavirus-seen-as-such-a-big-threat-to-economy/articleshow/74610538.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Aviation, tourism and those manufacturing companies heavily dependent on Chinese spare parts will face worst impact due to COVID-19 Pandemic.  

However, there will be some companies who will make huge profits. Companies making surgical instruments, masks, sanitizers, pathology labs, Hospitals, Pharma companies, local spare parts manufacturing companies and news channels will see top line growth.  

More people die because of Flu and extream climate conditions then the no. of death occured due to noval corona virus also known as COVID-19. However, for COVID-19 there is no drug or treatment available till date which is the prime reason for panic across the globe. If it will take more than a month from now in finding cure, it will have a huge impact on world economy. In a global village, no country can survive in isolation.

Is Gold a Good Investment?

Gold is women’s first love in India. Most of Indian families have some amount of gold in the form of gold jewellery. But very few people actually buy gold as an investment. Indians prefer real estate property over other asset class because of ever increasing population. But from last couple of years land, flats and other real estate properties are not giving any return. Also, this asset class has extremely low liquidity. Because of these problems small investors are looking for other assets.

Government is pushing public towards share market as it has huge disinvestment objective. Since last few months stock market is at its highest level even though economy is going down. Stock market can give high return but it is very risky and need lot of research to make money. That’s why it is better to enter in stock market through mutual funds and always buy on the advice of your financial advisor. To learn about mutual funds please read my blog by clicking here

Keeping money in banks is no longer beneficial due to high inflation. Your savings in banks will reduce with time due to inflation. Thus, to beat inflation, investment in gold is good idea. Gold has higher liquidity than real estate and less risk than equity. Gold can be a good investment if we invest smartly. Besides physical gold, there is several other option of buying gold. You can buy Sovereign gold bonds or you can invest in gold ETF (exchange traded fund) or you can even buy gold mutual funds.

While physical gold can have safety problem, purity problem and buying and selling problem, digital gold can be a better alternative.  Sovereign gold bonds are the best option if you want to invest in gold for longer term. Not only your investment will increase with increasing gold price, but also you will get 2.5% annual return on your gold bonds. You can buy these bonds from any public national bank and even from some private banks that too provides you with the facility to buy them such as ICICI bank.

Other method to investing in gold is ETF gold fund and gold mutual funds. For ETF gold fund you need a Demat and trading account. So if you do not have trading account and don’t want to open one, you can opt for Gold mutual funds which invest in Gold ETF funds. You should also invest in gold to diversify your portfolio. Invest 10-15% of your total investment money in gold. It will diversify your portfolio and save your money from inflation.

Why Mutual Funds Investers suffer losses on Budget day?

This year Budget-2020 is presented on Saturday.  Normally Saturday and Sunday are off days for Indian stock market. However, due to Budget presentation, share market was open and there was a steep fall in BSE Sensex of around 1000 points.

Unfortunately, all mutual funds decided to remain closed on Saturday as usual because as per their offer documents Saturday and Sunday are “Non business days” and NAV is not calculated on these days.

Mutual fund investors face huge loss due to this. All Mutual funds investors were unable to invest or redeem their money on Saturday. Suppose some person wanted to invest money on Saturday in mutual fund then he has to invest it only on monday when again market will be open. On Monday market was recovered and thus he missed the opportunity to buy low.

Logically, when share market is open, Mutual funds should be open too. This is not the first time when budget was presented on an off day. In 2005 also Budget was presented on Saturday. Mutual funds must think about it and in the interest of investors, all mutual funds houses and online discount brokers like Zerodha and Groww must remain open on such holidays. Even if they have to make some changes in offer documents, they must do it.

Millions of Indian Mutual Funds investors are feeling cheated and lose money on third of February 2020. When stock market is open, every investor must have access to invest not just those who directly invest in stocks. I request all Mutual Fund investors to raise their concerns to fund houses to avoid it in future.

Economic slowdown and Indian Budget 2020:

BJP led Indian Government should stop implementing RSS agenda and start listening to economic experts. Presently PM Modi is busy in pleasing few super rich industrialist and businessman. These Businessmen gives highest donation to BJP during election. However, Businessmen are not economic experts; they are expert of running a company profitably. They have their own hidden agenda to generate more profit for their company by requesting government to make favourable policies. They are focussed on their business not on Indian overall economic growth.

Government should trust more on Bureaucrat and let experts do their jobs. If PM or FM need advice they should listen to Nobel Laureate. Even if opposition parties especially our Ex-PM Manmohan Singh, who changed the course of Indian economy in 1991 and again in his tenure as a PM, wants to give advice, Government must be open to listen to his advice. Unfortunately, presently, this is not the case.

A good Government must have a long term vision. Government should focus on new ways to generate revenue rather than selling profit making PSU’s.Reducing corporate tax was a short term solution for long term problem of economic slowdown. Disinvestment of profit making PSU’s is another short term solution. To make a balanced budget, Govt. should focus on Agriculture and farmers.

A realistic Budget is far better than a popular but unrealistic budget. This is because every surprise brings panic in market. Though I am not a economic expert but as much as I learned about economy as an investor I find more and more economic experts suggesting Government to increase spending on infrastructure project which will generate employment and demand in market rather controlling fiscal deficit. Also, reduction in personal taxes are important, which will give purchasing power to people.

An extra ordinary problem needs extraordinary solutions. India is facing huge economic slowdown. GDP is at its lowest level in last 6 years. Everyone has very high expectations from Government, because this Budget will decide our direction in this new decade.  


Definition:

Fiscal Deficit: The difference between total Income (revenue) and total expenditure of the government is termed as fiscal deficit. It is represented in terms of percentage of national GDP.

GDP= Gross Domestic product: It is a measure of the value of economic activity within a country. It comprise of market values of all final goods and services produced in an economy during a period of time.

Wars and Elections

In recent time, wars are becoming tried and tested formula for winning elections. Whenever Existing Government loses popularity and feels it difficult to win elections again, they either initiate a conflict or escalate any dispute to divert public attention from real issues.

Recently we saw same thing during Indian Election where BJP Govt. converted Pulwama attack  into Indo-Pak war. Now US Elections are coming and Mr Trump is losing popularity. Thus, it seems that Mr. Trump is considering a war as the solution to re-gain popularity.

Today we saw its beginning when U.S. airstrike killed Maj. Gen. Qassem Soleimani, leader of the foreign wing of Iran’s Islamic Revolutionary Guard . Soleimani was not just Iran’s top-ranking military official but he is also very close to the country’s Supreme Leader Ayatollah Ali Khamenei. In a message published to his official website, Ayatollah Ali Khamenei said “harsh revenge awaits the criminals” involved.

Pentagon is calling it a “decisive defensive action”. The Pentagon also blamed the Iranian general for orchestrating attacks on coalition bases in Iraq in recent months, including an attack on 27 december that culminated in the deaths of an American contractor and Iraqi personnel.

Iran influence is increasing in the gulf region and US and its ally does not like it. It is Election time in US and anything is possible. Any escalation from Iran side may convert this tension into a war.

We, as a citizen and voters of different countries must understand that we should not let wars and offensives distract us. We should cast our vote based on five year performance of government not on emotional outburst or instant patriotism. Because electing right government is more patriotic then supporting corrupt government. Governments will stop waging wars once they realise that wars will backfire on their popularity. Let’s say no to wars and yes to peaceful resolutions of any dispute. Let us keep humanity first and live with peace and harmony.  

Be a Defensive Investor

 

Broadly speaking, there are two kinds of Investors –Aggressive and Defensive. Aggressive investors are those who are willing to take more risk for more profit, thereby putting their investment at higher risk. Whereas defensive investors are those who are more interested in avoiding any losses on their initial investment. They want to play safe. They are happy with minimum returns.

Investment and gambling are two different things. In investment, you take a calculated risk and do the proper research before investing. In gambling, you leave everything on your luck and wild guess.

So, even if you are an aggressive investor, do proper research before trying to make more profit. Do not just invest blindly on someone advice. Instead of making higher profit you may end up losing all your money. Do not invest on someone’s recommendations or past performance of any share or mutual fund. Past performance does not guaranty future returns.

We all know one universal principle of investing: More risk, more profit. Conversely, it also means that chances of making profit decreases as profit increases. If chances of making profit decrease too much, it becomes gambling rather than investing. In gambling most of people lose money. Similarly, investing with high risk can make you lose your whole money.

Seldom people told stories of peoples making lot of money in very short span of time from stock market. However, there are many more cases where people lost all of their hard earned money. Thus, do not let other’s success stories blind your eyes.

What is the purpose of investing? To make money, right? If instead of making money, you start losing money, there is no benefit of investing. Better, keep your money safe in bank account or in liquid funds. So, by default everyone must be a defensive investor.

If you have some extra money which you do not need for several years, you can invest it in stock market as an aggressive invertor. For high risk and high return, invest in small cap funds or small cap stocks.  

For retail investors and first time investors, defensive investing is the best. Diversify your portfolio and invest in different sectors and different schemes. Be happy with 10 to 15% annual profit on your investment in stock market and mutual funds because no other scheme will give you better returns. It has been observed that in long term (five to seven years), stock market gives good return.  As per your risk appetite, mix your investment in debt and equity.

Below are some other articles on investment:

1)

2)

Disclaimer: Mutual Fund/ stock market investments are subject to market risk. Please read the offer document carefully before investing’

200 Friends!

After waiting almost one year, finally today I reached to my second milestone of 200 followers. Cheers!!!

Thanks to all who appreciated, criticized and motivated me and my blogs. Somewhere I read that 70% bloggers quit in their first year. I am lucky to find some wonderful people who liked my blogs and gave me reason to keep writing. Though I know, neither me nor my writing are perfect, still you guys supported me. It is the time to thanks you all who read my blogs and most importantly I would like to thanks those who commented on my blogs.

A big THANKS to everyone!

Blind Marriages

There are many broken marriages because of the physical or mental incompatibility. People marry without knowing each other. They take the oath of living together forever as soul mate and in very first night they come to know this relation will not last any longer because of incompatibility! Still you try to patch up things but within a year or so you feel like enough is enough. You can’t spoil your whole life for your oath. You deserve a better life and with a heavy heart you broke up and move on.

In Indian sub-continent, this is a tremendous problem. We can call such unions as blind marriage where boy and girl didn’t see and talk to each other until they get married. Families of bride and groom make all the arrangements and they feel quite proud about it and believe it is morally correct. We can minimize such incidents of illogical practice resulting in divorce, if we let boy and girl to meet and understand each other completely before marriage. Let them spent some time together before they marry each other.

We do see some successful blind marriages, but in most of the cases such marriages succeed only because of wife does all the sacrifices to save her marriage. Her parents always tell her that if she disobeys her husband she is wrong, and there is no space in their home for her if she came back after fighting with her husband. Can there be anything more ridicules’ than this? Society preaches such behaviour as morality!

Time had come when we should raise our voice against such stupidity so-called morals. In small cities and villages you can still find such practice. I do not understand logic of it in a society which allows co-education . But when it comes to marriage it becomes somewhat objectionable if bride and groom want to see or talk to each other before marriage, the whole family will have problem. As blind dates are dengerous, so are blind marriages which can ruin your entire life.

How to Invest intelligently?

Below are some points about investment which you must keep in your mind while investing.

  1. Diversification: Never put all eggs in same basket. Always invest money in two to three different places like real estate, gold, equity and debt instruments like FD and Debt funds etc.. By doing so, you can minimise your risk of losing your entire investment.
  2. Start Saving and investment early in your life: Time is money. It is not just a saying but a proven fact. Always put your money to earn for you. As you give your investment more time, your return will grow faster due to compounding effect. To reap benefits of compounding, you need to give 5 to 10 years time to your investment. Encourage your youngsters to start investing in safe avenues like PPF and debt funds. Even Rs500 investment over a period of 20-25 years can fetch you big corpus. You can even start with Rs100 in some mutual funds through SIP. To know more about Mutual Funds you can read my article by clicking here.
  3. Discipline and regular investment: Small amount invested regularly can give you bigger amount than big amount invested irregularly. Most often, we wish to accumulate big amount for investment. However, when we have some need, we take out some money from this amount and this way our investment plan remain a plan! Invest monthly whatever surplus you have and discipline yourself to save every month that small amount whatever be the condition. Make regular investment a rule of your life not a habit.Because habits you can change, rules you can’t.
  4. Egg, Chicken and Hen: Whenever you invest, always invest with short term, medium term and long term perspective.Because you will need money in every part of your life. Thus, investment must be goal orianted like retairement, education, foreign tour and marriage etc. For short term, always keep some money (equivalent to minimum 6 month of your earnings) in saving account or in liquid funds, which can be redeem immediately. For medium term (2-5 years), invest in large cap. Mutual funds, Gold and other such instruments. For long-term investment, invest in PPF, Index funds, FD, NPS, debt funds, gold and govt. securities. You may not get high return but your money will be safe and with time it will grow rapidly.

Happy investing!!!

How To Love Your Work Which Is Not Your Passion?

It is true and now a days a general advise that do what you love. However, sometimes our love and passion are not financially viable source of income. In such case we can’t do what we love to do for our survival and wellbeing. In such scenario, we have to do what we ought to do!

From college itself we start making wrong carrier choices. Later on we get job based on those wrong carrier choices. We became mediocre employee and keep cursing everyone. In schools and colleges, we choose courses based on peer pressure, parents’ wishes and because of our inexperience.

Most of parents force their kids to choose professional courses. Most importantly, in India, parent knows only two profession- Medical and Engineering. As if no one else is making fortune. Without knowing and asking their kids, parent force them to take mathematics or biology. One more problem with Indian parents is that they think their child is genius but not studying enough to get good marks (90%). They don’t care about interest of their children. Suppose if a child is very good in painting, instead of motivating and supporting him to become great painter, parents will force him to become Engineer. Every parent in India wants his child to top in class and even in school. Somebody must tell them that only one person can top the school at one time! So, parents should have realistic goals and do some more research about new courses and professions available now days. Till this happens, people have to find some methods to love what they are doing.

Now question is how to develop your interest in what you have to do for living? Firstly, you must learn completely about your job and try to understand what is the importance of your job? No job is small or big. Every job is important. Find out how your job, you company or your industry is bringing positive change in society. For example: if you are working in HVAC company, you may be a small part of your company but always remember that for perfectly running  any machinery every part, how so ever small it may be, is equally important. Your work may not be changing anyone’s life, but your company is providing comfort and clean air to lot of peoples and making their life better. By knowing this you can develop love for your job. Because you are not just preparing drawings, presentation or doing execution work at site but you are working to make life better for thousands of peoples who will come to that building.

Secondly, work hard to become expert of your profession. When you will become expert, you can work based on your own rules. You will receive recognition; increments and appreciation which will help you love your work. Most of the time it is our laziness and habit of procrastination that makes us hate our work. You do not love your job when you do not know your job. When you work hard and learn completely about your job, you will no longer depend on company, but company will depend on you. You will gain extra freedom and flexibility in work, which will definitely improve your working environment and make you love your job.

If you can’t do what you love, love what you do.

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Water crisis in Indian villages and its solution.

Population growth is putting enormous pressure on natural resources. Underground water, which was available in abundance few decades ago is depleting very fast. Rich peoples always find a short-term solution to avoid such problems without thinking about long-term effect. First, they come up with above ground pumps to store municipal water in overhead tanks and to use it 24 hours uninterrupted. Due to which poor peoples were unable to get water. Later, when there was not enough water in municipal water line, they start using submersible pumps. However, no one think about its long-term effect on water table and its permanent solution.

Water level is going down very rapidly. In many villages, hand pumps are not working anymore. You have to bore as deep as 200m depth to find sweet water, such boring cost more than one lakh Indian Rupees. Poor’s and even lower middle class peoples cannot afford such huge amount of money.

In Neem village in Mathura and Dori nagar in Aligarh, potable water crisis is increasing day by day. Poor farmers and villagers are suffering daily. Daily women have to walk for 2 km for sweet water. Submersible pumps with less than 200m boring are no longer working. If such scenario will continue for long time, even plants will start dying causing double havoc for human being.

What is the solution of this problem?

Rainwater harvesting, reducing wastage of clean drinking water and using treated water can be the solution of this grave problem. Without Government and NGO involvement, this will not be possible. However, Government is giving slogans. No concrete action until date.

What is Rainwater Harvesting?

Rainwater Harvesting refers to the practice of collecting rainwater from a roof or other surfaces and to use this water for different purposes. Water collected is typically used as a non-potable source for uses such as toilet flushing, urinals, and irrigation.  If the water is treated it can also be used as potable water for drinking, dishwashing or bathing. 

Time waste is a life waste.

If you waste money, you can earn it back. However, you do not have any such facility with time. I have seen people killing time when they do not have anything else to do as if they will recover that time back whenever they want!

Time is most precious thing because as of now, we do not have any technology to reverse time or create time. Hence, use every second of every minute of every hour of every day of your life properly. To use time effectively, always carry some good books with you. Whenever you do not have anything else to do, you can start reading books. If you find it clumsy then you can download some books in your mobile and read it in your mobile whenever you have free time. If you are not interested in reading, then watch educational and motivational videos on YouTube. Meet peoples; call your friends and family members in free time. Make new friends, attend seminars, functions and fairs.

                World is changing very fast. Everyday some new technology is coming in market. Keep updating yourself. Whether you are a student, serviceperson or a businessman, it is equally important for you to learn continuously about new ideas, technologies, politics, cultures and religions. Utilise every moment instead of killing time in doing useless things. Whether rich or poor, we all have only 24 hours a day. No one can buy more time for himself. Hence, make most out of it.

Following are some time saving tips which can help you to save time:

  1. Wake up early. Start with to do list.
  2. Walk faster. When you do not have any goal in mind you walk slowly. Always set your goals and try to exceed them.
  3. While it is good to make friends, avoid wasting time in meaningless gossiping, backbiting and sitting idle.
  4. Plan before you start any activity. Rework waste time, money and energy. Hence, always plan in your mind first.
  5. Entertainment is important in life, however, do not waste whole day watching movies or cricket matches on TV. Try some outdoor games and creative entertainment for few hours.
  6. Take good care of your health to enhance your efficiency.
  7. Try to live near to your workplace. Daily two hours travel does not make any sense in long team.
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