The problem of plenty
As they say in Economics, too many choices are always a problem. This complexity applies in the investment world. In the good old days of India, the common man did not have too much savings and too many investment options. Life was simple! Today, there are thousands of investment avenues and multiple risk-reward products that even a savvy investor would not know of!
Getting the basics right
A fundamental question that many investors do not ponder upon is, why do we have to invest? Financial planners call it GOALS. If you have inherited an abundance and do not really need to ever work for money, and you have enough to retire any day – then do you really have any financial goals to fulfill?
Of course a lot of us are not in that category. We earn regularly, save regularly but need lumpsums in the future for various goals & milestones. The time value school has taught us to start investing early and enjoy the fruits of COMPOUNDING.
Earning more by not risking more
What does an investor want? Very high returns with no risk! Well, I wish I would know where to get that from. The chase for extra rewards has made investors look for risky avenues like:
· Alternative Investment Funds
· Small Cap Stocks and Funds
· Credit Risk Funds
They all are inherently high capital drawdown products like the recent past has shown us.
Mutual fund investments are subject to market risks….
The recent past has not been good to investors. It does not take long for new investors to shun mutual funds and go back to fixed deposits.
The power of a common man!
Well, it would apply to a woman too. As an individual investor, one can do things that no mutual fund or AIF or PMS can do - Take the power of limits against their portfolio!
If planned well, a 1-crore investment in a safe Overnight Fund can get you benefits of almost double of your investment! Here’s how it works:
Invest 1 crore in a safe overnight fund - Returns of 6.5% (You can earn more in other categories)
Take trading limits against this holding – Brokers will provide you limits of Rs. 90 lakhs!
Generate additional returns using near risk-free strategies – Earn additional 7-8% p.a.
Voila!! A fairly safe 1 crore investment is able to generate 13-14% p.a.
Going back to a question I asked previously, why to take extra risk if 13-14% compounded over long periods of time can help you achieve your financial goals?
The power of Alpha – Reach goals faster or Retire with more money at your disposal
As they say in Economics, too many choices are always a problem. This complexity applies in the investment world. In the good old days of India, the common man did not have too much savings and too many investment options. Life was simple! Today, there are thousands of investment avenues and multiple risk-reward products that even a savvy investor would not know of!
Getting the basics right
A fundamental question that many investors do not ponder upon is, why do we have to invest? Financial planners call it GOALS. If you have inherited an abundance and do not really need to ever work for money, and you have enough to retire any day – then do you really have any financial goals to fulfill?
Of course a lot of us are not in that category. We earn regularly, save regularly but need lumpsums in the future for various goals & milestones. The time value school has taught us to start investing early and enjoy the fruits of COMPOUNDING.
Earning more by not risking more
What does an investor want? Very high returns with no risk! Well, I wish I would know where to get that from. The chase for extra rewards has made investors look for risky avenues like:
· Alternative Investment Funds
· Small Cap Stocks and Funds
· Credit Risk Funds
They all are inherently high capital drawdown products like the recent past has shown us.
Mutual fund investments are subject to market risks….
The recent past has not been good to investors. It does not take long for new investors to shun mutual funds and go back to fixed deposits.
The power of a common man!
Well, it would apply to a woman too. As an individual investor, one can do things that no mutual fund or AIF or PMS can do - Take the power of limits against their portfolio!
If planned well, a 1-crore investment in a safe Overnight Fund can get you benefits of almost double of your investment! Here’s how it works:
Invest 1 crore in a safe overnight fund - Returns of 6.5% (You can earn more in other categories)
Take trading limits against this holding – Brokers will provide you limits of Rs. 90 lakhs!
Generate additional returns using near risk-free strategies – Earn additional 7-8% p.a.
Voila!! A fairly safe 1 crore investment is able to generate 13-14% p.a.
Going back to a question I asked previously, why to take extra risk if 13-14% compounded over long periods of time can help you achieve your financial goals?
The power of Alpha – Reach goals faster or Retire with more money at your disposal
Imagine what an additional 6% can do to portfolio!
|
Product
|
Investment
|
Expected
Returns
|
Value
after 20 years
|
Returns
+ Alpha
|
Value
after 20 years
|
Impact
of Alpha
|
20-years
goal gets achieved in
|
|
|
Equity MF
|
1,00,00,000
|
12%
|
9,64,62,930
|
18%
|
27,39,30,346
|
17,74,67,415
|
14 years
|
|
|
Debt MF
|
1,00,00,000
|
8%
|
4,66,09,571
|
14%
|
13,74,34,898
|
9,08,25,327
|
12 years
|
|
|
Fixed Deposit
|
1,00,00,000
|
7%
|
3,86,96,844
|
13%
|
11,52,30,877
|
7,65,34,033
|
11 years
|
To learn more about Alpha, feel free to reach out to us for a knowledge sharing discussion.
Happy investing and advising!
Happy investing and advising!
