China Economy Expected to Slow Down

Merchandise contracted

China Slows Down
China’s economic growth is expected to slow slightly to 6.8 percent next year, the central bank said, adding that downward pressures would persist for a while. The figure given in a working paper from the People’s Bank of China is slightly lower than its forecast of 6.9-percent expansion for the current year, the official Xinhua news agency reported. The paper listed overcapacity, profit deceleration and rising non-performing loans as major drags on the economy. But it said a recovering property market, the lagging effects of macro and structural policies and small improvements in overseas demand would help bolster growth.

The world’s second largest economy grew 6.9 percent in the third quarter, the slowest pace since the global financial crisis. The central bank has cut interest rates six times since November 2014 and reduced banks’ reserve requirement ratio several times to try to stimulate growth.

RBI Directs Banks to Set Five Benchmark Rates

RBI on Bank Rates by

The Reserve Bank of India has directed banks to set five benchmark rates for different tenure ranging from overnight rates to one year, which will come into effect from April 1, 2016. In a new set a guidelines aimed at improving transmission of policy rates to end customers, RBI has issued a new formula to price lending rates known as ‘marginal cost of funds based lending rates’ or MCLR which will replace the base rate. Speaking to media announcing the recent bimonthly policy, RBI governor Raghuram Rajan said, “What the marginal cost pricing does is make the cost flow through into lending rates faster. So the intent is that at least for a time banks will be able to make incremental loans on the marginal cost pricing while their historical or the legacy loans will be on the base rate that is the intent as we going forward.” RBI on Bank Rates by

India Retaliates on Development Issues

India has retaliated against the efforts of the developed countries’ attempts to pull the plug on the development issues in the WTO, junking two draft texts with an obvious tilt in favour of the developed countries. New Delhi is now working on new texts with a language suitable to the developing countries in which it will insist on a permanent solution for food security, special safeguard mechanism (SSM) for protecting domestic industry besides vehemently opposing the inclusion of new issues in the WTO mandate. This looks like a repeat of the Bali ministerial two years ago. India is fighting to secure its interest in Nairobi but the only difference is that this time it is not isolated.

India Well Prepared for Fed Rate

India Strong over fed rate hike by

India Strong over fed rate hike  by
The Finance Ministry on Thursday said India is well prepared to deal with the impact of the US Federal Reserve interest rate hike, as it was along expected lines. “India is well prepared with regard to external vulnerability, if at all it arrives at a future date. US Fed hikes is on expected lines. Infact both 25 basis points and the accommodative outlook which they have spelt out, both of them are on expected lines.

Accommodative outlook is good for emerging economies,” Economic Affairs Secretary Shaktikanta Das told media here. “They are also talking of gradualism. As of now 25 basis points they have announced, about the remaining part which they would do in 2016 is something which we have to wait and see. I am sure the US Federal Reserve would also be watchful of the emerging market situation, their job figures and growth figures but what is good that, the US Fed chief have also talked about the sustained nature of US revival, which I think is a good news for countries like India which exports a lot of IT and software products and services to a markets like U.S.,” Das added.

The U.S. Federal Reserve has raised interest rates by 0.25 percent, its first increase in nine years.This was announced on Wednesday after a two-day policy meeting between officials with stocks rallying in early trading in Europe and the US.

One Up on Wall Street

Top Investment Guide Book by

Top Investment Guide Book by www.purnartha.comWe at Purnartha gobble up books and research like no one does. Peter Lynchs book, One Up On Wall Street, gives a smart cheat sheet to identify stocks that are often completely ignored. But soon could end up being darlings on stock markets. He suggests looking at few characteristics of often overlooked stocks. If you find any one of these characteristics or a combination of most of the above, be alert and dig deeper! Chances of finding a winner are high.

The company’s name & their overall business sounds boring/dull or ridiculous. Perfect stock > Perfect company > Perfectly simplified business
The company actually does something really dull / boring. Like keeping directory of phone numbers of all top businesses in your country or manufacturing leather!
Point number 1 & 2 is a great combination. It keeps the oxymoron’s away until something bug happens, thus giving smart investors a lot of time to buy.
The company does something disagreeable.
For example : brooms, plastic spoons and bottles, iron furniture etc.
It’s a spinoff division. Parent companies make sure that these companies are well prepared to go solo since their reputation is at stake. Consider checking insider buying in such stocks.
Institutions don’t own this stock, and analysts are not tracking it.
There are many rumors around the company. For example : Its involved with some toxic waste or mafia or whatever !
There is something very depressing about the company.
The company operates in a non growth industry. Companies operating in non growth have few advantages as well. Everyone knows what high growth industries are, and low cost competition is running into the same to compete. But in non growth industries, no one dares to enter looking at the margins, saturation points etc.
The company has a niche. This niche could be its product / service, the segment or the geographic location etc. And its products are such that, people have to keep buying these products. Means very high repeat orders from same customers.
The company is a user of the technology and not the producer or seller of the technology.
There is no equity dilution.
The company is buying back its shares.
So how do we apply it in Indian context and find good companies to invest? Well the answer is simple, start from 1 and don’t stop till you reach 2

Insurance Doesn’t Create Enough Wealth

insurance and Equity Investment Advise from

insurance and Equity Investment Advise from www.purnartha.comIn India, insurance is viewed largely as a tax-saving instrument. People put aside money every year to “invest” in insurance. Sure, there are products like Unit Linked Insurance Plans (ULIPs) and Endowment Plans, which promise to increase your money by a higher rate than a traditional insurance plan would. But are these really effective tools for investment? This question comes up repeatedly in the field of insurance. Before we answer this question, let us look at the purpose of insurance.

The Aim of Insurance
Any insurance plan aims to protect you against financial risk. Life insurance helps you financially secure your loved ones in the event of your death. Car insurance ensures that a sudden collision does not leave you bankrupt. Adequate health insurance ensures that you never have to scrimp on medical treatment.
Thus, a good insurance policy is gold when it comes to risk protection.

Insurance as Investment
Things get a little murkier in the region of insurance as investment. Many policy buyers nowadays choose to overfund their life insurance plans. This is done in the hope of retaining the death benefit while also receiving an assured payout that can be withdrawn before the policyholder’s death.
This is common enough in the case of permanent life insurance policies, where some of the premium payments are diverted into investments to build a corpus for the policyholder to withdraw and use before his/her death.
Naturally, the premiums for such policies will be higher than for traditional plans. Moreover, such an investment plan makes sense only for people who are in it for the long haul.

Should You Invest in Insurance?
If you do not trust yourself to make wise investments annually and to change your investment plans from time to time, an insurance plan may be a good savings instrument. By its very nature, an insurance plan forces you to save over several decades. It works for people who lack the discipline to save otherwise.
Nevertheless, it is effective only if you are able to continue the payments over the duration of the policy term. To discontinue your plan midway would be a bad call, particularly if you have been using the insurance as an investment tool.

Insurance vs. Other Investment Tools
Take the instance of the endowment plan. This kind of a plan came along because buyers of term life insurance plans were disgruntled at receiving no benefit at all on surviving the term.
What an endowment plan does is to provide a death benefit as well as a maturity benefit. If you survive the term, you will receive an accumulated amount. However, the premiums are considerably higher than in traditional insurance policies.
The question you should be asking here is whether the returns on an endowment policy (or on a ULIP, if you prefer) matches up to the returns on a strong mutual fund. Unfortunately, insurance is a poor performer when compared to mutual funds and other traditional modes of investment.
The lump sum payout that you receive at the end of the policy term will form only a fraction of what you could have earned had you diverted your money elsewhere.

Final Word on Investment and Insurance
In conclusion, it is best not to combine insurance with investment. Insurance can be used for investment, but the returns will always be limited.

Beat Inflation with Equity Investment Advise

Beat Inflation with Equity Investment Advise

Beat Inflation with Equity Investment AdviseInflation, or the year-on-year increase of prices, is probably the main reason why someone would even think about investing.

Inflation doesn’t discriminate. Prices keep going up over time for all of us regardless of where we sit on the socio-economic scale. Inflation does the most damage to retirees and those living on a fixed income. Typically, they’re more dependent on income from their investments than people still collecting a regular paycheck.

Consider this; if 8% is the average inflation every year, and you can buy something for Rs 100 today, 10 years from now, to buy the same thing, you will need Rs 215.89. In other words, Rs 100 today is worth only Rs 46.32 in today’s value terms after 10 years.

Unless your investment earns you a decent return above and beyond expected inflation rate, your money can actually become worthless.

The question then becomes: how do you beat inflation?

Let’s talk about the lazy man’s approach to investment. Some people call it “invest and forget”. However, as you will see from the following statements, it isn’t smart to just “forget”.

What is “invest and forget”?
Invest and forget is an investment strategy wherein you invest in certain instruments such as company shares, mutual funds, or even real estate, and simply forget about them. Make regular payments and don’t track what’s happening to your investments.

The reasoning is that over a period of time, your investments will always grow in value.

What really happens here?

If you invest and forget that you have invested, it’s like rolling a dice. Your investments will perform randomly based on multiple factors, including pure dumb luck.

Invest, but own your investments. If you invest in a business, wouldn’t you want to check its performance periodically? Similarly your investments require periodic health checks. The frequency on the other hand should be on the lower side.

Benjamin Graham, one of the greatest investors, said that if you track the markets too frequently then it is like listening to the ravings of a deranged person. The markets moves between extremes, which if frequently followed will do you more harm than good.

A periodic check, perhaps once a year, is ideal for tracking your portfolio of investments. Invest, but track every year.

Can they beat inflation?

Equity, in the long run, is proven to offer better returns than any other investment. However, equity is also fraught with risk. You can minimize this risk by leaving the management to professionals and invest in consistently performing equity mutual funds.

As for beating inflation, “invest and watch occasionally” is the best way to avoid the hassle and yet, keep your wealth accumulating.

The right way to do “invest and almost forget” investing

If you really want to minimize your effort but want market beating returns, you need to invest in equity mutual funds. Here are some basic rules to follow to invest well:

#1: Diversify your investments but don’t overdo it
Mutual funds by their very nature, diversify your portfolio. Holding tens of mutual funds does not lead to better diversification. Have a manageable number of mutual funds in your portfolio.

#2: Have a flexible but overall consistent investment approach
Moving your investments across sectors in the markets or across too many companies too frequently will dilute your returns. Pick a strategy and stick with it.

If you are not very well versed with industries and companies when it comes to equities, go with diversified equity mutual funds. A fund manager, whose full time job is investing, is best placed to take calls on sector and asset allocation.

#3: Pick the right funds
Go with a mutual fund with a good track record to minimize risk and maximize gain.

However remember this; past performance is not a guarantee of future returns. So check your portfolio performance annually and re-think your investments if needed.

Stay married to equities; not particular funds.

#4: Follow a disciplined investing approach
Compounding is your friend.

Invest regularly; invest whenever you have money. Over time, your money will compound and start working for you.

#5: Give your investments time
Getting rich quick is normally a pipe dream. Historically, consistent investments in equity markets take at least five or more years to give inflation beating returns with the lowest possibility of making losses.

If you have made the right investments, give it time. Patience, not haste, will make you rich.

Want to automate the entire invest and forget approach and still get inflation beating returns?

Use free online investment platforms like Purnartha that helps you automate investment best practices.

inflation-1_new_650_073014042406Investing in equities over a long period is one of the best ways to stay ahead of inflation. Over the last 10 years, the Nifty has returned 16.7% a year compared to the 7% average inflation rate. One can either invest directly or through mutual funds. For small investors, it is advisable to invest through mutual funds, as they are managed by experts.

Anil Rego, chief executive officer, Right Horizons, says investors should look at diversified equity mutual fund schemes to earn higher risk-adjusted returns. However, equity investments should have a horizon of at least three years, sometimes even longer.

Another way of lowering the overall risk is investing via systematic investment plans or SIPs. The compounding impact of such investments over long periods will help you beat inflation by a comfortable margin.

One good way of staying ahead of inflation is buying stocks that pay good dividends. Interest rate offered by banks is usually much less than the inflation rate.

While investing, always focus on what is the real return or the return net of inflation.
Managing Director, Ladderup Wealth Management
“Dividends are a tangible return paid by companies and keep up with inflation,” says Raghu Kumar, cofounder, RKSV, an online share trading company.

Just like inflation, dividends, too, can be calculated annually. This figure, called the dividend yield, can be measured by adding dividends received during the year and dividing it by the stock price. The yield must be higher than the annual inflation rate.

Gold is considered an ideal hedge against inflation. Market experts say real estate can also be an option if one can afford to spend a big sum. However, only a small part of your portfolio should be allocated to these options.

Asset allocation is critical. In this, one can look at an opportunity is to diversify globally. This will make your portfolio more stable and less vulnerable to domestic volatility and inflation.

These bonds are a great way to beat inflation as they are designed to protect both principal and interest.

The basic mechanism of an IIB is quite easy to understand. Assume that the annual coupon, that is, the amount the investor receives at the end of the year on his bond investment, is 7%, and he has invested Rs 1,000 (his principal); in this case, he originally would have been paid Rs 70 at the end of the year. However, assume that the inflation index for the year is 10%. Through an IIB, the 7% coupon is then applied to the new principal of Rs 1,100 (10% of Rs 1,000 + Rs 1,000), which comes to Rs 77 plus Rs 100 increment on the principal. Thus, the investor is sure to generate a return higher than the inflation rate.

“The principal is indexed to inflation and, hence, IIBs safeguard principal from inflation,” says Rego.

Vikas Gupta, executive vice-president, ArthVeda Fund Management, says, “Inflation index bonds are widely available securities in the developed markets that offer inflation protection to retail customers.”

During periods of volatility and high inflation, it is imperative for an investor to reassess his/her asset allocation taking into consideration risk, times horizon and goals. At the same time, it is equally important for an investor to take a long-term view so that his reaction to developments in the market is not knee-jerk.

For example, if one were to look at the Sensex from 2009 onwards, one might be shocked to find that the index has actually has gone up almost 110% during that time (an annualised rate of almost 17%).

Doctors Misadventures in Equity Wealth Creation

Equity Investment Advise for Doctors and Health professionals

Equity Investment Advise for Doctors and Health professionals
Physicians should be crackerjack investors, but they are not. Overconfidence and gullibility make them easy marks for financial salesmen, whom they mistakenly assume to be seriously credentialed professionals like themselves, and not boiler-room bunco artists. Physician contact information is readily harvested and then their habits and preferences are carefully analyzed, the better to transfuse their assets into the broker’s pockets. Doctors are too smart for their own good, because they assume that their high I.Q.s will lead them On Old Olympus Towering Top of the investment hit parade. Unfortunately, this head bone isn’t connected to that wallet bone.

Picture-Alliance / Photoshot Extenuating Factors:
The history reveals several complicating factors. First, thanks to long winding MBBS, MD degree education,required to become a physician and train in one’s specialty, entry into the labor force is often postponed until after age 28-30. While salaries ramp up fast, there is the inevitable lost decade when savings otherwise could have been compounding. Second, given the skyrocketing cost of medical school, doctors now come to the starting line with saddlebags of student debt at a non-trivial rate of interest. The returns on money invested in financial markets are variable and uncertain, but this loan interest is inexorable and certain, making a strong argument for discharging the debt as soon as possible.

Predisposing Conditions:
There is the unwritten expectation of a “doctor lifestyle,” which includes the doctor house, the doctor car, and the doctor spouse (often sold together). A succession of doctor spouses pretty much will demolish any efforts at wealth management. There is no shortage of anecdotal evidence that doctors are susceptible to goofball investment schemes like extracting gold from sea water off Ratnagiri Coast, etc. Anything that promises sizzling returns with no taxes seems to loom large in their thinking. One successful investor says, “Doctors can go from one dodgy idea to the next without ever alighting on a sensible approach that puts them in the way of making money.”

Positive Indications:
money-doctor-10137319Did I mention that salaries ramp up rapidly? In addition, there is very low unemployment in medicine, little danger of most specialties being outsourced to China, and most important of all for purposes of this discussion, the fact that demand for medical services is unrelated to the performance of the larger economy and its bewildering cycles of expansion and contraction that bedevil the rest of us. In other words, being a doctor is low-beta and low-volatility. This is gives them an edge, if they would use it. Which they don’t.

Typical Symptoms:
Doctors are often predisposed to hear their patients, visiting pharma sales agents and other sundry advise givers who show off how their hard earned money can be doubled in few months. While they easily become scapegoats to the advise often burning huge holes in their Mercedes and Jaguar dreams. Its funny they never bother to understand the law of compounding and getting benefits through long term investments

Treatment Plan:
The doctors’ investment decisions shown in the Purnartha study are not life-threatening but susceptible to improvement through diet, exercise, and a modest adjustment to the stock/bond allocation. With proper follow-through, the physician not only will be healed but well-heeled.

Equity Investment Advisor Features

Equity Investment Advisor Features

Equity Investment Advisor Features
Live tracking
Compare against various bench marks (NIFTY, etc)
Easily visualize your portfolio performance
Analyse your assets
Live NAV Graphs, Understand performance over years
Live news, ratings, that show market impact
Upfront and transparent tracking of current and invested value
Track by allocations equities, stocks etc
Finding the right sector after analyzing performance across various regimes with help of relationship managers

Investment for Individuals

Equity Investment for Individuals from Best Equity Investment Advisors

Equity Investment for Individuals from Best Equity Investment Advisors
Each one of us is unique why should one investment advise fit all. You might be planning to buy a premium sports car and your uncle may want a small compact car. Purnartha provides customized investment advise for each individual. To fit your goals..
Call us now to meet your goals