MF penetration in India , a long way to go!!

Only 5.3 million individual earners in India have invested in a mutual fund. This works out to a mere 1.65% of the country’s earning population.This is among the findings of the Invest India Incomes andSavings Survey 2007, produced by IIMS Dataworks. The survey provides the first 360-degree view of the financial behaviour and future investment intentions of the Indianworkforce.

Power of postponing consumption

Time : Mid 90's
A & B : get Rs 20,000 as a bonus from their organisation ( Definitely a huge amount then!!)
A buys a 21" flat CTV for that amount..
B decides to go for a smaller and simpler TV costing around 12,000 and invests 8,000 in an equity fund . ( It was early stages when private MFs had set shops in India).
Time : 2007 Jul
A and B plan to buy a TV again . They decide to get an LCD for Rs 50,000 for their homes.
A takes it on EMI. B sells some units of his funds ( current value 2,40,000) worth Rs 50,000 and decides to leave the rest of the amount to grow in it further.
Time and patience has definitely helped B accumulate a good amount of wealth. I don't say any one of them is better than the other or made a good decision. But the power to forgo consumption at least partially and investing for the future pays results....most of the times ..if not always.
The mutual fund mentioned here has been an exceptional perfomer and has yielded 34% returns since launch for more than a decade now. Try guessing the name of the fund.

SIP and entry load

Not long ago, there was a time when SIP were not charged any entry loads. A couple of years ago some fund houses started charging loads.
Now different funds charge different rates for SIP as a load. Some charge NIL load while others charge almost the full entry load of 2.5% as that of normal purchase.
Although this amount or percentage may look small, it may add up to a significant amount . The returns you get out of the fund will come down to this extent. So, when there are two funds of comparable track record that you are planning to invest in...look the entry loads on SIP...This should also be considered for choosing an SIP in a fund.
This articles pertains only to SIP and entry loads...Don't rush to an NFO for the reason that an entry load is being waived.

Rupee , IT stocks and Sensex

The rupee has appreciated steadily against most of the currencies in the recent past. Rupee has appreciated almost 15-20% against the USD. While this makes the imports cheaper, it is painful for exporters.
Infosys , TCS results have shown a downward turn because of the impact of appreciating rupee. IT stocks have not appreciated as fast as other stocks although the sensex is hovering around 15400 levels now.
RBI governer has issued some statement about harm caused to exporters because of the appreciating rupee. We can expect some action from RBI on the same.
Although this trend ( of appreciating rupee) may not augur well for IT companies and stocks, this would encourage a lot of FII flows into the market. Because with an appreciating rupee...a dollar investor would gain even if the market declines provided the rupee appreciation is greater than the market decline.

ULIP Vs Mutual Funds

Was going through an interesting article on ULIP VS MF. It stated five reasons why ULIPS donot score over MFs . They are

Higher Agent Commissions
Costlier exit options:
No Track record:
Larger Commitments:
Insurance versus Investment:

For more details

Sensex @ 15000

Following is the timeline on the rise and rise of the Sensex through Indian stock market history.
1000, July 25, 1990

On July 25, 1990, the Sensex touched the magical four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results.

2000, January 15, 1992

On January 15, 1992, the Sensex crossed the 2,000-mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and current Prime Minister Dr Manmohan Singh.

3000, February 29, 1992

On February 29, 1992, the Sensex surged past the 3000 mark in the wake of the market-friendly Budget announced by the then Finance Minister, Dr Manmohan Singh.

4000, March 30, 1992

On March 30, 1992, the Sensex crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.

5000, October 8, 1999

On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-led coalition won the majority in the 13th Lok Sabha election.

6000, February 11, 2000

On February 11, 2000, the infotech boom helped the Sensex to cross the 6,000-mark and hit and all time high of 6,006.

7000, June 20, 2005

On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL [Get Quote], Reliance Energy, Reliance Capital [Get Quote] and IPCL [Get Quote] made huge gains. This helped the Sensex crossed 7,000 points for the first time.

8000, September 8, 2005

On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index -- the Sensex -- crossed the 8000 level following brisk buying by foreign and domestic funds in early trading.

9000, November 28, 2005

The Sensex on November 28, 2005 crossed the magical figure of 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors.

10,000, February 6, 2006

The Sensex on February 6, 2006 touched 10,003 points during mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006.

11,000, March 21, 2006

The Sensex on March 21, 2006 crossed the magical figure of 11,000 and touched a life-time peak of 11,001 points during mid-session at the Bombay Stock Exchange for the first time. However, it was on March 27, 2006 that the Sensex first closed at over 11,000 points.

12,000, April 20, 2006

The Sensex on April 20, 2006 crossed the 12,000-mark and closed at a peak of 12,040 points for the first time.

13,000, October 30, 2006

The Sensex on October 30, 2006 crossed the magical figure of 13,000 and closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.

14,000, December 5, 2006

The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028 points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

15,000, July 6, 2007

The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005 points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000 points.

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