Things I wish I had known 15 years back!

I have been an avid saver and investor over the last decade. I have immensely benefited from my saving and investment habit. Looking back, I think I could have done better in these areas. ( Not an exhaustive list but the things that are on top of my mind at this point of time)

1. I should have "fully loaded" my  PPF  account from first year.

I opened a PPF account 15 years ago( good decision). But I didn't fully invest into it every year. During the initial years, I kept PPF account active by doing some minimum investment. NSC or ELSS was my preferred choice for parking the money. The reason being "15 years in PPF" looked "too long " for me.
I probably didn't understand the power of compounding and also that PPF is more tax efficient than NSC.
This mistake was corrected a few years back and now the PPF account is extended for the next 5 years :-).

2. Choosing growth option in Equity fund.

During initial investment years I thought , Dividends from equity funds was the most efficient way of "profit booking"  a.k.a risk mitigation and it was better than growth plan. But didn't realize that in effect , dividends also broke compounding and selling units of growth option was the best way to book profits , if at all needed.

Now, most of my Equity MF investments are under growth option ( Direct plan- learn more)

3. Should have avoided more money in tax inefficient FD.

Bank FDs were my favourite investment to start with.
FDs are the least efficient way of investing for people in higher tax bracket. It doesn't help to beat inflation and no indexation benefit is available for FD investments.Having all your debt investments in FD is tax inefficient.

Of late, I use debt vehicles that defer taxation till withdrawal.

4. Having too many accounts.

I  used to open one SB account whenever I switched jobs and wanted to hold all the five star funds ! Attractive bank FD rate hoardings led to many banks for opening FDs.

Having too many accounts eother it be SB, FD, demat or MF folio makes life difficult for you. Simple is always better!

Realising this, started closing  many accounts and consolidating folios. Still some more work left here!.

Real estate debt levels #simply_scary

Real estate euphoria is slowly dying and the developers are facing some sort of difficulty- Most of us know this from the reports that we read.

Today, I happened to have a conversation with a person with a RE insider during my train journey and it was nothing less than scary!
  • One of the RE company is having debt up to Rs 1000 crores while the paid up capital as per books is below 20 crores( the actual capital got in by the promoter is far far less --- :-( , that should be another story)
  • The company has been using one bank debt to pay another cyclically and so on and they are managing this through their "contacts".
  • One famous private sector bank which is the darling of the stock market is keen on re-financing one of their loans on the condition that they will be the preferred partner for retail loans if and when they sell the flats. The logic being that retail loans seldom go bad!
  • Also got to know that the company had previously "pleased" a lot of people to get the loans.
  • Even if the company manages to sell all their existing stock and WIP at current prices, they will be able to manage only 50% repayment of the debt. 
Not sure what if the RE bubble burst, a few banks may actually go bust. ( But for all retail investors,Fixed deposit seems the safest investment ;-) )

NPAs from real estate and infrastructure sector can play out more differently than what we can predict.

Fingers crossed on what will happen and how stock market would play out eventually.

At least, I feel very very scared!!

Multibagger stocks of tomorrow

1.Which is a good stock to buy?. 

2. I want to do SIP in quality stocks as a long term investment, which are the good stocks to choose from?

3. Please help me identify some good stocks to buy.

These are some of the commonly asked questions that is being asked in some of the  web forums that I have been visiting.

There are many enthusiastic people who reply with answers like 

1. Choose L&T, HDFC bank, Asian paints , etc. These stocks have multiplied many times over the past decade, so they will continue to grow

2. Buy Eicher Motors, this stock has been a multibagger and Vanguard or someone has recently bought a stake in this company 

3. Buy Company XX because ace investor YY has acquired stakes in it.....

such answers go on!....

This takes me to some discussion a few years back (2006- 2007/08) like

1. Reliance power IPO is a great investment because the stock of the group companies have always made investors wealthy.

2. Unitech has yielded X times return in short span of time. That has been a jackpot!.

I am not trying to say that the answers mentioned above  are correct or wrong. The post is  not to compare the quality of stocks mentioned here and do a performance analysis of the past or prediction for the future.

The message is to say that nobody knows how any stock will perform in the future. Saying that investment in a particular company "can never go wrong" is foolish .

Making an investment decision purely based on suggestions from a web forum can prove to be disastrous. If stock picking was so easy, then you would have had billionaires all over!

Return of capital is more important than return on capital. So, please make right choices with your money.

If you ask me " How to make the right choices"... my answer is " I don't know the perfect answer" :-) !


If you make any decision to buy or not buy any of the stocks that are mentioned in this post, it will be " your decision" and you cannot blame this post for any losses or loss of  profit.:-)

 I am not a SEBI registered analyst. While writing this post, I do not own any of the shares (direct equity investment) that are mentioned in this post.This is not a recommendation to Buy-Sell-Hold any of the stocks mentioned above.

When will sensex reach 100000 ? #sensex@100000

Sensex will definitely reach 100000. This is like saying " you will die one day".

"When will sensex reach 100000? ", this question has been lingering in my mind for quite some time now. 

When I was reading this article in business standard, this morning, the following sentence caught my attention.

“We believe equities will likely be the best performing asset class in the coming decade for domestic investors. We expect the BSE Sensex to deliver annual returns of 14 per cent over the next 10 years, based on our residual income model,” Morgan Stanley says.

Based on the above , I did a linear calculation  which is presented below.

Assumption 1:- Sensex levels of 27500 for 2015 (dont ask me "how", I just assumed the current levels)

Assumption 2:- Sensex level  will grow 14% year on year in a linear fashion- (linear growth  is not going to be a reality - we know about volatility, average return, standard deviation, etc )

Year Sensex
2015 27500
2016 31350
2017 35739
2018 40742
2019 46446
2020 52949
2021 60362
2022 68812
2023 78446
2024 89429
2025 101949

So, by this calculation you can expect sensex to be at 100000 in another 10 years . But  looking at the current trend of EPS growth, 14% pa growth  may remain a dream.
on the other hand, if growth picks up , we may reach there faster (irrational exuberance!!).
In short, no one knows the  correct answer!

Disclaimer:- This post is not intended to advise anyone to invest in equities.Look at it only from an academic/ entertainment perspective.

The Game of Life #Ramayana #BookReview

Shattered dreams is part 2 in the series "Ramayana - The Game of Life".

When I received this book , I had very little expectations in terms of the content. Having read Ramayana multiple times , I didn't expect anything different or fascinating from the book. I hadn't heard of the authors previous work on the same tittle ( prequel). But the experience of reading this book turned out to be positively surprising when compared to my expectations. To put in simple words, this is one of the best books that I have ever read on "Ramayana".

"What do you do when you are informed that you will be made the emperor of a Kingdom one fine day. Do you maintain your poise or jump in joy. Do you worry about the huge responsibility that comes with the crown or look forward to take up the challenge. When you are approaching the situation very positively and give your 100% in preparation, what if there is a reversal of the decision. Do you blame the  people , fate or go around lamenting or Do you accept this decision whole heartedly. And when the decision to take away the crown from you is combined with a decision to send you to the forest for 14 years, How do you handle the situation?"

The author brings across such questions along the story line and in the process reveals why "Rama" is an incarnation par excellence. Rama's " equanimity of mind" is very clearly elucidated by the author in the process of story telling.

The finer aspects of all the characters are brought forward very easily and lucidly by the author. Sumanthara, Dasaratha, Kaikeyi, Kaushalya, Sumitra, Sita, Lakshmana, Urmila, Bharata, Sathrugana, Guha , Bharatwaja, Atri, Anusuya - All of these characters leave an impact on you for ever. 
 Most of the characters do get angry , do get judgemental , emotional, et all but all these turn positive as these emotions are displayed in a pure selfless spirit.The Love for Rama shown by the people of ayodhya and those around him are very clearly put forth by the author.

The "Notes" at the bottom of the page as the story unfolds is one of the key attraction of this book. 

A few samples.

"The gift of health, fearlessness, talent, beauty and experience of joy is the result of grace. But real grace lies not just in possessing these qualities but laso in being grateful for these qulaities. The highest manifestation of gracefulness if gratefulness"

"Past mistakes are like a man dressed in black running after you with a knife.No matter how fast you run away from the past, it catches up with you.And when it does, it plunges the Knife right into you, causing suffering.When you know that your present suffering is related to a past mistake, shame is replaced with guilt"

"Uncertainity becomes a joy when you welcome flexibility instead of set expectations"

The author has done extensive research on Ramayana and that is clearly visible in the output.
Overall the book is a must read for all . I definitely plan to read this book again.!

I would give the book a 4 star on a scale of five :-)

This review is a part of the biggest Book Review Program for Indian Bloggers. Participate now to get free books!

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