Benefit of #direct mutual fund #investing

From 1st of January, 2013 SEBI introduced the option of investing in the "Direct Plan" of  the existing schemes of mutual funds.( When you send your application to the fund house directly without a "broker code" or transact online without a broker code - it is called a direct investment)

Wanted to check how the "direct" schemes have fared over the "regular" schemes. Roughly for the two year period, the following difference is seen in NAV between direct and regular schemes of randomly chosen equity MF schemes.

Please note that although the percentage difference might look small,the benefit will be seen more" clearly" depending on the absolute sum of corpus invested in the schemes.Example, investor having more than 1 crore in a scheme would have saved more than 1.5 lakhs in two years.( savings till date- not looking into future savings) 

If you know to choose the right schemes ( it is not as complicated as knowing the right "stocks"), you should try and opt for direct investing in mutual fund schemes.

Fund- Growth Scheme Regular Direct Diff* %
HDFC Top 200 352.025 356.157 1.17%
ICICI Pru Dynamic 188.7277 191.4078 1.42%
UTI Opportunities 49.2846 50.0483 1.55%
Franklin India Bluechip 347.7465 353.3355 1.61%
Reliance Growth 786.723 797.0294 1.31%
Sundaram Select Midcap Fund 323.8099 327.5543 1.16%
Birla Sun Life Frontline Equity 161.57 164.3 1.69%
* Difference in returns for the period 1 Jan 2013 to 16 Jan 2015
Direct schemes were introduced on 1  Jan 2013
Wishing you a successful "direct" investing.

7.5X in ten years

How my first equity (mutual fund) investment has fared?

  • Almost ten years since I made my first equity mutual fund investment, the amount is now more than seven times the original investment after a lot of ups and downs. ( CAGR- 22.7%- tax free)
  • This was an NFO investment and the product was "sold" to me. In recent years, I am not a fan of NFOs.
  • Even if the markets fall by half now, the investment would have grown 3.5 times, which is not bad
  • Key learning during last 10 years
    • Direct equity investment is not easy for an individual investor . Need a lot of time, research and also luck to beat the market.
    • Investing through  diversified equity fund or balanced funds with a track record ( through SIP) is one of the easier option available to retail investors.
    • Dont track market news on a day to day basis.
    • Have very reasonable expectations from equity market in terms of returns (inflation + 2-5%).
    • Time in the market is more important than timing the market- but if you buy any asset with a high valuation ( including blue chip shares or equity MF), you may have to wait for a very long time to even  recover your capital. So, try to practice low P/E or low P/B investing which is easier said than done.
    • Understanding risks involved is very important before investing in equity - Volatility, average return, standard deviation ,etc.
    • Finally, Power of compounding is amazing. Experience it- to realize it :-) .
  • Happy new year and happy investing!
This post is not a recommendation to buy any mutual fund.

Business in the name of "Religion"

I hear a lot of criticism around the movie "PK" for making fun of religion esp. Hinduism. I haven't watched the movie yet but based on what I have heard , I see a lot of correlation with real life mockery being done in the name of religion. 
Here's one such example:-  There was a news article about 108 divya desam lords ( 108 vishnu temples sung by alwars) in one of chennai's leading news paper.Me and my wife got curios as to what this was about .We had also seen a few posters on the streets of chennai about the same place. We thought this should be some earnest attempt to recreate the 108 divya desam lords in chennai. We googled to find more information and saw that this was organized at shrivaaru venkatachalapathy palace vanagaram.

We decided to go and drove down.On reaching the place, we were charged Rs 100/ per head and Rs 20/ for car parking. No complaints yet, the expectations were real high as to "How would be the recreation of those 108 divine lords".

Within a few seconds of entering the hall, I was left with nothing but disappointed. Replicas of divya desam lords were made with sub standard attention. All 108 lords were recognizable only by posture a.k.a sitting standing or lying. Apart from this , there was no significant effort made to distinguish between the look or portray any significance of the specific lord. Only if you read the name board, you would know who the lord was and the name of the divya desam.

The display of lords was followed by a mini "food" exhibition.( obviously, you need to pay for the food)

There was a lot of crowd going around merrily taking pictures.of course, you might argue that one shouldn't expect too much from such "exhibitions". . In fact apart from the entry fee, I also saw some people throwing money at the idols, coconuts and arthi plates being sold at counters , etc etc.

But I see this as a ruthless effort to earn money out of a vacant mandapam ( In chennai-No one hires a marriage hall in Dec-Jan season) using an unpatented concept of 108 divya desam. 

These guys in collaboration with another tamil magazine- Kumudam "Bhakthi"?? have made a fortune with just the title 108 divya desam without actually making any effort to justify the theme.

But if some one makes fun of  us , we get real angry :-) ( Including me). The fact is there are a lot of folks who know to  milk money out of "religion".

Ultra Walkathalon - some experiences

Last week , I had the opportunity to do an ultra walk from Chennai to Tirumala  ( around 130 kilometers). It was definitely a good experience. Both mentally  and physically the activity was definitely a "stretch". At the end, the overall experience taught me a lot.

There were moments ( especially on the second and third day) when reaching the destination seemed almost impossible. The only thing that helped to reach the goal was to "slow down ", " take rest" and most importantly " focus on the next step alone". Many times in life we get overwhelmed by the things that are ahead of us but focusing only on the next step might really help.

Another significant observation:  - Either it be a national highway or a road crossing through a small village , there was one thing in common - 80% of the road stretches are being used as open public toilets. We as a nation have a long way to go in terms on imbibing "Cleanliness". Huge piles of plastic garbage was also a common sight next to all human settlements along the way.Mother nature is truly and extraordinarily patient with all of us!

Basic money managment tips

1. The cheque is the "real" money, not the credit card. Therefore, the cheque amount you receive as salary should determine your spending pattern; not your credit card limit. Utilise your card to the limit that you can comfortably settle at the end of the month.

2. Contrary to popular perception, cars, televisions and phones are NOT assets. They are liabilities, because they depreciate and because you need money to use and maintain them. So don't accumulate too many "fake" assets.

3. For greater transparency, flexibility, liquidity, simplicity, convenience and better returns, do not mix insurance and investments. Avoid policies that combine investment with insurance.

4. Borrowing means spending tomorrow’s unearned (and possibly uncertain) income today. So be very careful. If you have to borrow, borrow for the "right purpose", the "right amount" and at the "right cost".

5. Start early, invest regularly and stay invested. Time makes money. Fixed deposits, stocks, mutual funds, property, gold, and other such assets, are merely the tools that time employs to make money for you.

Rest of the article ,

This post has been written by Sanjay Matai, a financial adviser and author. This is the advice he penned down for his son when he got his first job and first pay cheque. 

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These are just opinions/ ideas exchanged. No one can claim us responsible for any investment failures /losses based on the ideas expressed here.

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