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International Gemological Institute (India) Ltd (IGI) : A Mini Fundamental Analysis

noreply@blogger.com (Divya Narayan) — Sun, 16 Mar 2025 09:21:00 -0700

IGI: A Fundamental Analysis

Ayodhya, the birthplace of Lord Rama, recently witnessed the grand inauguration of the Ram Mandir. Many of us watched the live telecast of this historic event, where the idol of Lord Rama was adorned with exquisite jewelry. Interestingly, these jewels were certified by the International Gemological Institute (India) Ltd (IGI), the world's second-largest independent certification and accreditation service provider for natural diamonds, lab-grown diamonds, and jewelry.

While IGI also offers educational programs in gemology, this segment contributes minimally to its revenue. Given that IGI is the second-largest in its industry, one may wonder about the first. The top position is held by the Gemological Institute of America (GIA), a nonprofit organization based in California.

Disclaimer

This analysis represents my personal opinions and should not be considered a recommendation to buy or sell stocks. It is intended as a supplementary resource for your own research before making investment decisions. I have held a substantial position in IGI since its IPO and continue to maintain my holdings.

Company Overview

IGI operates on an asset-light business model. Established in Belgium in 1975, the company later expanded internationally. In India, IGI commenced operations in 1999. Except for its businesses in Belgium and the Netherlands, all other global operations fall under IGI India. Notably, with the proceeds from its IPO in 2024, IGI India acquired IGI Belgium and the Netherlands as wholly owned subsidiaries, bringing the IGI brand under its umbrella.

Since May 2023, IGI has been fully owned by BCP Asia II Top Co Pte. Ltd., an affiliate of Blackstone, the world’s largest alternative asset manager. Post-IPO, Blackstone retains a 76.55% stake in IGI.

Q4 CY24 Results

According to IGI’s Q4 CY24 investor presentation:

The company operates in 10 countries, including India, Belgium, the USA, Thailand, the UAE, Hong Kong, and China.
It has 31 labs, 18 schools, and employs 672 gemologists.
IGI holds a 50% market share in India and 33% globally.
In the lab-grown diamond (LGD) segment, IGI enjoys a 65% global market share.

Standalone Financials (CY24)

Revenue: ₹785.4 Cr (23% YoY growth)
EBITDA Margin: 73% (+2%)
PAT Margin: 56% (+4%)
ROCE: 70%
ROE: 68%

Consolidated Financials (CY24)

Revenue: ₹1,053.2 Cr (17% YoY growth)
EBITDA Margin: 57%
PAT Margin: 41%
ROCE: 48%
ROE: 47%

Over CY21-CY24, IGI has demonstrated impressive growth:

Total Reports Issued: 10.4 million (34.3% CAGR)
Revenue Growth: 29.1% CAGR
EBITDA Growth: 33.5% CAGR (Margin improved from 66% to 72.8%)
PAT Growth: 36.8% CAGR (Margin improved from 47% to 55.9%)
ROCE and ROE Decline: Adjusted for fresh equity issuance in Dec 2024

Q4 CY24 Standalone Performance:

Revenue: ₹190.3 Cr (+3% YoY)
EBITDA: ₹141.9 Cr (+10% YoY)
PAT: ₹111.7 Cr (+27% YoY)

Q4 CY24 Consolidated Performance:

Revenue: ₹265.0 Cr (+6% YoY)
EBITDA: ₹152.2 Cr (+18% YoY)
PAT: ₹113.8 Cr (+45% YoY)

Key Observation:
The Q4 results fell short of market expectations. This was primarily due to an extended holiday period in November, causing factory shutdowns for 15-20 days, affecting business operations.

Management & Governance

IGI is managed by a team of professional experts under Blackstone’s ownership, mitigating risks related to management inefficiencies. ✅

Growth Prospects

✅ Management is optimistic about sustaining a 15-20% CAGR over the next five years.
✅ The company’s asset-light model requires minimal capital expenditure (No debt).
✅ IGI operates in key jewelry-consuming markets. India dominates 95% of global diamond polishing, making it a crucial market.
✅ Rising LGD adoption worldwide as it offers a cost-effective alternative to natural diamonds.
✅ Per capita jewelry consumption in India is 80% lower than in the US, indicating significant growth potential.
✅ Certification demand is increasing due to heightened authenticity and transparency requirements.
✅ Increased marketing efforts (TV advertising & B2C campaigns) to boost brand awareness.

Challenges & Risks

❌ Rising Trade Receivables: Increasing YoY, impacting the cash conversion cycle.
❌ Macroeconomic & Geopolitical Risks: European operations affected by economic slowdown and geopolitical tensions.
❌ LGD Price Volatility: Past declines indicate potential risks, though prices have stabilized.
❌ Seasonality & Operational Disruptions: Extended holiday shutdowns impacted Q4 performance.
❌ Growing Competition: New entrants in LGD certification may pose a threat.
❌ Sustainability & Cost Pressures: High CAPEX & OPEX in LGD production.
❌ Consumer Adoption Risks: LGD adoption in India is still in early stages.

Stock Price Correction: Possible Reasons

Slower growth in Revenue (0.6%), EBITDA (0.4%), and PAT (3.6%) due to extended holidays and volume-led discounts.
100% Share Pledge Concerns: Clarified by management in a recent NDTV interaction—no pledging occurred pre- or post-IPO.
Goldiam International’s Q3 FY25 Concall: Management mentioned reduced certification needs for entry-level LGD jewelry, raising concerns about IGI’s future revenue streams.

Final Outlook

IGI’s primary competitive advantages include high barriers to entry and first-mover advantage in LGD certification(65% market share globally). The industry is expected to grow as follows:

Lab-grown diamonds: 22% CAGR
Natural diamonds: 8% CAGR
Jewelry & colored stones in India: 8% CAGR

With India projected to be the growth engine of the global diamond market, factors such as rising discretionary incomes, increasing financial independence of women, and Western consumer trends will drive demand. However, IGI must address its rising trade receivables and cash conversion cycle challenges.

Key aspects to monitor going forward:

Q1 CY25 YoY / QOQ growth trends
Belgium business performance
LGD price fluctuations
Goldiam International’s next earnings call

I hope you understand why I didn't talk about valuation—it is your call. Valuation is not the cup of coffee for all; it totally depends on risk appetite.

Stay tuned for further updates. Happy investing! 🚀

Any corrections / Suggestions / feedback, Please share it in comments below.

Black Box Ltd: A Mini Fundamental Analysis

noreply@blogger.com (Divya Narayan) — Sun, 9 Mar 2025 09:47:00 -0700

Black Box Ltd, an Essar Group company, was acquired in 2019 as a loss-making U.S.-based entity. It has since evolved into a key player in the global digital infrastructure sector, providing system integration services, technology solutions, and support services.

The primary focus of this analysis is the company’s current financial fundamentals, its Q3 FY25 results, and management’s insights as shared in the Q3 earnings call.

Disclaimer: This analysis reflects my personal opinions and is not a recommendation to buy or sell the stock. It should be considered as a supporting resource for your own research before making any investment decisions.

I have held a tracking position in this stock for the past two quarters and continue to hold it.

Q3 FY25 Financial Results

Pros:

✅ Margin Expansion: EBITDA margin at 8.7% and PAT margin at 3.7%, aligning with management’s guidance.
✅ Consistent PAT Growth: The company has posted eight consecutive quarters of PAT growth, with a 14% CQGR (Compounded Quarterly Growth Rate).
✅ Efficient Cash Flow Management: The company maintains a negative cash conversion cycle, indicating strong working capital efficiency.

Cons:

❌ Revenue Stagnation: Growth remains flat.
❌ Debt Levels Unchanged: No significant reduction in outstanding debt.
❌ Low Tax Rate: The company benefits from tax set-offs due to prior losses, resulting in an unusually low effective tax rate of 5%-8%.

FY25 Revised Guidance

Revenue Growth Guidance Lowered: The company has significantly reduced its revenue growth forecast due to a subdued order book and its strategic decision to exit tail customers (low-value clients).
Margin Expansion Despite Lower Revenue: EBITDA and PAT margins have been revised upwards, driven by improved operational efficiencies, better productivity, and higher-quality revenue streams.
Long-term Targets:

Double-digit EBITDA margins by FY27
$2 billion in revenue by FY29

Key Growth Drivers

📌 AI and Digital Infrastructure Expansion: Recent advancements in AI reinforce management’s confidence in achieving its $2 billion revenue target.
📌 Increased Investments by Tech Giants: Hyperscalers (global tech giants) continue to expand investments in digital infrastructure and data centers.
📌 IT Modernization Across Industries: BFSI and Healthcare sectors are prioritizing IT modernization, driving demand for enhanced digital operations and data storage solutions.
📌 Sales Leadership Investments: Strengthening the business development and sales leadership teams is expected to improve the company’s deal pipeline and win rate for large contracts.

Key Challenges (Draggers)

⚠️ Slowdown & Uncertainty in the U.S. Market: Over 70% of the company’s revenue comes from North America, making it highly vulnerable to macroeconomic slowdowns and policy shifts.
⚠️ Geopolitical Risks & Policy Changes: Recent political changes in the U.S. may impact the business environment, affecting demand from enterprise clients.

Operational Efficiency Strategies

Cost Optimization via Indian Workforce: Post acquisition, the company is leveraging lower-cost manpower from India to improve operational efficiency.
Tax Optimization: Black Box continues to offset prior losses against current tax liabilities, resulting in a significantly reduced tax burden.
Focus on High-Value Customers: The company remains committed to acquiring strategic, high-value clients, which contributes to improved margins.

Final Outlook & Investment Stance

Management appears confident in achieving its $2 billion revenue target by FY29, with 80% of the growth coming organically and the remaining through strategic acquisitions.
The company is focusing on large enterprises and investing in sales leadership to improve its win rate for big-ticket deals.
Order booking momentum is expected to pick up from Q4 FY25 onward, which will be a key factor to monitor.

🔍 Investment Stance: A wait-and-watch approach is advisable until the Q4 FY25 results are released. Investors should look for positive trends in revenue growth, sustainable margins and order book expansion before making further investment decisions.

The Satvic Revolution: 7 Life-Changing Habits - Book Review

noreply@blogger.com (Divya Narayan) — Wed, 26 Feb 2025 08:23:00 -0800

Hi Readers, Recently I read this 466 page book and felt compelled to share its insights with you all.

In today’s fast-paced world, many of us struggle with low energy, stress, and health issues. We often turn to complicated diets, expensive supplements, or quick fixes that don’t bring lasting results. But what if the key to a healthier, happier life was simple and rooted in ancient wisdom?

The Satvic Revolution: 7 Life-Changing Habits offers a refreshing approach to well-being, based on nature’s principles and traditional Indian practices. This book introduces small yet powerful lifestyle changes—focusing on food, sleep, fasting, and mindfulness—to help detoxify the body, improve digestion, and boost energy levels naturally.

In this review, we break down the key lessons from the book and explore how these simple habits can bring lasting transformation to your life. Read on to discover how you can embrace the Satvic way of living!

The book introduces seven simple habits that can help detox the body, increase energy levels, and bring peace of mind. The focus is on clean eating, proper sleep, mindful living, and aligning daily routines with nature’s cycles.

Key Takeaways

1. Eat Natural, Plant-Based Foods
The book encourages eating fresh, whole, and unprocessed foods like fruits, vegetables, nuts, and grains. Avoiding packaged and artificial foods helps the body function at its best.

2. Follow the Sun-Cycle Eating Pattern
The body digests food best when the sun is high, so the largest meal should be in the afternoon. Dinner should be light and eaten early to allow proper digestion before sleep.

3. Fast Regularly for Detoxification
Fasting gives the digestive system a break, helping the body cleanse itself naturally. The book suggests fasting once a week with only fruits or liquids.

4. Drink Plenty of Water the Right Way
Hydration is key to good health. The book recommends starting the day with warm water to flush out toxins and staying hydrated throughout the day.

5. Sleep Early and Wake Up Early
Sleeping before 10 PM and waking up around sunrise helps the body align with nature’s rhythm. This improves energy levels, mental clarity, and overall health.

6. Practice Yoga, Meditation, and Mindfulness
A calm mind leads to a healthy body. Simple practices like deep breathing, meditation, and yoga can reduce stress and improve focus.

7. Simplify Your Life and Avoid Stress
A clutter-free mind and lifestyle lead to happiness. The book advises limiting screen time, reducing negative thoughts, and staying connected with nature.

Pros & Cons

✅ Easy to Understand & Follow – The book breaks down complex health concepts into simple habits.
✅ Holistic Approach – It focuses on both physical and mental well-being, not just diet.
✅ Based on Timeless Wisdom – The practices are rooted in Ayurveda and ancient Indian traditions.

❌ May Feel Restrictive – Avoiding processed foods, eating early, and fasting may be difficult for some.
❌ Limited Scientific Backing – The book is based more on traditional knowledge than modern scientific research.

Final Thoughts

The Satvic Revolution is an excellent book for those looking to improve their health naturally. It provides simple, effective habits that can transform your life if followed consistently. While some may find the approach strict, the core message of mindful and natural living is beneficial for everyone.

You can buy it from HERE

IKIGAI : THE JAPANESE SECRET TO A LONG AND HAPPY LIFE - BOOK REVIEW

noreply@blogger.com (smart satya) — Sun, 16 Feb 2025 00:18:00 -0800

Hello Readers..

Have you ever wondered why some people live long, fulfilling lives while others struggle to find happiness? Ikigai: The Japanese Secret to a Long and Happy Life by Héctor García and Francesc Miralles explores this very question. Rooted in Japanese wisdom, the book uncovers the habits, mindset, and lifestyle choices that contribute to longevity and purpose.

From the serene villages of Okinawa—home to some of the world’s longest-living people—to practical lessons on finding meaning in everyday life, Ikigai offers an inspiring guide to a more balanced and fulfilling existence. In this review, we break down the key takeaways from the book and explore whether its lessons can truly help us lead happier lives.

What’s the Book About?

This book explores ikigai, a Japanese concept that means “reason for being” or “what makes life worth living.” The authors travel to Okinawa, a Japanese island known for its many centenarians (people who live past 100), to learn their secrets to a long, happy, and fulfilling life.

Key Takeaways

1. Find Your Purpose – Ikigai is about discovering what you love, what you're good at, what the world needs, and what you can earn from. When these four things align, you feel more satisfied with life.

2. Stay Active – Okinawans don’t really "retire." They keep themselves busy with hobbies, work, and social activities that give them a sense of purpose.

3. Eat Well and Move Naturally – They eat mostly vegetables, tofu, and fish, and follow the Hara Hachi Bu rule (eating until 80% full). They also stay active by walking, gardening, or doing simple exercises.

4. Stay Connected – Strong friendships and a supportive community help reduce stress and increase happiness.

5. Embrace Simplicity – Accepting life’s ups and downs, letting go of stress, and enjoying simple pleasures contribute to long-term happiness.

Pros & Cons

✅ Easy to read – The book is simple and inspiring.
✅ Useful life lessons – Practical advice that anyone can follow.
✅ Positive and uplifting – Encourages a meaningful, happy life.

❌ Can feel repetitive – Some ideas are repeated in different chapters.
❌ Not deeply scientific – It shares real-life experiences but doesn’t have much research backing every point.

Final Thoughts

This book is a great reminder to slow down, find what makes you happy, and live with purpose. It’s perfect if you enjoy self-improvement books with a touch of Japanese wisdom.

How to win friends and influence people by Dale Carnegie - Book Review

noreply@blogger.com (smart satya) — Sun, 7 Apr 2024 03:42:00 -0700

Hi readers, it's always hard to find the best way to deal with the people around us. We cant even persuade our own family members to do what we said. We don’t need to talk about our colleagues / sub-ordinates. Here is the solutions to all these - Mastering Relationships: A Review of 'How to Win Friends and Influence People’" by Dale Carnegie.

It is the ultimate guide in simple words. Packed with practical tips and timeless advice, this book will teach you how to navigate relationships with ease and authenticity. Get ready to unlock the secrets of influence and build lasting connections like never before!

Fundamental techniques in handling people:

Don’t criticize, condemn, or complain: Criticizing, condemning, or complaining about others can lead to resentment and defensiveness, hindering effective communication and relationships.

Give honest and sincere appreciation: Showing genuine appreciation for others' efforts or qualities fosters positive feelings and strengthens relationships.

Arouse in the other person an eager want: Motivate others by appealing to their desires and interests, encouraging them to take action willingly.

READ: Book Review - The monk who sold his ferrari

Six ways to make people like you:

Become genuinely interested in other people: Showing a sincere interest in others helps build rapport and establishes connections based on mutual understanding and respect.

Smile: Smiling is a universal sign of friendliness and warmth, making interactions more pleasant and inviting.

Remember that a person’s name is, to that person, the sweetest and most important sound in any language: Using someone's name in conversation demonstrates attentiveness and makes them feel valued and respected.

Be a good listener; encourage others to talk about themselves: Actively listening to others and showing genuine interest in their experiences and perspectives can strengthen relationships and foster trust.

Talk in terms of the other person's interests: Tailoring conversations to focus on topics that interest the other person demonstrates consideration and helps maintain engagement.

Make the other person feel important, and do it sincerely: Acknowledging the value and worth of others reinforces positive feelings and promotes goodwill.

When influencing people to your way of thinking:

The only way to get the best of an argument is to avoid it: Instead of engaging in confrontations or arguments, seek common ground and strive for understanding.

Show respect for the other person's opinions; never say they are wrong: Respectfully acknowledging differing opinions validates others' perspectives and encourages open communication.

If you are wrong, admit it quickly and emphatically: Accepting responsibility for mistakes demonstrates integrity and fosters trust and credibility.

Begin in a friendly way: Initiating conversations or interactions with a positive and approachable attitude sets a welcoming tone and encourages receptiveness.

Get the other person saying "yes" immediately: Garnering agreement on small points or requests establishes a pattern of cooperation and increases receptiveness to larger ideas.

Let the other person do a great deal of the talking: Allowing others to express themselves freely fosters a sense of involvement and ownership in the conversation.

Let the other person feel that the idea is theirs: Encouraging others to contribute ideas and solutions fosters collaboration and buy-in.

Try to see things from the other person’s point of view: Understanding others' perspectives promotes empathy and enhances communication and problem-solving.

Be sympathetic to the other person’s ideas and desires: Acknowledging and validating others' emotions and aspirations fosters trust and cooperation.

Appeal to nobler motives: Encouraging actions that align with values such as integrity, compassion, and fairness can inspire cooperation and goodwill.

Dramatise your ideas: Presenting ideas in a compelling and engaging manner captures attention and enhances persuasion.

Throw down a challenge: Challenging others to strive for excellence or overcome obstacles can motivate action and inspire growth.

Read: The Phsychology of Money

To be a leader and change people without giving offence or arousing resentment:

Begin with praise and honest appreciation: Recognizing others' contributions or strengths fosters positive feelings and opens the door for constructive feedback.

Call attention to people’s mistakes indirectly: Addressing mistakes in a non-confrontational manner preserves dignity and encourages learning and improvement.

Ask questions instead of giving direct orders: Engaging others in problem-solving or decision-making promotes autonomy and encourages ownership of tasks.

Let the other person save face: Avoiding public humiliation or embarrassment preserves relationships and encourages cooperation.

Praise the slightest improvement and praise every improvement; be hearty in your approbation and lavish in your praise: Recognizing progress and effort reinforces positive behavior and encourages continued growth.

Give the other person a fine reputation to live up to: Setting high expectations and believing in others' capabilities can inspire them to meet or exceed those expectations.

Use encouragement; make the fault seem easy to correct: Providing support and guidance promotes confidence and resilience in overcoming challenges.

Make the other person happy about doing the thing you suggest: Framing requests or suggestions in a positive light increases motivation and willingness to comply.

In conclusion, "How to Win Friends and Influence People" is more than just a self-help book. it’s a blueprint for living a richer, more rewarding life. Its principles transcend time and circumstance, offering timeless guidance for anyone seeking to navigate the complexities of human relationships with grace and authenticity. Whether you're a seasoned professional or someone just starting on their journey, Carnegie's insights will undoubtedly leave a lasting impression. But try these whole heartedly without any other thoughts.

The Monk Who sold his Ferrari by Robin Sharma - Book Review

noreply@blogger.com (smart satya) — Sun, 10 Dec 2023 02:02:00 -0800

Hello readers, today I am talking about a book that many of us must read at least once in our lifetime to cultivate a new version of you. It's true – if you don't prioritize self-care, you won't be able to take care of others, including your family. We often rush to achieve targets without worrying about personal health or personal time until life teaches us a lesson.

By the time you realised, a significant portion of our time had already been expended. "Time", it is the most valuable asset, we have, but we often spend it without much thought, assuming it's free. However, if you don't invest wisely in your time, you risk losing your life. (Consider this, not when you're at the office or engaged in work.) Even if you're a multitasker, your mind needs a pit-stop to refuel itself. Take at least fifteen minutes each day to reflect on yourself in solitude. In doing so, you'll discover the true value of your life and time.

In this book, the author shares many of such life hacks to fulfill your dreams and reach your destiny. The summary in simpler terms, "a highly regarded trial lawyer, Mr. Julian Mantle, left his practice (selling all his assets) and went in search of answers in a mystical land. After three years, he returned to meet his former assistant, now a famous lawyer, Mr. John, with a vibrant new look. The story delves into how someone who looked tired and old just a few years ago could now appear so vibrant and alive".

Read: The Alchemist - Book Review

The author narrates this man's transformation in a very pragmatic way. We can all achieve this by following a few simple virtues and rituals discussed in this book.

In this book, Yogi Raman (Guru) imparts the fable of the Seven Virtues to the protagonist, Julian Mantle. Here are insights from Yogi Raman's fable of the Seven Virtues:

Master Your Mind (Master Your Thoughts): The first virtue emphasizes the importance of controlling one's thoughts. Yogi Raman teaches that a disciplined mind is essential for a meaningful and fulfilling life. It encourages individuals to be mindful of their thinking patterns and to cultivate positive and empowering thoughts.

Follow the S.E.T. Principle (Simplicity, Excellence, and Trust): The S.E.T. Principle highlights the virtues of simplicity, excellence, and trust. Yogi Raman suggests that a simple life, commitment to excellence in all endeavors, and trust in oneself and the journey contribute to a harmonious and successful existence.

Practice Kaizen (Continuous Improvement): Kaizen, a Japanese term meaning continuous improvement, is the third virtue. Yogi Raman teaches that small, consistent improvements in all areas of life lead to significant personal growth over time. It emphasizes the value of ongoing self-development.

Live with Discipline (Discipline Shapes Destiny): Discipline is the fourth virtue, and it is portrayed as the key to shaping one's destiny. Yogi Raman emphasizes the importance of cultivating discipline in daily habits and actions, as it leads to a more purposeful and focused life.

Respect Your Time (Time is Precious): Yogi Raman underscores the precious nature of time in the fifth virtue. He teaches that respecting and managing time wisely is crucial for success and personal fulfillment. Wasting time is seen as wasting one's life.

Selfless Giving (Serve Others): The sixth virtue revolves around selfless giving and serving others. Yogi Raman emphasizes the joy and fulfillment that come from contributing to the well-being of others. It encourages individuals to go beyond self-interest and make a positive impact on the lives of those around them.

Embrace the Present (Be Content): The seventh virtue encourages individuals to embrace the present moment and be content with what they have. Yogi Raman teaches that finding joy in the present, rather than constantly seeking external validation or future achievements, is essential for lasting happiness.

I'd like to share something fascinating about the author. He skilfully weaves a short and captivating story to effortlessly illustrate all seven virtues. The seven symbols in the story mirror these seven virtues.

Read: Learn to invest in Mutual Funds

Here are some key rituals discussed in the book:

Daily Ritual of Solitude: Take time each day for solitude and silence. This ritual involves spending time alone to reflect, meditate, and connect with one's inner self.

The Ritual of Physicality: Engage in regular exercise and physical activity. The book stresses the importance of taking care of one's body to maintain overall health and well-being.

The Ritual of Live Nourishment: Adopt a healthy diet and mindful eating habits. The book emphasizes the connection between proper nutrition and physical and mental vitality.

The Ritual of Abundant Knowledge: Commit to continuous learning and personal development. This involves reading, acquiring new skills, and seeking knowledge to expand one's understanding of the world.

The Ritual of Personal Reflection: Set aside time for personal reflection and introspection. This ritual encourages individuals to evaluate their goals, values, and actions regularly.

The Ritual of Early Awakening: Wake up early to start the day with purpose and intention. This ritual allows for a peaceful and focused beginning to each day.

The Ritual of Music: Integrate music into daily life to uplift the spirit and enhance overall well-being. Listening to music is presented as a way to connect with emotions and find inspiration.

The Ritual of the Spoken Word: Use positive affirmations and uplifting language. The book emphasizes the power of words in shaping one's mindset and influencing personal beliefs.

The Ritual of Congruent Character: Align actions with values and principles. Living in accordance with one's true character and beliefs is presented as essential for personal fulfillment.

The Ritual of Simplicity: Embrace simplicity and minimalism. This ritual encourages individuals to declutter their lives and focus on what truly matters.

The Ritual of Personal Photographs: Create a visual representation of personal goals and aspirations. The protagonist in the story uses a wall of photographs to remind himself of the life he desires.

Finally, few takeaways: Think positive thoughts and be kind to yourself. Take time daily to reflect on your goals and values. Stay calm and confident in different situations. Form good habits like exercising and eating well for a healthy body and self-esteem. Picture yourself succeeding to boost confidence. Find your life's purpose for a meaningful and fulfilling life. Take risks and face challenges to enhance self-esteem. Live in the present moment to reduce worry about the past or future. Help others and be grateful for the good things in your life. This will give you a sense of purpose and positivity, even if things aren't perfect.

This concludes my message for today. I hope you found pleasure in reading it and are eager to obtain your copy of this book from here. Believe me, it truly merits your time. I am confident you will relish it, as it evokes the warmth of a grandma's story while imparting valuable life lessons.

Click to get your copy

Give your feedback in comments below.

The Alchemist by Paulo Coelho - Book Review

noreply@blogger.com (smart satya) — Sun, 19 Nov 2023 06:13:00 -0800

Hello, reader! I hope you're doing great. If not, fret not – a positive change awaits you after delving into this book (and not just my review 😉). Honestly, this stands out as one of the most impactful self-help / life-enhancing books I've ever come across. Paulo Coelho weaves a simple yet profound tale about a boy, leaving a lasting imprint on how we perceive our life dreams. Yes, it may be a fable, but its resonance with our pursuit of dreams feels remarkably authentic (after all, as Dr. A. P. J. Abdul Kalam said, "Dreams are not what you see in sleep; they are the things that don't let you sleep”).

Encountering this book during my Amazon shopping spree in the Great Indian Festival campaign, my initial curiosity led me to Google for the meaning of "Alchemist" 😄. An alchemist, in essence, is one who can transmute ordinary metal into gold. Inspired by this, I embarked on creating my own fable centered around the title "Alchemist." However, the story I envisioned was vastly different from the one I discovered within the pages of this captivating narrative. Okay, let's get into the story - but in very few lines 👍.

The story follows "Santiago, a shepherd boy, on a journey to discover his personal legend and fulfill his dreams. Guided by omens and the pursuit of his own "Personal Legend (treasure),” Santiago travels from Spain to the Egyptian desert, encountering various characters and challenges. The novel explores themes of destiny, personal growth, and the pursuit of one's dreams, emphasising the importance of listening to one's heart and following one's intuition. Ultimately, Santiago learns that the treasure he seeks is not just a physical object but a deeper understanding of himself and the universe".

My key learning points from this fable are:

Personal Legend: The concept of a "Personal Legend" emphasises the importance of discovering and pursuing one's true purpose and destiny in life. Santiago's journey is centred around finding and fulfilling his Personal Legend. When you realise.

Listening to the Heart: The fable encourages individuals to listen to their hearts and follow their intuition. Santiago often receives guidance from his heart and dreams, illustrating the idea that one's inner voice can lead to fulfilling experiences.

Read: Book Review - The psychology of Money

The Language of the World: Coelho introduces the idea that everything in the universe is interconnected, and by paying attention to the "Language of the World," individuals can understand the signs and omens guiding them towards their goals.

The Journey is as Important as the Destination: Santiago's journey is filled with challenges, lessons, and self-discovery. The novel suggests that the process of pursuing one's dreams is just as significant, if not more so, than the achievement of the ultimate goal.

Overcoming Fear: Santiago faces numerous fears and obstacles during his journey. The novel teaches that confronting and overcoming fears is essential for personal growth and the pursuit of dreams.

Unity with Nature: The Alchemist promotes a connection between individuals and the natural world. Santiago learns valuable lessons from the elements and the desert, emphasizing the importance of harmony with nature.

Read: The Little book - Review

The Power of Faith: Faith, not just in a religious sense but also faith in oneself and the journey, is a recurring theme. Believing in the possibility of achieving one's dreams is portrayed as a powerful force.

Learning from Every Experience: Santiago gains wisdom from every person he meets and every experience he encounters. This underscores the idea that every situation, whether positive or negative, contributes to personal growth.

The Pursuit of Happiness: "The Alchemist" suggests that true happiness comes from pursuing one's passions and fulfilling one's dreams, rather than conforming to societal expectations or material pursuits.

Alchemy as a Metaphor: The alchemical process in the book serves as a metaphor for personal transformation and self-discovery. Like turning base metals into gold, individuals can transform their lives through self-realization and pursuit of their dreams.

These learning points make "The Alchemist" a reflective and inspirational work that encourages readers to introspect and seek meaning in their own lives.

What are you waiting for? Order your copy from here

INVESTING IN MUTUAL FUND - BEST WEBSITES

noreply@blogger.com (smart satya) — Sun, 8 Oct 2023 00:18:00 -0700

Hello, Dear Readers,

I trust you're all well. I hope everything is going smoothly in your lives. Before we delve into the heart of this article, I'd like to inquire if you've had the opportunity to explore our series of posts on mutual funds. If you have, please feel free to continue with this article. However, if you haven't had the chance yet, I encourage you to peruse our collection of articles dedicated to the analysis of mutual funds, here (Part-1, Part-2, Part-3, Part-4, Part-5 and Part-6).

You might be wondering why I'm suggesting you do this. The reason is simple: I believe that when it comes to investing in mutual funds or any other asset class, we shouldn't solely rely on the recommendations of others. Off course, if you have the means to engage a qualified financial advisor to manage your finances, that's a sound choice (and you might not need to read further). However, if you're here, it's possible that you either haven't enlisted the services of a financial advisor or prefer to invest based on your own convictions, am I right? Then read the previous articles and come back.

Welcome back after your exploration of our previous articles. It's crucial not to rely solely on others' recommendations when it comes to investing, as building your own conviction in the funds you choose can lead to successful long-term investments. I trust you've grasped the art of selecting the best mutual funds from our earlier articles. Now, let's delve into the web portals we can utilize to analyze these funds.

ET Money: This website stands out for its user-friendliness. It allows you to find funds based on market capitalization, diversification, sector, and themes. Each category provides rankings among the funds, along with returns for a specific fund compared to its category average over various timeframes. ET Money also offers essential details for each fund, such as stock holdings, AUM, charges, age, ratios, and more. You can even compare funds side by side on various parameters.

Morningstar.in: This website excels in providing year-wise return comparisons between your chosen fund, its category, and the index. They also offer daily factsheets for funds, offering a comprehensive view. The Risk & Rating section provides various ratio values compared to the category and index, including capture ratios. You can find extensive details about fund managers, including timelines and stock holding specifics. Other essential fund information is available, including turnover ratio, though it lacks fund-to-fund comparisons.

Investonline.in: This platform impresses with its peer comparison feature over 12 timelines and the "What's in - What's out?" menu, which reveals a fund's recent entries and exits. They also provide comprehensive details and ratios for funds.

Advisorkhoj.com: This unique website offers a screener option to find funds based on your desired metrics. It also provides insights like portfolio overlap between funds and common stocks across various MF schemes, making it valuable for both equity and debt fund research. The platform allows you to compare funds by rolling returns against an index, category, gold, and the Sensex. It's especially useful for new investors.

Bmsmoney.com: This website offers 23 Key Performance Indicators (KPIs) for funds compared to their category averages, along with rankings for these 23 KPIs. What sets it apart is its Pros & Cons feature for funds, as well as performance comparisons against top-performing peers. It provides expected returns for up to 10 years, compares performance between direct and regular plans on a single screen, and presents insightful charts for better fund understanding.

These five websites are among the best for mutual fund analysis, but there are others as well. While these should suffice for your analysis needs, if you come across any other valuable websites, please feel free to share them in the comments section. Share this article with your friends and family to help improve their financial literacy. Thank you for your attention!

INVESTING IN MUTUAL FUND - SELECTION OF FUND

noreply@blogger.com (smart satya) — Wed, 13 Sep 2023 09:49:00 -0700

Greetings, Esteemed Readers,

In our ongoing series, we have covered five parts thus far. In this installment, we will delve into the practical application of the procedure discussed in our previous article (Part-5). However, before we jump into the practical aspect, let's take a moment to recap the essential checks:

Define our financial goal.
Determine our risk appetite.
Utilise these steps to choose the right fund category.

Once we've accomplished these initial steps, we can move on to more specific sub-checks for selecting a fund within our chosen category. These sub-checks include:

Assessing the age of the fund.
Analysing the fund's Assets Under Management (AUM).
Reviewing the fund's performance over various time periods.
Evaluating the fund manager's expertise and their duration of association with the fund.
Examining ratios and metrics in comparison to its peers.

Now, let's roll up our sleeves and dive into the practical session 😊.

To illustrate, let's assume my financial goal is "wealth creation," which is a long-term objective, and my risk appetite is on the higher side. Consequently, I have decided to invest in the "Small Cap Fund" category.

Within this category, there are numerous funds available from various Asset Management Companies (AMCs). Our first task is to organise these available funds based on their "age of fund.”

I utilised the "ETMoney" website to filter the funds, resulting in a selection of 19 funds with over 3 years of operational history. Further refining by Assets Under Management (AUM) size, we arrived at a list of 11 funds:

Quant Small Cap Fund Direct Growth
Canara Robeco Small Cap Fund
ICICI Prudential Small Cap Fund
Tata Small Cap Fund
Aditya Birla Life Small Cap Fund
Invesco India Small Cap Fund
Sundaram Small Cap Fund
Edelweiss Small Cap Fund
Bandhan Emerging Businesses Fund
Union Small Cap Fund
Bank of India Small Cap Fund

Next, we'll compare the performance of these 11 funds against the category average return. This analysis will help us identify the most promising options for our investment strategy.

*Source: etmoney.com

You can compare these Year wise in morningstar.in as like below.

*it is of “Quant Small Cap Fund”.

After a thorough comparison with the category average, the following funds have shown better performance:

Quant Small Cap Fund
ICICI Prudential Small Cap Fund
Sundaram Small Cap Fund
Edelweiss Small Cap Fund

Now that we have narrowed down our selection, it's time to delve deeper and compare these four funds based on various ratios and metrics (Alpha, Beta, R2, Sortino, Sharpe, Upside capture ratio, Downside Capture ratio, Standard deviation, Expense Ratio and Turn over Ratio) to make a more informed investment decision.

*Source: morningstar.in

I trust that you have thoroughly reviewed the explanations of the aforementioned ratios in the prior articles (Part-3 and Part-4) and have a clear understanding of them. If not, I recommend revisiting those sections repeatedly until you feel confident in your comprehension.

Now, let's turn our attention to the table and evaluate the metrics of the funds in comparison to the category average. Please proceed to share your selection of the fund based on this metrics comparison in comments below.

To streamline this process, it would be beneficial to provide a ranking based on the individual ratios

Based on the comparison of these metrics, here's an assessment of the two top-performing funds:

Quant Small Cap Fund:

Generates higher returns but with high volatility.
Exhibits a high expense ratio (1.78%) primarily due to a high turnover ratio.
Generates a significant alpha of 9.83 despite the expense ratio.

ICICI Prudential Small Cap Fund:

Also generates higher returns (though slightly lower than Quant) with less volatility.
Maintains a lower expense ratio compared to Quant Small Cap.
Shows strong performance with relatively lower downside risk.

* And we need to see present fund manager association with these funds.

Quant Small Cap:

ICICI Prudential Small Cap:

Considering these factors, the choice between these two funds depends on your risk tolerance and investment objectives:

If you are comfortable with higher volatility and are seeking potentially higher returns, Quant Small Cap Fund could be the choice due to its higher alpha. (Higher expense ratio is due to higher turn over ratio).
On the other hand, if you prefer a balance between returns and risk, and wish to minimize expenses, ICICI Prudential Small Cap Fund may be a more suitable option.

Ultimately, the decision should align with your personal financial goals, risk appetite, and investment horizon.

I hope you understand it will, Kindly share your selected fund along with the reasons supporting your choice in the comments section below.

INVESTING IN MUTUAL FUND - CHOOSING OF FUND (PART-5)

noreply@blogger.com (smart satya) — Sat, 9 Sep 2023 21:28:00 -0700

Greetings, dear readers! Welcome to the fifth and most pivotal instalment of our "Investing in Mutual Funds" series. Think of this segment as our grand finale. In the vast landscape of mutual funds, how do we navigate and select those that align perfectly with our financial objectives and risk tolerance?

Selecting mutual funds is no cookie-cutter task; your choices should be as unique as your financial circumstances and objectives. Armed with the right information and a strategic approach, you can make well-informed decisions that set you on the path to financial prosperity.

In our previous articles, we delved into the essential terminology and key performance ratios used in the world of mutual funds. In this segment, we'll transition from theory to practice, learning how to leverage these terms and ratios in the selection of funds that best match our financial goals and risk appetite.

This article aims to be your compass in the complex landscape of mutual fund selection. Whether you're a novice investor looking to start your investment journey or an experienced one seeking to refine your portfolio, we're here to guide you through the decision-making process.

so, whether your goals involve retirement planning, saving for a child's education, or simply seeking to grow your wealth, let's embark on this journey together to uncover the art and science of choosing the right mutual funds for your financial future.

But before we dive into the practicalities, let's rewind the key terms and ratios discussed in our previous articles (Part-1, Part-2, Part-3 and Part-4).

Now, let's embark on the exciting journey of mastering the art of investing in mutual funds! 😁

For the purpose of illustrating our selection process, we'll use the "Quant Small Cap Fund" as our reference. Please note that this fund is not recommended by us.

To select any Mutual fund, the initial step is to define our investment objective and clarify the purpose behind our investment. Whether it's for retirement planning, education funding, home purchase, or any other financial goal, setting a specific time frame for achieving, is crucial.

For Short-Term Goals: In cases of short-term goals or emergency funds, consider money market funds or debt funds. These options offer stability and liquidity. They primarily invest in low-risk, highly liquid securities such as Treasury bills, government securities (G-secs), and bonds.

For Long-Term Goals (More than 5 years): For long-term objectives like retirement planning or wealth accumulation, it's wise to explore equity funds. These can encompass various types, including index funds, actively managed stock funds, and sector-specific funds.

Now, let's delve into the selection of equity funds. Equity funds tend to offer higher returns, albeit with higher risk, which often appeals to retail investors seeking substantial gains. However, within the realm of equity funds, there are different categories, such as Large Cap, Mid Cap, Small Cap, Sectoral/Thematic, and ELSS (Equity-Linked Savings Schemes), as we discussed in our previous article (Part-2).

To choose among these categories, it's essential to assess our risk tolerance. You might wonder why we need to evaluate risk when equity funds inherently carry a high level of risk. The reason is that risk tolerance varies among individuals, and understanding your comfort level with risk is key.

Consider how much risk you are willing to take with your investments. Generally, risk and potential returns are closely linked. Higher risk tolerance may offer the potential for greater gains, but it also carries the potential for more substantial losses. Therefore, careful consideration is essential at this stage of decision-making.

Here's a general guideline for risk levels within equity funds:

Large Cap/ELSS funds tend to be more stable.
Mid Cap funds are moderately stable.
Small Cap funds come with higher volatility.
Sectoral/Thematic funds require a deeper understanding of specific sectors, in addition to other evaluation criteria.

So, have you selected the type of fund that aligns with your goals and risk tolerance? If so, the critical part of the process has just begun.

Once you've identified the fund category that aligns with your objectives, you'll encounter numerous options offered by various Asset Management Companies (AMCs) falling under the same category. This is where the real work begins – selecting the fund within an AMC that consistently outperforms its peers from other AMCs.

Here are the criteria I've used to select a fund within the category we've chosen. (It's worth noting that I always recommend opting for the "Direct" option due to the differences between Direct and Regular, as explained in Part-2.)

Age of Fund: Consider the tenure or age of the fund. A longer track record can provide insight into how the fund has performed through various market cycles. I think, opting for a fund with a minimum age of 3 years is a wise decision.

Fund's AUM (Asset Under Management) / Size: The fund's AUM is an important factor. A fund with a substantial AUM may offer stability but could face challenges in deploying large amounts of capital effectively. Conversely, a small fund may be more nimble but might have liquidity limitations. So go for medium sized fund (500 Cr to 10000 Cr).

Fund Manager Expertise: Assess the fund manager's experience and track record. A skilled and experienced fund manager can play a crucial role in a fund's performance. The duration of their association with the fund is also a crucial factor to take into account. When a fund exhibits strong performance but experiences a recent change in the fund manager, it raises questions about the likelihood of maintaining that performance.

Fund Performance Over Different Periods: Examine how the fund has performed over various timeframes, such as short-term, intermediate-term, and long-term, in comparison to its peers. Consistency in performance is key. Compare on time-frames like 1M, 3M, 6M, 1Y, 3Y, 5Y etc.,

Ratios/Metrics Compared to Peers: Analyse key ratios and metrics of the fund, including expense ratios, Sharpe ratios, alpha, and beta, (refer Part-3, Part-4) in comparison to similar funds offered by other AMCs. These metrics provide insights into the fund's efficiency and risk-adjusted returns.

By considering these factors and conducting thorough research, you can make an informed decision when selecting a specific fund within your chosen category. Remember that past performance is not indicative of future results, so ongoing monitoring of your investments is essential.

Let's conclude here to keep this segment concise. The detailed illustration of the fund selection procedure outlined above will be covered in our upcoming article. We appreciate your patience and encourage you to stay with us to gain practical insights into the process.

Share your selection of fund as per your financial goal and risk appetite in comments below. 🙏

INVESTING IN MUTUAL FUND - RATIOS (PART-4)

noreply@blogger.com (smart satya) — Wed, 6 Sep 2023 02:33:00 -0700

Greetings, dear readers! Welcome back to the next instalment of our "Investing in Mutual Funds" series. In this segment, we will delve deeper into the remaining ratios essential for evaluating the best mutual funds to invest in. Before you proceed with this fourth part, it's important to ensure you've thoroughly reviewed the preceding three parts (PART-1, PART-2, PART-3).

Assuming you've completed those three sections, let's now explore the remaining crucial ratios together.

R-Square: In simple terms, R-squared, or the coefficient of determination, is a measure that tells you how well the movements of one thing can be explained by the movements of another thing. In the context of mutual funds:

R-squared close to 1 means that the mutual fund's performance closely follows or can be explained by a benchmark or an index. It's like saying the fund behaves very similarly to the index.

R-squared close to 0 means that the mutual fund's performance doesn't really follow the benchmark or index. It's like saying the fund does its own thing independently of what the benchmark does.

So, R-squared helps you understand how much influence the benchmark has on the mutual fund's returns. A higher R-squared means the fund mimics the benchmark, while a lower R-squared means the fund is doing its own thing.

Read: Know these before avail TERM INSURANCE

Standard deviation: In the context of mutual funds and investments, standard deviation is a statistical measure that quantifies the level of risk or volatility associated with the returns of an investment over a specific period. It's one of the key indicators used by investors to assess the risk profile of a mutual fund.

Standard deviation measures how much the returns of a mutual fund tend to deviate or vary from their average return. In other words, it tells you how bumpy or erratic the fund's performance has been over time.

Higher Standard Deviation = Higher Risk

Lower Standard Deviation = Lower Risk

Past performance does not guarantee future results, so it's essential to consider other factors, such as the fund's investment strategy, fees, and your own investment objectives.

Upside capture ratio: The Upside Capture Ratio, in simple terms, tells you how well a mutual fund performs when the overall market is doing well. Here's a straightforward explanation:

If a mutual fund has an Upside Capture Ratio of 100%, it means it performs exactly like the market benchmark during good times. If the market goes up by 10%, the fund goes up by 10%.
If the Upside Capture Ratio is above 100%, it suggests the fund does even better than the market during good times. For example, if the market rises by 10%, and the fund has a ratio of 120%, it means the fund goes up by 12% during those periods.
If the Upside Capture Ratio is below 100%, it means the fund doesn't do as well as the market when it's rising. For example, if the market goes up by 10%, and the fund has a ratio of 90%, it means the fund only goes up by 9% during those times.

In summary, the Upside Capture Ratio helps you understand how closely a mutual fund follows or outperforms the market during positive or "up" periods. A higher ratio suggests the fund does well when the market is doing well, while a lower ratio indicates it lags behind during good times.

Read: 16 Rules for Financial Planning

Downside capture ratio: The Downside Capture Ratio, in simple terms, tells you how well a mutual fund performs when the overall market is doing poorly or when there are losses. Here's an easy-to-understand explanation:

If a mutual fund has a Downside Capture Ratio of 100%, it means it performs exactly like the market benchmark during bad times. If the market goes down by 10%, the fund also goes down by 10%.
If the Downside Capture Ratio is below 100%, it suggests the fund doesn't drop as much as the market during tough times. For example, if the market falls by 10%, and the fund has a ratio of 90%, it means the fund only goes down by 9% during those periods.
If the Downside Capture Ratio is above 100%, it indicates that the fund performs worse than the market when it's going down. For example, if the market experiences a 10% decline, and the fund has a ratio of 120%, it means the fund falls by 12% during those times.

In summary, the Downside Capture Ratio helps you understand how well a mutual fund protects your investment when the market is performing poorly or experiencing losses. A lower ratio suggests that the fund does a better job of limiting losses during tough times, while a higher ratio indicates it performs worse than the market during downturns.

Turnover ratio: In simple terms, the turnover ratio in a mutual fund tells you how often the fund's managers buy and sell investments within the fund.

A high turnover ratio means they buy and sell frequently. It suggests the fund is actively managed, with the managers making many changes to the portfolio.
A low turnover ratio means they don't buy and sell much. It suggests the fund is passively managed, with fewer changes to the portfolio.

Why does it matter? High turnover can lead to higher fees and potentially more taxes for investors. Low turnover can mean lower costs and fewer tax consequences. So, when choosing a fund, consider how its turnover ratio fits with your investment goals and preferences.

To select debt funds, it's essential to understand the following.

Read: What mindset you required for "Investing".

Modified Duration: To invest in Debt Mutual funds, we need to know about this. Modified duration, in simple terms, is like a gauge that helps you estimate how much a bond's or a bond mutual fund's price might change when interest rates go up or down.

YTM (Yield to Maturity): In simpler terms, YTM tells you the overall return you could earn on a bond if you keep it until it matures, considering factors like the bond's interest payments and its current market price relative to its face value.

Finally we are at end of this part. Almost all ratios and terms we covered to choose the best mutual fund to invest in, on our own. Hope you understand everything well. we will come back with our next part, we are going to learn how to choose the best fund by using these ratios and other few aspects. Until then Please go through these four parts and come to next part.

We've reached the conclusion of this segment. We've now covered nearly all the ratios and terms necessary for independently selecting the best mutual fund for your investments. I trust that you've grasped the concepts thoroughly.

In our upcoming instalment, we will delve into the practical application of these ratios and explore a few additional aspects to guide you in choosing the optimal fund. Until then, I encourage you to revisit these four parts to solidify your understanding in preparation for the next segment.

Feel free to share your questions and suggestions in the comments section below. Sharing this valuable information with your loved ones can contribute to enhancing their financial knowledge as well. Together, we can all strive for greater financial literacy and make more informed investment decisions.

INVESTING IN MUTUAL FUND - RATIOS (PART-3)

noreply@blogger.com (smart satya) — Wed, 6 Sep 2023 01:00:00 -0700

Hello, dear readers,

I'm back with the latest installment of my ongoing series about mutual funds. In this part, we'll be delving into the key ratios commonly used to evaluate mutual fund performance. Understanding these ratios is crucial for making well-informed investment decisions.

This marks Part 3 of our series. If you haven't had the chance to read Part 1 and Part 2 yet, I recommend taking a moment to do so before continuing with this article. It will provide you with a solid foundation for understanding the topics we'll be covering here.

So, without further ado, let's begin our exploration of these fundamental ratios.

Expense Ratio : The expense ratio is like a fee that you pay toward covering the costs of managing and operating the fund.

Let's say we invest ₹1,000 in a mutual fund, and it has an expense ratio of 1%. That means you pay ₹10 each year to the people who manage and run the fund.
This expense ratio is important because it affects your investment returns. The higher the expense ratio, the more money you pay in fees, which can eat into the returns you earn from your investment.
So, when you're choosing a fund to invest in, it's a good idea to look at the expense ratio. Lower expense ratios are generally better because they leave more of your money working for you, rather than covering expenses.
But for example, passively managed index funds and ETFs tend to have lower expense ratios than actively managed funds because they aim to replicate the performance of a specific benchmark rather than relying on active investment strategies.

Read: INVESTING Vs TRADING

Alpha (⍺): In simple terms, it is fund manager’s performance. It provides insight into whether the mutual fund has added value through active management of fund manager

alpha in the context of mutual funds represents the extra return that a mutual fund manager has generated (or failed to generate) compared to a benchmark index, considering the level of risk taken. It tells you whether the fund manager has done better or worse than a standard market benchmark.

Positive alpha means outperformance and Negative alpha denotes under performance.

Beta (β): beta is a measure that helps you understand how a particular stock or investment tends to move in relation to the overall stock market. It provides insight into whether an investment is likely to be more or less volatile than the market as a whole

Beta of 1.0: If a mutual fund has a beta of 1.0, it means the fund tends to move in sync with the overall market. So, if the market goes up by 1%, the fund is expected to go up by a similar percentage, and if the market goes down by 1%, the fund is likely to go down by a similar amount.

Beta above 1.0: If a mutual fund has a beta greater than 1.0 (like 1.2), it tends to be more volatile than the market. This means it can potentially offer higher returns when the market is rising, but it can also experience larger losses when the market is falling.

Beta below 1.0: If a mutual fund has a beta less than 1.0 (like 0.8), it tends to be less volatile than the market. While it may not capture all the gains when the market is surging, it might also provide more stability and potentially smaller losses during market downturns.

Negative Beta: Some mutual funds may have a negative beta (e.g., -0.5). This suggests that the fund tends to move in the opposite direction of the market. When the market goes up, the fund might go down, and when the market goes down, the fund could go up. These funds are often considered defensive because they may help protect your investments during market declines.

Read: Know these to avail - Health Insurance

Sharp ratio: Certainly! The Sharpe Ratio in simple terms is a measure that helps you figure out if an investment, like a mutual fund, is giving you enough extra return for the amount of risk it carries.

Imagine you have two mutual funds with the same average return. One of them is riskier (more ups and downs), while the other is safer (more stable). The Sharpe Ratio helps you see which one is better.

Higher Number is Better: A higher Sharpe Ratio is better. It means you're getting more extra return for the risk you're taking.

Lower Number is Riskier: A lower Sharpe Ratio means you're not getting much extra return for the risk. You might be taking on more risk for the same return.

So, when you're comparing mutual funds, look at their Sharpe Ratios. It helps you see if you're being rewarded enough for the risk you're taking.

Sortino ratio: The Sortino Ratio in simple terms is a way to figure out if an investment, like a mutual fund, is doing a good job managing the risk of losing your money.

Higher Number is Better: A higher Sortino Ratio is better. It means you're getting more extra return for the risk of losing money (especially below a certain target return, like what you'd get from a safe investment).

Lower Number is Riskier: A lower Sortino Ratio means you might not be getting enough extra return for the risk of losing money.

So, when you're looking at different investments, you can use the Sortino Ratio to see which ones do a better job of managing the risk of losing your investment, especially when it comes to returns below a certain target.

Enough learning for today; we'll pick up where we left off in our next installment. Take some time to familiarize yourself with these terms and ratios and put them into practice. Please share your experiences here.

Alright, until the next part. See you soon!

INVESTING IN MUTUAL FUND - BASIC TERMS (PART-2)

noreply@blogger.com (smart satya) — Sun, 3 Sep 2023 01:58:00 -0700

Hello, Readers. I trust everyone is doing well. Before we dive into this, please make sure you've read Part 1 of the article.

I hope you've had a chance to review it. Welcome back, and let's continue exploring the remaining terms.

Large-Cap Fund: primarily invest in stocks of large, well-established companies with a significant market capitalization. These are typically industry leaders and household names. Large-cap stocks are generally considered less risky compared to smaller companies. As a result, large-cap funds tend to offer relatively stable returns with lower volatility.

Mid-Cap Fund: Mid-cap funds invest in stocks of medium-sized companies. These companies are smaller than large-caps but larger than small-caps. They are often in a growth phase and have the potential for significant expansion. Mid-cap stocks can be riskier than large-caps but potentially offer higher returns. Mid-cap funds strike a balance between risk and growth potential.

Small-Cap Fund: Small-cap funds concentrate on stocks of smaller companies with a lower market capitalization. These companies may have more growth opportunities but also tend to be riskier and less established. Small-cap stocks have the potential for higher returns, but they are more volatile and may be less liquid. Small-cap funds are suitable for investors with a higher risk tolerance.

Read: Learn Money works for you

Sectoral or Thematic Fund: Sectoral or thematic funds focus on a specific sector, industry, or theme within the economy. For example, they may concentrate on technology, healthcare, real estate, or emerging markets. The risk and return profile of sectoral funds depends on the performance of the chosen sector or theme. These funds can provide opportunities for targeted investments but may carry additional sector-specific risks.

XIRR (Extended Internal Rate of Return): it is a financial metric used in the context of mutual funds and other investments to calculate the annualized rate of return, taking into account the timing and size of various cash flows, such as investments, withdrawals, and dividends or interest received. It's a way to assess the actual annualized return on an investment when there are multiple cash flows occurring at different points in time. When we do investments in SIP mode, XIRR is the right metric to measure our returns.

CAGR "Compound Annual Growth Rate”: It is a financial metric used to measure the annualized growth rate of an investment or asset over a specified period, assuming that the investment grows at a compounded rate, which means that gains or losses from each year are reinvested or compounded into the next year's value. CAGR is useful for understanding the consistent annual growth rate of an investment, especially when it has experienced fluctuations over time.

Read: Ideal number of stocks in portfolio

Open ended / close ended: Imagine an open-ended fund as a store that never closes its doors. You can go in (buy shares) or leave (sell shares) whenever you want, just like a convenience store open 24/7.

Think of a close-ended fund as a store with a limited number of items available for sale. Once those items (shares) are sold, no more are created or sold by the fund company.

Factsheet: A mutual fund factsheet is a document provided by mutual fund companies or investment management firms that contains essential information about a specific mutual fund. It serves as a concise and standardised source of information for investors to help them make informed investment decisions. It provides the fund’s full info like Fund Name and Symbol, Fund Objective, Fund Category, Performance Data, Risk Profile, Asset Allocation, Top Holdings, Dividend and Distribution Information, Expense Ratio, Minimum Investment, Manager Information, Contact Information, Key Dates.

Minimum Investment: The minimum amount of money required to invest in the fund, which can vary depending on the share class and investment platform.

Benchmark: Certainly! Think of a benchmark in simple terms like a measuring stick or a standard that helps you know how well something is doing. Imagine you're a chef, and you're making a delicious pizza. To make sure your pizza tastes great, you want to know how it compares to the best pizza in town. So, you use the best pizza in town as your benchmark. If your pizza is just as good or even better, you know you've done a fantastic job!

Direct plan: It's like buying a product directly from the manufacturer or source, skipping the middleman or retailer. It's designed for investors who want to invest in a mutual fund without involving intermediaries like financial advisors, brokers, or distributors. So lower expense ratio and higher returns.

Read: Reduce your Motor Insurance premium

Regular plan: In simple terms, a regular plan in a mutual fund is like buying a product through a middleman, such as a shopkeeper. When you invest in a regular plan, you go through a financial advisor or distributor who helps you choose and buy mutual fund units. When you invest in a regular plan, a portion of your money is used to pay commissions and fees to these intermediaries. These costs are built into the mutual fund's expenses, often resulting in a slightly higher expense ratio compared with direct plan.

I believe I've covered all the fundamental terms essential for our mutual fund investment journey. Our series will persist, and in the next installment, we'll delve into "ratios." In the meantime, I encourage you to thoroughly absorb the content presented in these two parts and consider applying your newfound knowledge by examining funds in practice.

Share your experience in the comments section.

INVESTING IN MUTUAL FUND - BASIC TERMS (PART-1)

noreply@blogger.com (smart satya) — Sun, 3 Sep 2023 00:12:00 -0700

Investing in Mutual Funds - We invest in various asset classes to diversify risk. Among these, Equity offers the best returns. However, mutual funds are the optimal choice for investing in equities.

Before making investments based on recommendations from friends, bankers, or social media, it's crucial to familiarize yourself with essential terms used in mutual funds. Once you understand these, you'll rely more on your own judgment. Confidence comes from making informed investment choices, doesn't it?

So, let's delve into the key terms frequently used in mutual funds. Before we dive into it, let's get a grasp of what a mutual fund is all about. In simple terms, a mutual fund is like a big pot of money that lots of people put their money into to invest together. A professional manager then takes care of this money and uses it to buy a mix of different investments, like stocks (pieces of companies) or bonds (IOUs from governments or companies). When these investments make money, the profits are shared among all the people who put their money into the mutual fund. It's a way for regular people to invest in a diversified portfolio without needing a lot of money or expertise to do it on their own.

NAV: In simple terms, Net Asset Value (NAV) is like a snapshot of how much each share or unit of an investment fund is worth at a specific moment. Imagine you have a box of different types of coins. The NAV is like adding up the value of all the coins (investments) in the box and then dividing that total value by the number of coins (shares) you have. So, if the box is worth ₹1,000 and there are 100 coins, the NAV would be ₹10 per share.

Active Funds / Passive Funds: In the world of finance, active funds are managed by professionals who pick and choose specific investments like stocks or bonds. In this, the fund manager carefully selects which stocks, bonds, or other assets to buy and sell.

These are costly because it involve a lot of research and decision-making, they often have higher fees and expenses compared to passive funds but return will substantiate the cost.

Passive funds are like "set it and forget it" investments. They are designed to follow a predetermined plan without active decision-making. These funds aim to replicate the performance of a particular benchmark or index. Passive funds typically have lower fees and expenses because they don't require active management or extensive research.

Equity Fund: Equity funds primarily invest in stocks or equities of companies. Their main goal is capital appreciation, which means they aim for long-term growth in the value of the investments. These funds tend to have a higher level of risk compared to other types of funds, but they also have the potential for higher returns. The value of stocks can fluctuate significantly. Equity funds are generally suitable for investors with a longer investment horizon, typically five years or more. For example: Large-Cap Equity Funds, Small-Cap Equity Funds, Sectoral Funds, International Equity Funds, etc.

Read: Learn to grow PASSIVE INCOME

Debt Fund: Debt funds primarily invest in fixed-income securities such as government and corporate bonds, treasury bills, and money market instruments. Their main goal is capital preservation and generating regular income through interest payments. Debt funds are generally considered lower risk compared to equity funds, but they typically offer lower returns. They are more stable in terms of value. Debt funds can be suitable for short to medium-term investment goals, depending on the specific type of debt fund. E.g: Short-Term Debt Funds, Long-Term Bond Funds, Gilt Funds, Liquid Funds, etc.

Hybrid Fund: Hybrid funds, also known as balanced funds, combine both equity and debt investments in their portfolios. They aim to provide a balance between capital appreciation (from equity) and income stability (from debt). Hybrid funds offer a middle-ground approach between the higher risk and potentially higher returns of equity funds and the lower risk and more stable returns of debt funds. Depending on the asset allocation within the fund, hybrid funds can be suitable for various investment horizons. E.g: Aggressive Hybrid Funds (with a higher equity allocation), Conservative Hybrid Funds (with a higher debt allocation), and Balanced Hybrid Funds (with a balanced allocation).

ELSS (Equity Linked Savings Scheme) Fund: It’s a type of mutual fund that is popular in India and is designed primarily for tax-saving purposes with specific lock-in period (at present it is three years). ELSS funds offer tax benefits under Section 80C of the Income Tax Act in India, making them a favored investment option for individuals looking to save on taxes while investing in the stock market.

Asset under Management (AUM): MuM (money under management) is used to measure how much money a mutual fund or investment company is managing for its clients. A higher AUM means they're managing a lot of money, and it can show how successful or popular they are at helping people grow their investments.

Holdings: Imagine a chef making a delicious dish. To create it, they need various ingredients like vegetables, spices, and meat. Similarly, a mutual fund is like a recipe, and its holdings are the ingredients it uses to create returns for investors. In a nutshell, "holdings" in a mutual fund are like the various ingredients that make up the fund's investment portfolio, and a skilled fund manager acts as the chef, carefully selecting these ingredients to achieve the fund's investment goals.

Read: SAVE YOUR TAX

Fund Manager: As earlier said, fund manager is like the professional chef who decide which ingredients (investments) to buy, when to buy, and when to sell. In Mutual funds, Each fund is managed by expert called fund manager. They are like Decision-Makers, Expert Planners, Risk Managers, Goal Achievers, Researchers, Team Leaders etc.,

Exit Load: Think of it as a way for the mutual fund company to encourage you to keep your money invested in the fund for a certain period. If you take your money out before that specific time frame, you might have to pay a small fee, which goes to the fund. The goal is to discourage frequent buying and selling of the fund's shares and to reward long-term investors. So, before you invest in a mutual fund, it's a good idea to check if it has any exit loads and understand how they work, especially if you plan to access your money in the short term.

Alright, I understand that you've covered enough for today. We'll continue exploring the remaining "terms" in the next article. In the meantime, please explore our portal to expand your financial knowledge further. Feel free to share your feedback in the comments section below.

INVESTING Vs TRADING

noreply@blogger.com (smart satya) — Mon, 14 Aug 2023 11:30:00 -0700

Hi readers, as I said in my previous article, I am writing this to get some lucidity b/w investing vs trading. May be, my view would be biased as I always believe in long-term returns. Just check the tagline of this blog. “An investment in knowledge pays the best interest”.

But for the sake of this article, I keep my belief aside. Is it really possible? Yes of course, keep on reading, you will come to know ✌︎.

Before we jump into balancing of these, just let me define these first.

What is Investment? - In layman language “distributing what we had to get good appreciation as return”.

And Trading - “Net returns of buying and selling or exchange of goods and services”.

In stock market, most of us enters with an expectation of earning “Quick returns”, because of feedback from amateur proximate, YouTube babas, unwanted ads with unbelievable returns with screenshot proofs, and of course spam calls to earn high returns with the small investment amount. There are many more like this to get us into the stock market with myths.

But really thanks to Covid’19, almost 14.2 million demat accounts were opened during the Covid period (FY 21) and for our surprise, it is three times of previous FY’20 number. Indeed, it gave wide publicity of stock market to retail investors.

Read: Ideal No of stocks in your Portfolio

It is all because of free time provided by nationwide lockdown and searching for passive income sources. Most of us are exploring stock market as alternative income source. But we should take care of our principal amount first. Right?

When we first heard about Warren Buffett, RJ and other celebrity investors, what do we think ? just comment below ✍︎.

My comments are: it is really great thing to imitate and good opportunity to earn from stock market like them.

But when I read about stock market, I came to know that it is not that easy as reading about it. Learning about is not enough to earn, we need to change ourselves in many aspects like consistency, patience, discipline etc., Because it took decades grow their money like that.

Nowadays, we are all doing simply imitate the strategies followed by the celebrities but why can’t we successful by copy these strategies.

Read: Best ways to save tax

Many of us are investing in stock market without much bother about fundamentals of a company. Then what do we expect to happen? obviously we lose our principle too. Perhaps, it may work for traders but not in investing. Traders depends on news things and they play with volatile market up 📈 and downs 📉.

In short term, traders square off their positions in stock market to get net profit or loss. It is totally depends on risk taking capacity of an individual.

There is myth in Stock market “ We need money for investing and the money can be earned from trading”.

But If you are really in market, you should came across these quotes “Rome was not built in a day” and “Hiroshima / Nagasaki destroyed in a day”. What do you understand from these - “Earning takes time but losing does not”.

Let’s see some comparison:

Investing	Trading
Long Term and less risk	Short Term and more risk
Fundamental analysis required	No Fundamentals study required
Knowing about business and understanding required	Not at all
Certainty will be there	Probability. No certainty
Risk to Reward is low	Risk to Reward is high
90% of investors earning	90% of traders are losing
Dividend, Compounding factor do it’s work	No such thing
Passive income and we can be passive here	Passive income but we should be active
Spending less time on screen and more time on company analysis	Spending more time on screen and almost Nil time on company analysis

It is totally depends on your risk appetite and your way of approach towards stock market.

In any of these (Investing | Trading), it is not about how much you earn but rather how much you lose.

But one thing I want to remind you here - “Anywhere in Stock Market, Experts makes money by using their expertise but not by selling their expertise as advice”.

So choose your path wisely - INVESTING | TRADING

All the best 👍.

Comment here your choice of path 😁

HABIT - LEARN IT AND EARN FROM IT

noreply@blogger.com (smart satya) — Sat, 12 Aug 2023 23:31:00 -0700

Hi guys... after long time, but today it is not about finance just to talk about our habits. I am not here to say what is habit but why it is, we all do promises to change our habits or to start a habit on birthdays / new year. isn’t it?

It is good to take initiation / thought to start one on a good day, but to start a good work, don’t wait for a good day to start it. just start at the moment, you thought of it like you are ordering pizza at the moment you want to eat it.

I am not joking. We people always intent to do things which are simple and quick. (That is why in India QSR (Quick Service Restaurent - like Dominos, Pizzahut, KFC etc.,) business is in trend - it is not a recommendation to start your QSR business / to buy a QSR stock).

Heard a quote “ bad things are simple to implement, and addict-able to lose ”.

We all know junk food is not good for our health. But still we are all paying price to deteriorate our health. Looking silly but serious one.

We all wanna be looking fit but it is easy to gain belly rather than being fit. Right? (take care of your health and it save your wealth).

Read: Know about Health Insurance

Good things or changes will take time to reflect it's results.

In childhood where habits are new to us and we can imitate them easily. And once we got conscious, we can differentiate good and bad one. But off-course we can’t welcome any new change such easily. Making a life change is pretty scary but know what’s even scarier? Regret.

when you welcome a change, you can start it in SIP mode. (You know about SIP, Right?). So, to be successful, there is no elevator, we need to take steps.

Consistency is key and it is an essential to get results in our life either it is a good or bad habit.

“It’s not what we do once in a while that shapes our lives, it’s what we do consistently.” - Anthony Robbins.

But to our bad, we need reminders to be consistent. So we can use our dearest friend to remind at necessary times. But who will be our dearest friend to remind without any expectations? — “Our Smart phone” - use it wisely.

Our smart phone reminders are punctual and we should not avoid / cheat them. At any time in our lives, we can treat ourselves greatly but never cheat yourself, it will ruin us.

If we are not implementing anything new (not bad ones ☻) in our lives, we are not living.

Habits are what keep us growing, but be careful with growth direction. Because our habits will determine our future.

You know something - we all got inspired while seeing successful people, but inspiration can’t keeps us grow, “Following their good Habits, will do”.

Get used to our habits in phased manner (not in overnight). If you get it in overnight, you will lose it on another night ☹︎. Like “Rome was not built in a day”.

Finance example - Investing / Trading - which one of these, makes most of us rich with consistent hard work. Trading is short term while investing is long term. 99% of traders fails but in investing, with monthly ₹1000/- SIP, we can earn good amount of money.

Read: Investor Mindset

So grow a habit step by step, our success rate will grow. We will never change our life until change something we do daily. Our success is always lies in our daily routine.

In final lap, I wanna give you one insight - i.e., 21/90 rule. We take 21 days to make a habit and 90 days to make it a permanent life-style change.

We need to believe “Habits can be changed”, then we can amend them as we wish. All the best 👍.

Thank you ✍︎

Ideal number of Stocks in Portfolio you should have - Diwali Pick

noreply@blogger.com (Divya Narayan) — Mon, 24 Oct 2022 01:29:00 -0700

Hi readers, recently I read a book written by Joel Greenblatt. There I came across one word “Non Market Risk”.

In his words, Non Market Risk is the portion of a stock’s risk that is not related to the stock market’s overall movements. Means this risk arises when a company’s factory burns down or when company’s product didn’t sell as well as expected.

So as common saying “Don’t put all your eggs in one basket”. If you do, It is over concentration. So diversify your risk by investing in multiple stocks (companies).

But simply buying more stocks can’t help you avoid market risk, Right? But actually it reduces the alpha - return on your portfolio.

Even you designed your portfolio with total 5000 stocks available in market, still your portfolio is at risk for the up and down movement of the entire market - called “Market Risk”.

Tip: It is better to invest in index mutual fund, if you want to have more stocks in your portfolio ( when you don’t have conviction in your selected stocks)

There is a myth - owning more stocks will reduce market risk, But how many stocks should we have in portfolio?

Let’s start then, As per statics, owning two stocks eliminates 46% of the nonmarket risk of owning just one stock. And the same risk is reduced by 72% with a four stock portfolio.

And risk will reduced by 81% in a eight stock portfolio.

$$ Reduced by 93% with 16 stock portfolio $$

Reduced by 96% with 32 stock portfolio. And reduced by 99% with 500+ stocks. So

~~ 'Golden Rule' ~~ is “after including 16 stocks in your portfolio, the 'benefit' of adding more stocks to your portfolio to reduce risk is very small”

As per mathematical statics, 16 is the magic number to avoid 93% risk. This is the ' ideal ' number of stocks one must have in a bid to 'aim for alpha' and also reduce nonmarket risk.

Low number of stocks, easy to monitor the company updates, track the results and analyse them keenly. But too low number of stocks, is not good as said above.

Final Tip: select these stocks from different sectors (uncorrelated and negative correlation sectors).

My Diwali Pick - “ Piramal Pharma Ltd “ - Recently this company was listed on exchange after demerger from Piramal Enterprises. Listed at 200, but now it is at 171 due to forced selling from DII, PMS etc., Special situation ( will explain in my next post) is here. For this Diwali 2022, I am going to accumulate Piramal Pharma Ltd stock but don’t buy in one go, better to buy in SIP mode.

Disclaimer: it’s just my opinion not any buying advice. Please do full analysis of this company or consult your financial advisor before takes position in this stock.

HEALTH INSURANCE - KNOW THESE BEFORE AVAIL

noreply@blogger.com (Divya Narayan) — Sat, 23 Jul 2022 02:57:00 -0700

Hi Readers, after my previous article about Term insurance policy, today I wanna give some basic inputs to choose the best Health Insurance for yourself / for your family members.

Health Insurance - first of all we should get aware that it is not same as life insurance. Most of us say that we had insurance but which type of it is? Life Insurance or Health Insurance or both.

Actually we should have both -- for life -- & -- for health.

As we know in our previous article, Term Insurance is for our Life ~ Secure your dependents from unforeseen loss of bread earner of the family. It is just like replacement of income earner of family.

Read More about TERM INSURANCE

But Health insurance is for recovery of our expenses incurred on our hospitalization. Here I remind one quote here "one rupee save, one rupee earn" - isn't it?

Have you ever think of lock down all over the world due to some virus? In these last two years, we came across deadly virus (corona) in different variants / in different waves and it greets almost everyone of us. And in this time, hospital expenses were sky rocketed. Even we have our employer / government's health scheme, it did not cover much of our hospital expenses. That too, in most of the cases, this expense got reimbursed which means, you need to get your cash first.

After this corona, now inflation is showing it's bad characteristics in almost all countries. So to deal with these unforeseen pandemics and rate hikes in our medical expenses due to inflation, the best option we have "Health Insurance".

One more benefit from this Health Insurance, this is not only look after our hospitalization expenses but also it helps the expenses incurred on our life style diseases. Right?

Try to insure at an early age to get the premium at lower price through out life time. (off course, renewal should be in time every year to continue the initial premium)

I think this is more than enough of convincing to avail your "Health Insurance". :)

Let's know what we have to verify before availing "Health Insurance".

Network of hospitals
Cash less Treatment
Pre and Post Hospitalization cover
More than Hospitalization (Maternity etc.,)
Restoration of Sum Insured
Life time renewal option
No claim bonus
Free Medical Checkups, if any
Co-Pay Clauses, if any
Max Insurance cap, if any
Waiting Period, if any
Claim settlement Ratio

Network of Hospitals: Check the number of hospitals in your city, the insurance company tied up. because Higher the number is the better to choose such company's insurance policy.

We can't choose the hospital to admit in emergency. So more tied up hospitals is better to have such company's HI.

Cash-less Treatment: Best feature available in this category. It helps a lot, when we burden with unforeseen medical expenses. We don't need to pay a single rupee, if our company tied up with hospital and offering cash-less facility. Check this "How many cashless hospitals are there in your locality" before avail HI.

Pre and Post Hospitalization Cover: Any medical costs incurred before the patient is hospitalized due to certain diseases. For instance, CT Scan, MRI, X-Ray like expenses cover under pre hospitalization.

Post hospitalization will take care of expenses incurred after the patient is discharged from hospital. like any therapy expenses, follow up treatments, medication, physician expenses etc.. Most of the companies are offering Pre and Post hospitalization cover period as 45 to 90 days. Longer the period is the better. but mind the premium...

More than Hospitalization: As we discuss before, Health insurance covers our hospitalization expenses but more than hospitalization means cover for maternity expenses or some chronic diseases. So, check before you avail it. because all policies do not cover maternity facility.

Restoration of Sum Insured: It is a 'MUST' like feature on any health insurance policy. because if your sum Insurance amount was exhausted during the policy period, it will be restored / reinstated the total sum insured.

Otherwise, we need to do top up on our existing policy separately. Not only this, may be sum insured exhausted when we were in hospital itself, what can we do?

Life Time Renewal: As mentioned above, we need to get health insurance cover at the earliest age possible. The same premium amount continue for your life time.

No claim Bonus: It is like reward given by insurance companies to policy holders, who have not made a claim during the policy period. Reward like increase (10% to 50% hike) in coverage amount for the same premium amount or discount in premium amount for the same coverage amount.

Free Medical Checkups: It is like free add-on. Expenses incurred towards Cost of Health check-up up to the limits mentioned in your policy at network hospitals on completion of each policy year or for two years (irrespective of claim).

Co-Pay Clauses, if any: It is not better to go for co-pay clause insurance policy. Because we have to pay some amount on every bill we incurred.

Max-Insurance Cap, if any: Not advisable to avail the health insurance policy which has maximum sum insurance cap.

Waiting Period, if any: For almost all policies, waiting period will be there for some specific diseases / chronic diseases / pre-existing diseases. It is like 2 to 4 years.

If you are new insurer, check for initial waiting period. Initial waiting period is 15 to 30 days from the date of avail.

Claim settlement Ratio: This is the best metric used to choose the insurance company. Higher the best.

Claim settlement ratio is the percentage of claims that an insurance company settles in a year out of the total claims.

For instance, CSR of an insurance company is 99% means, this company is honoring 99 claims out of 100 claim request from it's policy holders.

Like this, there are other ratios like solvency ratio, combined ratio to consider but these will be taken care of by insurance regulatory IRDAI.

Best way to avail Health insurance policy: what are the things we need to verify before availing a policy but where can we get all these details?

Either at company's website or aggregator website. If you ask me, I choose aggregator website like policybazar, insurancedekho, policyX, comparepolicy etc.,

This is all from me today. Have a healthy day.

45 BEST WAYS TO SAVE / REDUCE INCOME TAX IN INDIA

noreply@blogger.com (smart satya) — Fri, 8 Jul 2022 20:39:00 -0700

Hi Readers cum Tax payers... :)

Today we are going to discuss about our main income effector / reducer - Tax. We can't avoid it but we can reduce our income reducer. Right?

Every income tax payer of india whether veteran taxpayer or a first time payer, felt that they are paying too much tax and they want to save their income from tax as much as possible. So tax payers have to become smarter in paying taxes on their income. There are many things that we do unknowingly which can save our tax.

All we need to do is know the ways to save tax. Some of them might be know by us, But in this article you can find some more ways to know our regular expenses which make us eligible for tax benefits.

So let's check the options to save our income / reduce tax

Expenses - which are eligible for tax benefits:

Repayment of home loan:

You will be glad to know that the burden of your home loan EMIs can reduce the burden of taxes. There are three ways to get income tax deduction on your home loan(s). The principal amount re-paid in the current financial year is included under section 80C, offering a deduction up to Rs. 1,50,000. The interest portion offers a deduction up to Rs. 2,00,000 separately under section 24 (Have to deduct rental income, if property is let-out one). In addition to this,

Benefit on interest on home loan for First Time Buyers (If loan availed b/w 01.04.2016 to 31.03.2017) – Rs. 50,000 under section 80EE.

Benefit on interest on home loan for First Time Buyers (If loan availed b/w 01.04.2019 to 31.03.2022) – Rs. 1,50,000 under section 80EEA.

If you are living in the home on which you took first home loan, you can get another loan for the second house. There is no limit on income tax deduction on the interest payment of second home loan.

Very few people are aware of this benefit of tax saving on second home loan.

***Read more about this***

Repayment of education loan:

Now a days, people often go for education loans when it comes to higher education, because of rising in costs of educational courses.

Interest paid on education loan is also non-taxable under Section 80E, there is no upper limit on the amount.

The interest on education loan for higher studies in india or abroad, is eligible for the deduction if taken for self, spouse or children.

Tuition Fees:

We often spend a considerable amount of our income to provide best education to our kids. Income Tax laws provide you opportunity to compensate the expenses you incur on their tuition fees by reducing your taxes. You can claim this deduction u/s 80C of Income Tax Act.

Note: Tuition fees for spouse is not eligible for tax exemption.

Medical insurance:

Medical expenses are part of everyone's life. These expenses can claim under section 80D. The limits of medical expenses Rs. 25,000 for medical insurance of self, spouse and dependent children (including preventive health check up limit of Rs.5000 ) for below 60 years and it is Rs.50000 for above 60 years.

In addition to this, you can avail deductions of Rs.50,000 for medical insurance of parents above 60 years (as per budget 2018).

Preventive Health Checkup:

You get tax reduction on preventive health checkups annually. Inside of aforementioned limit of Rs.25,000 (or Rs.30000 all things considered) under section 80D income tax, you can also claim expenses incurred for preventive health checkups up to Rs. 5000 for each budgetary year.

Note: The premiums paid for health insurance availed by your siblings are not qualified for tax benefits.

Deduction on rent paid (without HRA):

You are paying monthly rents but even HRA is not being paid by employer. Now, Don’ t worry if you don’ t get HRA in your salary as you can still get tax benefit as per the provisions of section 80GG of Income tax Act on your rent what you paid.

Pension funds:

Ideally, the day you start earning money should be the day you start planning your retirement.

One of the best ways to do this is to start investing in pension funds. Fortunately, you can also reduce your taxes when you contribute to certain pension funds. Provisions regarding tax benefits in this case are covered under section 80C.

Medical expenses of disabled dependent:

If you have a dependent person in your family who is suffering from a disability, then you can avail tax benefit under section 80DD. This deduction is offered to help you take care of your disabled family member who is dependent on you. It can help you save up to Rs.1,25,000 from your taxable income.

Medical expenses of disabled individual:

Similar to deduction under section 80DD, an individual suffering from disability himself gets tax benefit under section 80U. The maximum deduction limit under this section is Rs.1,25,000.

Treatment of specified diseases:

For certain specific diseases, Income Tax Department offers tax benefits to the individual u/s 80DDB on the basis of expenses incurred by him for the treatment of such diseases or ailment. Treatment of diseases like cancer and AIDS is very expensive and this section offers much needed financial relief to the person suffering from such ailment and his family members.

Exemption limit for individual less than 60 years is Rs.40,000, For senior citizen (above 60 years) is Rs.80,000 and For very senior citizen (above 85 years) is Rs.1,00,000.

Donations:

There is another reason to rejoice when you make donations. You not only boost your karma & achieve inner peace but also earn right to claim another tax exemption which is covered under section 80GGA. There is an upper limit on cash donations. Such donations are capped at Rs.2,000.

Donations to the National Defense Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, National/State Blood Transfusion Council, etc. qualify for 100% tax deduction on donated amount.

Donations made towards trusts like Prime Minister’s Drought Relief Fund, National Children’s Fund, Indira Gandhi Memorial Fund, etc. qualify for 50% tax deduction on donated amount.

Any donation made for scientific research or rural development is eligible for deduction under section 80GGA of the Income Tax Act.

Travel/Hotel Expenses in Business:

Business owners have to travel to grow their business. They can file travel and hotel expenses as business expenses to save tax. They never pay for travel from their salary but from company account. Smart people always show expenses before taxation.

Look what a salaried person do – Assume he has taxable income of 10,00,000 (after all deductions) and paying his taxes as per slab. Then he spends 2,00,000 on travel vacation on leftover income.

And what a business person do – He shows his travel as a business expense and takes the rest of profits as salary. He will pay tax on 8,00,000 only.

Smart no!

Food Expenses in Business:

Similarly, business owners need to meet so many people like customers, vendors, and potential hires. Often he spends money on paying bills of food. They save tax by showing all food expenses as the business expense.

Distributed Profit to Partners in Partnership Firms:

There is no tax in the hand on partners if their partnership firm is making profits and partners decide to distribute profits among themselves. Partners get tax benefit because their partnership firm has already paid taxes on the profits.

Leave Travel Allowance for salaried:

Employees can utilize Leave Travel Allowance for the expenses on domestic vacations. This policy covers the expense of travel tickets for yourself and your family. You will not be taxed on the travel expenses of your spouse, two children and parents if they are part of your journey. Brother or Sister are covered only if they are solely dependent on you.

You can avail this facility twice in the block of four years. If you were unable to claim the benefits in four year block then you can carry over one vacation in next block, provided you avail in the first year of the block itself.

Expenses Related to Internet or Phone:

Employees often get mobile phones and internet devices from their employer to do their jobs effectively. Expenses incurred in using these devices are either pre-paid by the employers or can be reimbursed by the employees. Tax benefits can be claimed on these expenses.

Incomes - How much you can avoid tax on income:

Interest Income on Saving Account:

You might not be aware that interest income on saving accounts is not taxable up to 10,000 Rupees under section 80TTA. If you earned 15,000 as interest from all your savings accounts (sum up interest from all your bank saving accounts), then you have to pay tax only on 5000 rupees. For senior citizens, Maximum exemption limit was increased from Rs.10000/- to Rs.50000/- under section 80TTB in budget 2018.

Interest Income on NRE Account:

Indian Government is very friendly to NRIs. Someone with NRE account doesn’t have to pay tax on interest income on saving or fixed deposits.

Some smart Indians residing abroad, take a loan from the foreign country at 3-4% and invest their income in India through NRE account and earn tax-free income at 8-9%. Point to note that their income from NRE account is tax-free in India, but it may be taxed in their residing country (as per country law).

Maturity or Claim amount by Life Insurance:

As per amendments introduced in the Finance Act, 2003, any proceeds received on account of maturity/surrender of an insurance policy were exempt from tax only if the premium paid did not exceed 20% of the sum assured. As an example, if the annual premium is Rs.10,000, to qualify for the exemption, the minimum sum assured under the policy was required to be Rs. 50,000.

If the sum assured was less than the said value, the entire maturity proceeds would be taxable.

In case the policy is issued after 01.04.2012, then the limits of 20% premium paid reduced to 10%.

Educational Scholarship:

Any amount received as a scholarship for education is not taxable. It does not matter if the scholarship is granted by government or private trust.

Profit from Selling Shares or Equity Mutual Funds:

If you invest in stocks or mutual funds then you can make your profits 100% non-taxable. Do not sell your equity before holding for one year, whether shares or mutual funds (equity).

For example, you invested 100,000 in some stock and in 11 months it becomes worth 1,20,000. If you sell all of them then you have to pay tax on 20,000 profit. If you hold it for another month, then you are not liable to pay any tax on the profits up-to 1,00,000 and thereafter 10% on profit (whatever tax slab you are in).

Same is applicable to equity mutual funds.

Dividends received from Shares or Equity Mutual Funds:

Until 31.03.2020, as mentioned below - Stocks and Mutual Funds (Equity focused) distribute dividends to shareholders. All of the dividends are tax-free in the hands of the receiver.

Like in the previous example, where you bought stocks worth 100,000, let’s assume you receive dividends of 2000 after 10 months. Even one year is not completed since you bought stocks, you don’t have to pay any tax on Dividends.

After 01.04.2020 - Dividend is taxable income.

Amount received as Gifts on marriage:

In india, the gifts received (cash/cheque/gifts) on marriage are totally tax-free.

You can receive gifts from your relatives, friends and family on the occasion of your marriage and you don’t have to pay any taxes.

Agriculture Income:

Any income derived from Agriculture land is tax-free in India.

1. Any rent derived from land

2. Income from agriculture products

3. Income from farm building

HUF account for secondary income:

You can take benefit of tax saving under HUF account if you have any additional income to your salary. You can pay tax on your salary under your name and deposit secondary income into HUF account.

Hindu Undivided Family (HUF) status is available to Hindu, Sikh and Jain families in India. You have to get separate PAN and bank account number. Income Tax Department considers HUF as a separate entity for taxation purpose.

Under section 80C, income tax exemption for individual is Rs.2,50,000 and income tax exemption for HUF is Rs.1,00,000.

You can save tax on both of your entities by investing in tax saving options like under section 80C. You will virtually pay no taxes on your secondary income if you invest 1,00,000 in tax saving instruments.

Inherited Amount through Will:

There is no inheritance tax in India. So anything you get from your parents or uncles through WILL is not taxable in your hands. It becomes your non-taxable income.

House Rent Allowance:

You can claim HRA to save tax on your house rent. This is applicable only if you are not owning any house near to your office. You must be living in rented space and should receive rent receipts from the house owner. You have to submit PAN card copy of your landlord if you are paying more than 100,000 annual rent.

1. The actual HRA received from your employer

2. The actual rent paid by you for the house, minus 10 per cent of your salary (including your allowances)

3. 50 per cent of your basic salary (for a metro) or 40 per cent of your basic salary (for non-metro).

Income from Gratuity:

Gratuity received on retirement or on becoming incapacitated or on termination or any gratuity received by his widow, children or dependents on his death is exempt subject to certain conditions.

The maximum limit of exemption is Rs. 3,50,000.

Meal Coupons:

You can ask your employer to issue you meal coupons (like Sodexo) those are not taxable up to 2600 per month.

Medical Bills:

For salaried persons, medical bills are reimbursed by most of companies. But keep the receipts of your medical expenses which can be used to save tax at year end. You must know that up to 15,000 amount is non-taxable on medical expenses for yourself and your dependents.

Daily Travel Allowance:

You can avail tax benefits on conveyance up to 1600 rupees (Revised) per month from your company. You can save tax on 19,200 per annum on conveyance allowance. You don’t have to submit any bills or proof to avail this tax benefit.

Some companies have the policy of daily travel allowance if an employee is commuting by car or bike. You have to submit original fuel bills to get the tax benefit. Limit of non-taxable amount varies with your vehicle type and capacity, you have to check with your employer for more details.

Standard Deduction:

This is proposed in latest budget'2018 by hon' FM. A standard deduction of Rs.50000 in lieu of medical bills reimbursement and daily travel allowance (above stated). It will come into effect from the FY 2018-19.

Section 87A:

As per section 87A, if a resident individual's taxable income is up-to Rs.3,50,000 then he will get the benefit of Rs. 2500 or the amount of tax whichever is lower.

Company Leased Car:

Check with your employer if they have car lease policy. In that case, you will not be allowed to take advantage of Daily Travel Allowance, and you can drive company leased car to save tax on car EMI & fuel.

Telephone/Internet Expenses:

Your employer may not be reimbursing your telephone or internet expenses but may have any policy to make these expenses tax free. You can either get telephone expenses reimbursed or claim tax benefits.

Money under VRS:

If a government or public sector employee takes voluntarily retirement then the amount received is non-taxable with the upper limit of 5 Lacs.

Money Received from Provident Funds (after 5 years):

You will save tax on investments in Provident Account in the year of investment. The good news is that you don’t have to pay taxes on interest received from EPF/PF investments (note that Interest received on Fixed Deposit is taxable).

You have to keep your Provident Fund active for at least five years before you start withdrawing money (however not recommended unless an emergency)

Setting off capital gain:

You have to invest your sale proceedings amount in capital gains, When you sell a property. if you make capital gains on your investments, you attract taxes. However, if you make a loss then Income Tax Department allows you to carry forward your capital loss up to 8 years. Note that you can set off short-term capital gain only with short-term capital loss and long-term capital gain only with long-term capital loss.

Regular Savings under 80C:

Employee Provident Fund:

If your employer has opened an EPF account for you, then you are already investing in a very lucrative investment option. The contribution that you make to your EPF or PF account can be claimed as deduction under section 80C. The interest income & maturity amount that you get as a result is also exempt from tax.

Voluntary Provident Fund:

12% of your basic salary goes as a mandatory investment in your EPF. However, you can choose to invest more (up to 100%) of your basic salary + DA through voluntary contributions. In case you choose to invest more, your EPF becomes your VPF. VPF earns you tax-free interest of 8.4%. Therefore, you can increase your contributions in VPF to get the most out of your deductions under section 80C.

Public Provident Fund:

Other than PF, you can also invest in PPF. It is a good option if you looking for long-term (15 years, you extend 5 years more) investment opportunity. Just like PF, you can get tax deduction on your contributions while resulting interest income & maturity amount stays exempt from tax.

Sukanya Samriddhi Scheme:

This scheme is only available to parents or guardians of a girl child. it is arguably one of the best tax saving investment options available today. Its tax benefits are also covered under section 80C. It offers higher rate of return on investment when compared to remain all government schemes PPF.

*** Read more about this ***

National Pension System:

This scheme is available at all Nationalized Banks and Post Office. It is considered a highly secure option having almost zero risk and you will get pension after 60 years. Your contribution to this scheme makes you eligible for section 80C deduction.

“An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available under section 80C of Income Tax Act.”

5 year post office or Bank time deposit account:

Five year fixed deposits can be opened with any branch of Indian Post Office or Any bank. These deposit accounts work like any other fixed deposit account except that they have a lock-in period of five years and offer good returns and tax deduction.

National Savings Certificate:

Indian postal department provides National Savings Certificates (NSC) scheme to invest your funds and get exemption under section 80C (through post offices).

Senior Citizen Savings Scheme 2004:

An individual of the age of 60 years or more (Age 55 years, who are retired on superannuation or VRS) can invest in this scheme and which also come under section 80C exemption.

Let me know, how much smart you are in your tax saving and share your thoughts and queries in comments below

KNOW THESE BEFORE AVAILING TERM INSURANCE POLICY

noreply@blogger.com (Divya Narayan) — Fri, 1 Apr 2022 04:27:00 -0700

Insurance - I know what you think “ I already had life insurance”. ~~ most of our parents introduced us to some insurance agent who was our family friend, relative and got insurance cover for us at initially stage of our job ~~

Is that correct insurance or enough for our life cover? Ok tell me this. What is your sum assurance ? I mean how much insurance cover you got?

Let me guess, your sum assurance around Rs 2.00 Lacs or 3.00 Lacs or 5.00 Lacs or 10.00 Lacs maximum. Am I right ? Off course it is right. Why because, no agent suggest a insurance product which gave him minimum commission or Nil.

Yeah you heard me right. They always suggest high commission product like endowment plan, money back plan and full life cover plan etc., that too with high premium with minimal sum assured amount.

I wanna ask you a small question here. Is the above said sum assured enough for your family in case any eventuality happened to you?

The answer is “Not at all”. When earning member left his family, how can they lead their life comfortably. They can’t lead with this Rs.10.00 Lacs sum assurance amount. ( even after you paid 28k yearly for 10.00 Lacs coverage for 35 years, if your age is 22 years — approx)

For instance, When bread earner of family is no more with his/her family and leaving no sufficient investments, debts, major responsibilities, your sum assured amount will not cover even your debt if any.

What about your family and their livelihood. Here is the solution - TERM INSURANCE POLICY

What is term policy? A policy covers your life for specific period of time (term) with minimal premium amount for larger sum assured like Rs.50.00 Lacs or more ~ Not exactly, but I try it in simple words. I hope you understand well ~

As exampled above, for regular policy with Rs. 10.00 Lacs coverage, yearly premium is 28k but here for term policy with Rs. 50.00 lacs coverage, yearly premium is around 4k only. It means if any unfortunate event (Death) happened, death benefit amount (sum assured amount of Rs. 50.00 Lacs) will go to nominee. I think it is good amount for a family to lead good life § off course sum assured amount will be decided based on our family’s income range - Low, Middle, High etc., §

This is basic info of term policy, now let us explore more about this.

But what is the right age to get term insurance?

Yeah it is common doubt all we have. Term Insurance, should be taken at lowest possible age ( not less than 18) because we are healthy and fit (it means no medical test, higher chances) at our young age - so lower premium will be charged for the total period you have chosen.

Here I want to say one important thing that fill proposal form yourself with your own hands (Don’t leave this work to agent or someone else). I mean to say is “don’t misrepresent anything in proposal form - don’t increase the chances of rejection”. If rejection at issuing stage, it is ok but if it is at claim stage, it is vulnerable. Right??? So be true yourself in all details like height, weight, family history, existing policies, habits, occupation, income etc.,

So, when you receive your policy copy ( digital or physical), just verify it thoroughly. If any corrections required, attend those corrections immediately within free looking period of 15 days. ‘Don’t keep your policy copy safely in your almirah even without opening - let your family know about your policy clearly’.

Now you may ask that does the company still reject the claim to nominee. No it can’t be. As per Sec 45 of Insurance act, company can reject your policy within 3 years from issuance if it finds anything wrong with your details. (Nominee can approach the court when we gave correct details in proposal form and still the company rejects the claim)

How much cover we need to get - there is a thumb rule that we came across different websites I.e., 10X times of your annual income (Ex: Annual income is 500000/-, cover will be 10 X 500000/- = 5000000/-). But if you ask me, it is not enough cover. Try to get 15X / 20X / maximum limit (as per your income) and it should cover your total of debts, children education expenses, retirement corpus etc.,

How much term we need to choose - Tell me frankly, what do you suggest? How much term will you take? As a general answer, we will choose for longest term, company provides. Is that correct choice? Nope.. My answer is we have to choose the term up to our age 60 / 65 / 70 is enough. Because I will tell you two reasons, what I am thinking.

First one, age 60 (retirement age for the most of govt jobs ) our family will not be need of this claim amount ~ i hope we are all confident that we will be financial independent and will have enough cash flow to cover all the our old life expenses ~

Second one, after 60 /65 / 70, our children shouldn’t discuss about our insurance claim, when our health is not good or bedridden in such a old age (it’s too sentimental, isn’t it? But we have to think).

Coming to premium payment mode - There are different modes of payments ( frequency or periods of payments - monthly / quarterly/ half yearly/ yearly) being offered by almost all companies but “yearly” is better option, we need to choose because if we missed out any premium, we will have grace period of 30 days to pay the missed premium amount. For remain mode of payments, grace period is very less. So we may missed our payment even after grace period.

If missed the premium payment, what will happen in term policy? Just you will become new customer to your company, because you need to start a fresh policy with fresh premium rates and fresh conditions. Which means your experience will be lost. So be reminded.

Ok we will pay premium but which is better option to pay the policy premium? Online / Offline. My choice is ‘Online’ mode only. I mean ‘auto debit’ option (to not miss your renewal premium).

There are three options available in premium payment - Single premium, Limited Premium and Regular Premium. Go for Regular premium. (or limited premium if you get this with good price tag).

Another query is - what is the better way to avail term policy? - Online or Offline through agents / company’s office. Both are good only, but premium of e-term policies is less than that normal term policies. “You can compare and avail term policy in POLICY BAZAR website or directly from company’s website”.

Here one more thing I want to tell you that you should be careful in choosing “sum assured payment option”. You may ask that sum assured will be paid on death claim, what will we do with that? Here is the catch, if your nominee is financial literate, no issue with sum assured payment option. If not, you need to plan that how such sum assured will be utilised / paid? If sum assured amount misused on guidance of any agents / family relatives, there is no point of term policy. So we have to choose sum assured payment option as “single instance ( total amount) / annuity (monthly, quarterly, half yearly)” depends on our nominee’s financial literacy. ~ financial literacy is just as important in life as other basics ~ “ Create financial awareness to your nominee / family “

Riders - when you are availing term policy, you will come across these “Riders” like add-on covers. There are so many riders being offered but out of which critical illness, accidental partial and permanent disability riders can be added to your policy. ~ remain add-ons are not actually add-on ~

So best advice is, you can avail plain term policy and get these riders as separate policy at lower premium from general insurance companies (of course your decision is final).

Yeah i am coming to your main query, Tax benefit - Yes you can avail tax benefit of your premium under 80C.

Before conclude this, last thing i need tell you is 'you can avail term policy from any insurance company' it means avail policy from any big (famous) or small (new gen) insurance company but we need to check these before you choose an insurance company - 1. Claim settlement ratio (indicates how many claims settled by insurance company against the number of claims received) 2. Solvency Ratio (which helps to identify whether the company had enough buffer to settle all claims in extreme situations, as per IRDAI, it should be minimum 150%). ~ will explain in detail in my next article ~

There are other ratios like Persistency ratio, commission expense ratio but above two are primary checks to decide your insurance company.

But do some research before you availed any financial service like insurance, loan, credit card etc.,

This is all from today. Hope this clarifies all your queries / doubts to avail Term Insurance policy. if its not, please comment below. Share with your friends / family, if its really worth for them.

LIC IPO - POLICY HOLDERS - YOU NEED TO KNOW

noreply@blogger.com (smart satya) — Sun, 27 Feb 2022 00:00:00 -0800

The most awaited, most buzzed and biggest initial public offering in the Indian stock market history - LIC IPO.

Recently LIC filed it's DRHP with SEBI and there are few things we need to know to get ourselves eligible to apply for LIC IPO under policy holder category with discounted price. ( Discounted price ? it is all depend on LIC RHP).

Biggest!!! Yes this is expected to be the biggest IPO to date with an issue size of 5% of its total equity (out of this, 10% is going to be for policy holders). expecting to become the largest company in the Indian stock market by market capital on the listing.

Lets have a look on some facts about LIC.

Life Insurance Corporation of India, was established on 1 September 1956. when the government of India passed the life insurance of India act that nationalized the insurance industry in India. You know, over 245 private life insurance companies and provident societies were merged and formed LIC of India.

As we mentioned before, LIC is the largest insurer in India (as of FY 2020-21) compared with other life insurance players like SBI life, HDFC life and ICICI PRU life etc., in terms of market share.

Here are the details : ~ its useful to know ~

-64.1% in terms of premium collected only by LIC (off course all other companies put together 35.9% premium).

-Issued 66.2% in New Business Premium (first time policy issued and premium collected) and 62.5% in Renewal Premium.

-74.6% in terms of the number of individual policies issued (other 25.4%). And 81.1% of market share in group policies issued by LIC (other together 18.9% )

According to the FY 2021, LIC had 37.29 Cr policyholders and having around 1.35 million insurance agents.

And you know LIC has largest AUM assets worth of Rs.36.8 trillion as of 31st march 2021 (I hope you know why LIC has such huge volume of AUM - what will it do by collecting premiums? it couldn't be in idle position. isn't it? Yes it should be invested somewhere to earn good returns).

Here i want to say some important facts about this LIC AUM - it is Largest DII in Indian stock market(we heard about domestic institutional investor in stock market). This AUM is 1.1 times of total Mutual Fund houses AUM in India and it is 3.3 times of total Private insurance company's AUM.

As of sept 2021, the company had 2,048 branch offices and 15554 satellite offices, covering 91% of all districts in India. The company also has branches in Fiji, Mauritius and United kingdom. It has its subsidiaries in Bahrain, Bangladesh, Nepal, Singapore and Sri Lanka.

One of the important thing that LIC was identified by IRDAI as a Domestic Systemically Important Insurer. (But what is it for? If a LIC fails (it is not joke), Govt of India involves itself and taken over the issue to comfort the policy holders)

Coming to valuation part, LIC has its Brand value of $8,655 million with Brand Strength Index Score 84.1 out of 100. It also recognized as the 3rd strongest and 10th global insurance brand.

Now coming to LIC Distribution Network, we can say it has best distribution network - 1.34 million individual agents and 72 bank assurance partners consisting of 8 PSU banks, 5 Private banks, 13 Regional and 45 co-operative banks. And having 174 alternate Channel partners comprising 44 insurance marketing firms ,59 brokers and 71 corporate agents. (Long list.. huh..).

Agents - LIC agent Network is said to be most productive in the sector with New Business Profit of Rs 4.12 Lakh per agent.

Around 60.9% of contribution was from Participating products because the policy holders get a share of profit in the form of bonuses or dividends which ensures customers will be in the company for a long period.

Out of it's total Investment portfolio the Debt is about 75% and the Equity is about 25%. As of Sept' 2021, 37.50% Central Government securities and 24.61% State government Securities investing under Debt. 96% of LIC's debt AUM was invested in Sovereign and AAA- rated securities. Now again the 90% of the Equity investments were in stocks either part of nifty 200 and BSE 200 indices only (overall in investment portfolio 25% of equity). 99.7% of policies in LIC are non-linked (traditional) policies only.

The best part of LIC is mis-selling complaints are about 2.4 per ten thousand only, it is way less than remain all other private insurance companies.

I think it is enough to had your decision perfectly and going to try your luck in getting LIC IPO allotment under policy holder category (may be with discount).

Now we need to know there are some clarifications given in the DRHP to apply under policy holder category with discounted price.

The first thing to know is : You need to have LIC Policy but should be issued before 13.02.2022.

PAN Linkage - Yes you have to link your PAN Card to your policy before applying for LIC IPO (Last date is 28/02/2022) to get discount under policy holder category. You can link your PAN online in LIC home portal - CLICK HERE TO LINK (No need to visit office).

There is no specific time we can say to PAN linkage completion at LIC end. You can know your status of PAN LINK HERE

Demat Account - You required to open Demat account with well known stock brokers in India. Almost all are charging same pricing like Account opening fee, AMC, Equity brokerage etc., Click below to open your Demat account with

SBI SECURITIES / ZERODHA / UPSTOX / GROWW / ANGEL ONE

These are the basic requirements to apply for LIC IPO under policy holder category.

Need to clarify some common queries here. Right??

Are only active policies eligible? - No, Not at all. Policies with status in-force and lapse, both are eligible. (but off course, surrendered policies are not eligible)

Coming to size of premium, whatever the size of the premium, you are eligible to apply for IPO

What about Proposer is different from insurer?

Here the Proposer can link his/her PAN Card to policy and can apply for IPO

In Joint policy - Any one of the policy holder link his/her Pan card and can apply for IPO

If policy availed in the name of HUF, Karta can link their Pan card and apply for IPO.

Now you may ask that can we apply under policy holder category as well as retail category??

Answer is YES, we can apply under policy holder category as well as retail category (which means we need to apply for one lot in each category - Total two Lots)

Some are there to know, which are - NRI policy, Not eligible to apply under policy holder category.

PAN Linkage should be done before 28.02.2022, if we didn't, we are not eligible.

If we surrendered the policy, we are not eligible.

I hope, it clarifies your doubts to apply for LIC IPO under policy holder category. If any query other than above, Please leave a comment. Please share it with your friends and families who are in need,

The 16 Thumb Rules for Financial Planning

noreply@blogger.com (Divya Narayan) — Mon, 21 Feb 2022 19:00:00 -0800

Hi Readers, Another weekend with another new topic. Today I am writing this to give you basic thumb rules to maintain your financial things yourself. Out of these, some rules are already known to some of us but implementation is missing (even me too :p).

Learning and implementing these rules will help you to grow your wealth and health. But

~~ Don't run for too much wealth by leaving your health ~~

~~ The first wealth is health ~~ (from emerson's quote)

I hope everyone aware of this quote, So the first and foremost rule is "Health is Wealth" and vice versa. Do regular exercise / Yoga / go for jog / meditate etc., But how much time? Time = Your age. If your age is 30, you need to spend at least 30 minutes.

In this Covid World, you need to be healthy and fit. Please be safe and follow the first rule without any planning. I know what you are thinking, without planning, how can we do a thing? yeah of course but coming to health, we have to.

Coming to planning and execution, we heard about so many ratios like 80% planning, 20% execution. But there is no such magic ratio for planning and execution. it all depends on individual's comfort, knowledge and experience.

Ok, it is enough for health, let me take you to main course of this article i.e., Financial thumb Rules.

First rule of this article is "THE 8% RULE",

Before you make any long-term investment, ask yourself: will it pay you at least 8% returns per annum after taxes? If not, reconsider your decision to invest. The benchmark refers to returns from small savings schemes such as the Public Provident Fund, which currently provides tax-free returns of 7.9 per cent per annum on investments up to Rs 1.5 lakh per year. If your investment can't beat PPF, then it may not be worth your while.

PAY YOURSELF 10% RULE :

You are in debt to your future self. So make sure you clear this debt on priority each month without fail. Your 60-year-old self depends on you for his income. You should invest at least 10 per cent of your monthly income in long-term investments such as equity mutual fund SIPs and PPF in order to secure your retirement. Want to retire early? Invest more than 10 per cent.

THE RULE OF 100 :

This is the rule suggests that the percentage of equity in your portfolio should be 100 minus your age. So, when you are 30, the equity portion of your portfolio should be 70 per cent. When you are 40, it should be 60 per cent and when you are 50, it should be 50 per cent, and so on. This thumb rule is based on the fact that equity investments deliver good returns over a longer time period as market volatilities even out. So at the start of your career, you should have a higher proportion in equity and reduce your equity exposure as you near retirement.

THE 3% RENTAL YIELD RULE :

A property you own should generate an annual rental yield of at least three per cent of the property purchase cost. For example, if property costs Rs 50 lakh, your annual rent should be at least Rs 1.5 lakh. This is a loosely applied thumb rule, and the actual rental yields may vary wildly from one location to another. But a good point of reference nevertheless.

THE 3X EMERGENCY FUND RULE :

You must always own an emergency fund that's at least three times your current monthly income. That's the bare minimum. You can go up to six months and keep building if you feel the need to do so. This is up to you. This fund will keep you financially stable in emergencies such as loss of employment, urgent travel, repairs, etc.

THE 20X LIFE COVER RULE :

If you are buying life insurance, make sure that your sum assured can take care of your family's income needs for the long term. If you are in your 30s, the sum assured should be at least 20x your current annual income, or more if you can afford it.

THE 20X RETIREMENT FUND:

You should have 20 times your income saved for retirement and plan to replace 80 percent of pre-retirement income. But here retirement means retirement at age of 60 & life expectancy of 80 – and a conservative lifestyle. But now things have changed & you would have dream/planned a lot of things for retirement.

THE RULE OF 72 :

This is the rule gives you an indication of how much time it will take you to double your money when you are investing in a certain instrument. It says 72 divided by the rate of return is the time taken for your money to double. So, if your rate of return is 8 per cent, your money will double in nine years and if it is 12 per cent, it will double in six years. Remember, it is important to earn a rate of return that beats inflation. Also, where you invest would depend on your risk appetite and the time to a certain goal.

THE RULE OF 114 & 144 :

These can help you in how many years your money will be triple (114) or quadruple (144) at some rate of returns.

THE 12/8/6 RULE :

Indian economy is growing at some different pace & even inflation numbers are different. So we can safely say if inflation is 6% (T bill rate) we can get 8% from the fixed deposits & 12% from the equity or in other words – in long term equities will deliver twice the return of inflation? Try combining Rule of 72 with this rule – you will get some amazing numbers.

THE RULE OF 70 :

You know it or not but inflation is our biggest enemy – the rule of 70 will tell you in how many years the value of money will be half. You just need to divide 70 with the rate of inflation so if the rate of inflation is 7% – 70/7=10 years. So in 10 years, your Rs 100 note will be worth Rs 50.

THE 30% CREDIT LIMIT RULE :

Try to keep your credit utilisation ratio (the percentage of your credit limit you are using) to 30 per cent for any month. For example, if your credit card limit is Rs 1 lakh, and if you spend Rs 30,000, your CUR is 30 per cent. Try and stay within this limit, because it will help improve your credit score.

THE 30% HOME BUYING RULE :

Any time you buy property, you are going to pay at least 30 per cent (and normally around 40 per cent) of the property cost from your own pocket. Banks will typically finance up to 80 per cent, while you may need to fork out 30-40 per cent more for the down payment, costs of stamp duty and registration, furnishing, etc.

THE 20/4/10 CAR BUYING RULE :

This is one of the biggest purchases after your home. And this is a depreciating asset – today morning you purchase a car for Rs 10 lakh & by the evening it will be worth Rs 8-9 Lakh. After 5 years it will not be even of half-value but still, you keep buying cars regularly – buy at 10, sell at 4 & lose 6. (repeat the cycle) There are few rules that you can follow: The value of a car should not be more than 50% of the annual income of the owner. Purchase a used car or buy a new & use it for 10 years. While buying a car with a loan stick to Rule 20/4/10 – Minimum 20% down payment, loan tenure not more than 4 years & EMI should not be higher than 10% of your income.

THE 40% EMI RULE :

All your EMIs combined should ideally be no more than 40 per cent of your take-home income. For example, if your take-home pay is Rs 50,000, your combined EMIs should ideally be Rs 20,000. While few would stop you from going over this limit, you will strain your finances, lower your savings, and run the risk of defaulting on your EMIs.

THE 50-30-20 RULE :

This is a ratio which says how much you should spend from your monthly income on fixed expenses such as rent (50 per cent), discretionary expenses such as eating out (30 per cent), and minimum savings and investments (20 per cent).

This ratio is ideal at the start of your working life. As your income grows, gradually flip your savings from 20 per cent to 30 per cent. As you age and your fixed expenses fall, your savings ratio should move from 30 per cent to 50 per cent, helping you secure your retirement.

These are the most basic guidelines to better manage your money yourself. Depending on your life stage, income, and life priorities, you may fine-tune these rules to achieve the best results.

Yeah, this is all from me today. Keep an eye on this blog, you will get more financial plans and knowledge.

WHAT IS NFT ? NON FUNGIBLE TOKEN

noreply@blogger.com (smart satya) — Sun, 6 Feb 2022 00:55:00 -0800

Hi readers, it is time to learn something new today.....

What is NFT? As i said in the title, NFT means - Non Fungible Token. That's all? Yeah, you got what do you want to know, right? Just kidding, jokes apart.

In recent days, we came across so many news articles, social media, youtube are talking about NFTs. Like, Amitabh bachchan's NFT collection sold for 7.00 Cr.

Big B collections includes 'Amitji's father Madhusala poem in amitabh's tone", 'Sholay movie poster', other amitabh's physical posters were auctioned by beyondlife.club in Nov'2021.

It is really hard to digest But it is true. In this digital world, every art has it's own price.

Not only Amitabh collection, Art work of Mike Winkelmann - American digital artist, known as Beeple, can sell his art in three / four digit figure. But NFT of his art work sold at $69 million (How many digits are there?).

It is another unbelievable thing, isn't it? But already happened. We need to believe that the art piece was sold for $69 million. (Don't regret yourself not become "digital" artist)

A lot of these happened in this digital NFT world. We are all want to participate and earn as much as we can but don't think, you can directly participate in NFT world with out knowing anything, because you can't revert quick decisions once they went wrong.

We are not playing gambling here, Right? So we need to know before we introduce ourselves to this NFT world.

Let hit the bench yourself, read this one completely and explore the NFTs after.

Non Fungible - Non replaceable / Non exchangeable. The unique thing which can't be replaceable like your girl (of course it is replaceable, isn't it?) Just kidding.

For instance, we can find so many cricket bats in the store but if any bat used by international cricketer like Virat Kohli. Then it will be made precious thing by his fans like us (but it can't be NFT, because it can't be a digital asset but his sign be a digital asset). Your hard earned certificates (not fake ones) can't be replaceable but hard earned money can be replaceable.

Read : How to improve Your Passive Income

I hope you got what is non fungible, now we are moving to 'what is token?' - In old banking system, when you went to a bank for withdrawal, they used to give a token and they called the token number to give you cash. It is like a proof that you submitted your withdrawal request. So token is a proof of "your ownership" like registered document of your property. Here this registered document be executed in presence of Govt authorities (Centralized) and it can be tracked by Courts, Govt etc.,. And we hold it in physical mode.

But when coming to token, we are talking about digital one, means it is a proof of your ownership in digital form, executed in the presence of public (Decentralized) backed by blockchain and of course the transaction can be tracked by public (but can't altered).

I hope you read my article on "Bitcoin", where i spoke about this decentralization and blockchain. It is ok, if you didn't. Let me explain in simple terms, blockchain is shared, decentralized and immutable ledger that facilitates the process of recording transactions and tracking assets across the entire network of computer systems. In decentralized world, a single person or authority can't control the system (not like bank authority controls your financial transaction done through your account) I mean it is in authority in public domain.

Now get back to our NFT world, Non fungible token - It is a unique digital work or items like pictures, clips, posters, song etc., can be bought or sold using this blockchain technology. No one can modify it or delete it.

Whatever digital item you can create with your own talent, you can sell it by creating NFT of the same by proving your ownership. It is a legit way transferring the ownership of an item. In this digital world, Even licenses (of product, of software, of medicine ect) can be obtained in these NFT form.

Read: The Psychology of Money by Morgan Housel

Or if you have money (not fiat money, you should have crypto), you can buy amitji's NFT collection or beeple's NFT. But i know your question, what will we do with these? if you are fan of amitji, you can keep it as his memory (Must be rich crypto guy). The correct answer is you can sell it for more price because it is unique (unique things have scarcity, you know), So price will move up.

Should you ride this NFT ride or not? we will discuss this in my next article. This is enough for today learning. Will come back soon with new article. Stay visited to my blog and explore my articles on various financial topics.

Ride - i got something in my mind that recently i purchased new sports shoe because I have to give a jog daily to keep me healthy.

You can buy this affordable sports shoe from Relaxo Footware Limited (Good company to invest, but it is not a stock advice and i am not authorized to give stock advices, do your own research before investing). To invest in stocks, you need to open Demat account at brokerage. Click below to open your Demat account now on

ZERODHA / UPSTOX / GROWW / ANGEL ONE.

The Little Book that still beats the Market by Joel Greenblatt - Best Guide for Investment

noreply@blogger.com (smart satya) — Sat, 29 Jan 2022 09:38:00 -0800

Hi guys, back with another book "The little book that still beats the market".

This book is about value investing in shares without any large strategies / explanations / algorithms. Author explains the whole thing in simple common terms. By reading this, you come to know

How to value a business? The way we have to view the market? (Don't troll it, its different from watch)

Professionals uses so many parameters to arrive the value of business but retail investors like us, unable to spend to much time on these parameter calculations and all. To ease this process of identifying good companies at bargained price, Greenblatt came with his "Magic formula" - (While you are reading this book, you come across this word "magic formula" almost more than in 00's, truly)

Joel starts this book with narration of a small business story, to value a business.

Read: The Psychology of Money by Morgan Housel

But before value a business, he compares the investments and returns when you invest your money in various asset classes. Like, we can put our excess money under mattress / kiddy box, but the money will not appreciate even a penny. Where as we can put our money in the bank or buy government bonds to get fixed rate of return at around 6% with full capital refund without any down risk. But we can get higher rate of return if you invest the same in bonds of corporates but we may loss small or all of our money including interest - (Yeah, we better get paid enough for taking the risk).

Coming to main course - we can buy shares of a company.

Buying a share means we are buying a stake in the business by expecting better future earnings of the business. The earning from your share gives us more money than we would receive from secured fixed ROI instruments.

The share price of stock fluctuates between 52W High and 52W Low prices with in a year (52W) and to gain the best return on our investment that the best buy of a stock is at 52W low price and sell at 52W high price. But is that so easy? No not at all.

Within a year (pretty short period of time, Right?), can the value of a business change that much?

Is there any sudden spike in the business numbers?

I don't think so (except few turn around business / small cap companies). But it is a good idea to buy share of a company at a big discount to our estimated value of those shares.

"Buying shares at a large discount to value, will provide you with a large margin of safety and lead to safe and consistently profitable investments".

Ok got it, we went to market and bought a share of company at discount price. Then what, now starts the main picture - What about future earnings and future prospects of the business you invested?

Will future earnings be in align with our estimations?

Read: What is investment?

Here is the catch, return on capital, we buy a company with high return on capital by paying bargain (discounted) price, is the secret to making lots of money.

I think now you got what is author's "Magic formula".

* Earning per share (EPS) - The company's profit per outstanding shares of stock.

* Return on capital (ROC) - The company's earnings against invested capital.

Now the main part of this book is, Greenblatt suggests that we have to give ranks based on ROC & EPS to all large companies or Small companies listed on your local exchange, the companies which meet the best ranking (both parameters), can be invested. This magic formula that seek to find good companies at bargain price.

See below example:

If we give different ranks as per their ROC and EPS for the list of stocks (A,B,C,D....) from 1 to 14 (1 - Good, 14 - Not good), the lowest total value indicates that respective stock is good to buy. In below table B, G, E, C, D, H are best buys as the total rank value (ROC + EPS) is least.

The magic formula ranks stock in order. As a result, there should always be plenty of highly ranked stocks to choose from. The magic formula has been incredibly accurate indicator of how a group of stocks will perform in the future.

Joel is saying that they tried this magic formula for the last 17 years and it work well and beats the index average return in most of the year.

Of course, in short term (doesn't work for several years in a row), sometimes it won't work but in long term, magic formula works good.

Companies that achieve a high return on capital are likely to have a special advantage of some kind that they have opportunity to invest some or all of their profits at a high rate of return. it can contribute to a high rate of earning growth.

However, ROC / EPS are calculated based on old earnings only, So we need to know the business and estimates the future earnings.

Better to get Magic formula stocks in different industries can be a sage and effective investment strategy.

You can buy this book from here: (click on the below image to buy)

Postpe Card - Buy Now Pay Later Card

noreply@blogger.com (smart satya) — Tue, 25 Jan 2022 05:53:00 -0800

Hi Readers.. I hope you are all doing well. Actually this article is suitable to millennials. Yeah it is about "Buy Now Pay Later".

In old times, we can spend money what we have. But in today's world, we can spend money even we don't have it with these new era lending platforms. like Postpe, Mobikwik, Unipay etc.,

It is a new trend in retail lending industry with zero processing fee, zero interest rate installments. I know what are you thinking - which company will do such type of business without any benefit for them. Yeah you are correct, But these BNPL companies charging the interest from Merchants in the form of commission every time when we make a purchase. like we do purchase from Amazon, Flipkart, Swiggy, etc.,

Not only they are not charging any extra, but also they are offering good discounts on various online platforms.

Today in this article, I just let you know the process to get Postpe card (I got it recently).

To apply Postpe card, we need Savings account no (mobile number should be linked) in any major Public / Private Bank, PAN Card, UID (mobile number should be linked).

Download the app from Playstore / App store,

On opening of App, it will automatically shown your mobile number in your phone - just click proceed, it will verify your mobile number by sending a sms from the your number. Thereafter you have to select your bank name::

Once you select you bank name, it will redirect to below shown page to enter your PAN number.

READ : HOW TO GET OUT OF DEBT TRAP

Now it will fetch your credit score in background and there after it will move to Documents signing with UID authentication. Please enter your UID number and click on Next. Enter OTP received on UID linked mobile number.

After due authentication of UID, it will ask to upload to your selfie (this is the easy one, Right?? :))

Done, your card has been approved

READ: HOW TO GET HOUSING LOAN

Now you will see too many offers from Postpe (New age company so they have to burn the cash to attract the customers).

You can watch detailed video of the same here :

You can apply your card from here - CLICK HERE

(Yeah it is referral of mine - there is some benefits for successful referral)

Best Book on "Buy Now Pay Later" to Read :