DON'T RETIRE RICH

Monday 20 June 2022

MY PORTFOLIO IN DEEP LOSSES, WHAT TO DO NOW ?

The Slow, painful correction in Stock Markets which started in October 2021 got magnified by a huge fall of more than 1000 points for 2 days last week. Surprisingly there were very few (negligible) panic calls/messages on WhatsApp university.

4-to 5 years back whenever there was a sharp correction in stock prices, I would be flooded by phone calls / WhatsApp messages/emails from worried investors.

The constant and consistent education about the Power of Long-Term Investment and that Volatility is a part and parcel of all asset classes and inevitably every investor has to face is now ingrained in the DNA of almost all my investors

Well, almost, but not all investors.

Some new millennial investors who started only post Covid fall and have never seen a Correction in True Sense were in for a rude shock.

Obviously, the Hand-Holding and education will take time for them to ignore these falls but I know it’s a natural reaction and very reasonable.

Earlier the obvious question which almost all investors would ask and now only the very new investors ask is

 

 

STOCK MARKETS ARE FALLING EVERY DAY, WHAT TO DO NOW SIR?

“If we are facing in the right direction, all we have to do is keep on walking,” goes a Buddhist proverb.

So, when the Direction is right....in this case...our Direction is Wealth Creation and our vehicle is also right...that is the Equity Mutual Funds...then there is absolutely no need to keep looking at the NAV on a daily or even a weekly basis.

Sometimes it makes great sense to be like an Ostrich and ignore the noise all around.

I as a concerned MFD will be like a swan weeding out bad and choosing the best ones suitable as per profile, horizon, and asset allocation.

You, as a good investor, behave like an Ostrich and ignore all the noise around.


CORRECTION IS NATURAL EVEN IN BULL MARKETS

The Sensex had a BIG RALLY from 3000 levels to 21000 levels between 2003-2007. However, the rise was not at all linear.

The Sensex fell more than 10% 13 times in this period and out of which 1 time it was a 23% fall and another time it was a 29% fall.

Just imagine if you had WITHDRAWN your money from the Markets when these falls happened.

You would have missed the 700% RISE for panicking after a 10% fall!

These falls of 10% - 15% are an opportunity to invest extra savings you may have, rather than getting panicky. And, as an Accumulator of mutual funds, you should actually be HAPPY if the NAV is coming down.



 


 

BUT WHAT IF THIS BECOMES A REPEAT OF 2008 FALL?

A very valid question and quite understandable.

I strongly suggest you read my article on https://srikavimoney.blogspot.com/2021/09/sensex-nifty-will-never-crash-like.html



WEALTH ARCHITECT
    

 

In the last 2 years, the market has moved UP by only 60% compared to the 700% rise in the 2003-2007 Bull Run. My interaction with Investment Experts, Wealth Professionals,, Fund Managers, and my own experience of being in stock markets for more than 3 decades says that the 2008 Fall will never get repeated as at that time the Markets rally was highly abnormal. 

Still, if it happens, Markets would have reached the Bubble stage and could be easily identifiable. RELAX!!

 

And, of course, people talk about the 2008 fall of 52% but no one talks about the equally sharp bounce back of 75% the following year in 2009!!!

Those who held on to their investments saw a huge jump in their returns. Quality Portfolios gave even a bigger return.

History shows that each Big fall is followed by a Bigger jump sooner or later.

 

Also, read my article https://srikavimoney.blogspot.com/2021/09/sensex-nifty-will-never-crash-like.html

 

 

 

THE HISTORY OF BIG FALLS & THE BIGGER BOUNCEBACKS:

 

Year 1992 - Sensex down by 54% in a year and up by 127% in next 1.5 yrs.

 

Year 1996 - 40% down in 4 years and 115% in next year

 

Year 2000 - 56% down in my 1.5 years and 138% up next 2.5 years.

 

Year 2008 - 61% down in 1 year and 157% up in next 1.5 years

 

Year 2010 - 28% down in 1 year and 96% up in next 3 years

 

Year 2015 - 22.3% down in 1 Year and 25% up in next 7 months

 

Year 2020 – 38% and recovered 47% within 6 months & by 100% in 18 months!

 







SO, WHAT SHOULD I DO NOW?

Stock Price Correction (and NAV falls) are but a natural phenomenon of equity markets.

 

Focus on the BIGGER PICTURE...Your Goals.

When Situations Change, nobody knows how to respond. Thankfully, being in Equities for the last 31 years has helped me understand how to respond to this type of situation exactly as this happened many numbers of times in my professional career. 

STOPPING Your SIPs at this point of time would be nothing short of a Disaster. It will hamper your Wealth Creation Hugely.

 

Firstly, understand why you had invested in the particular fund...

Does it still make sense to continue?

Has my Asset Allocation altered?

Have my goals been reasonably provided for?

Are my goals still far off?

Always look from the angle of your GOALS.

If your goals are still far away...it still makes sense to continue to stay invested (and in fact, add more) in Small-Cap and Mid-Caps.

History has proved time and again that Midcaps and Small Caps have given greater returns than Large Caps.

The volatility will only increase in the NAVs from here on.

But you need to think Long Term and worry least about the fluctuations.

These fluctuations and falls of 10% plus are actually a blessing for long Term Wealth Creation and an excellent time to Increase your Equity Exposure especially if your Goals and Asset Allocation allows you to.

As your well-wisher, I would ensure that you stay the course and get out of this Temporary Blip without you suffering a stroke and create REAL WEALTH.

If your goals are quite far...CONTINUE to STAY INVESTED.

If your finances allow, do SIP TOP-UP and even consider investing in a One Time Lumpsum.

As Baron Rothschild said

THE TIME TO BUY IS WHEN THE BLOOD IS RUNNING IN THE STREETS.....EVEN IF IT IS THE BLOOD IS YOUR OWN"!!!



REMEMBER there are lots and lots of positives that are being ignored by mainstream media, the so-called Wealth Wizards who come on TV

1. The Crude is falling

2. The Russia-Ukraine war is nearly at the ending stage

3. The Governments are fighting the Inflation worldwide with proactive steps making sure inflation is reined in

4. Indian Govt is spending huge on Infra which will have a cascading effect on the entire economy

5. The Tax Collection continues to rise rapidly indicating the strength of the Economy.

6. The fall in markets has made the PE attractive

7. The relentless selling by FII is gradually decreasing

8. Increasing equity participation by Indian Retail Investors

9. EPFO money that will come to the Equity Markets henceforth month after month adding to the strength of the Indian Markets

 

Every economist is clear that INDIA IS THE CLEANEST SHIRT IN THE DIRTY LAUNDRY OF THE WORLD!

 

 

 

 

TREAT EQUITY LIKE YOU TREAT LAND AND GOLD

 

The biggest issue with Indian Investors is that when

GOLD prices fall, and their first reaction is... GOOD...Now I can buy more

 

When Land Prices fall, their reaction is …. CHALEGA...I AM HOLDING FOR LONG TERM

But when the same investors’ mutual fund or equities fall, their reaction is...

IS THE END OF STOCK MARKETS...

Has my money gone??

Let me Take out whatever is left!!

When anyone is looking at selling off Real Estate and the land rates have fallen by 30%, their ONLY reaction is.....”WHY SHOULD I SELL NOW?? IT'S DOWN BY 30%... I WILL WAIT”

but, the same investor, will not even blink when it comes to selling Equities even at a loss!!




DO NOT ALLOW YOUR NOTIONAL LOSS TO TURN INTO PERMANENT LOSS!!

In investing as in auto racing, you don't have to win every lap to win the race, but YOU ABSOLUTELY DO HAVE TO FINISH THE RACE. 

And when it comes to investment and wealth creation, you should be

a) Consistent

b) Unemotional

c) Logical

d) Have no Biases

e) Have an expert to guide you

A Guide will instill discipline into your investment strategy and identify the right assets for your financial goals.

 

 



DO READ MY LATEST BOOK WOW - WEALTH OF WISDOM

 

Equity is not to get rich fast. It is just that equity compounds wealth at a higher rate than other assets. Be ready to get rich slowly.

 


 

 

FINALLY,

 

If your Direction is Right....you just need to keep on Walking. There will be stones on the way.... you will have to negotiate them and move on. Don’t turn away looking at the number of stones.

 So, when the Direction is right....in this case...our Direction is Wealth Creation and our vehicle is also right...that is the EQUITY MUTUAL FUNDS...then there is absolutely no need to keep looking at the NAV on a daily or even a weekly basis.

 Regards, 

Srikanth Matrubai


 

 

 





All the best,
Regards,
Srikanth Matrubai
MUTUAL FUND DISTRIBUTOR
REBALANCE VOLATILITY CERTIFIED COACH
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH


You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.

 
Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

Do read the book and give your valuable feedback and request you to post positive comments on Amazon. https://amzn.to/3cHUM6M/ 

You can purchase the book on Amazon and Flipkart 

For the best of ideas on where to invest to create Mountains of Wealth 
join my TELEGRAM channel
WEALTH ARCHITECT
    https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/

Tuesday 7 June 2022

GOOD OPTION FOR SHORT TERM INVESTMENT

*******************************************************

 

 

With Inflation shooting up and FD rates not keeping match, those who are looking for a shorter time horizon of investments are in a huge fix.

Their money in FD and debt funds are actually yielding negative returns.

 

What’s the alternative then?

 

Invoice Discounting could be the right answer.

 

What’s this Invoice Discounting?

 




INVOICE DISCOUNTING EXPLAINED:

Invoice Discounting is a way of ensuring Capital Working requirement is fulfilled by taking against Bills Receivable.

 

Let me explain in a simplistic way.

 

It’s a given that almost all FMCG companies outsource their product manufacturing. Whether it's Hindustan Unilever, Godrej, or Emami ... the majority of their products are outsourced.

 

For example, say the famous Ponds Company powder is manufactured by Ador Multiproduct (Peenya, Bangalore)

Now. Ador Multiproduct Ltd manufactures powder for Ponds Company, which does the packaging and then sells it under the PONDS COMPANY brand.

 

Let’s say, Ador manufacturers powder worth Rs.1 crore and supplies it to Ponds Company.

Ponds Company which has to pay Ador Rs.1 crore does not pay immediately.

Instead, it raises an invoice promising the entire 1 crore in about 30 days to 90 days (1 month to 3 months)

But, here Ador wants cash immediately as it needs for working capital, etc

So.. not wanting to wait for 90 days, Ador goes to an NBFC / Bank and gives this Invoice to Ponds Company and asks for CASH PAYMENT.

 

The Bank / NBFC then gives cash to Ador Multi products ltd. But not the entire Rs.1 crore but about 80% of it, which is Rs.80 lakhs.

 

Ador is happy with Rs.80 lakhs cash (as it would have a sufficient margin of profit)

 

Post the 90 days, this Bank / NBFC then receives the entire Rs.1 crore from Ponds Company thus making a clean Rs.20 lakhs profit.

This is what is called Invoice Discounting.

 

The majority of Small and Medium Scale companies do this Invoice Discount to ensure the smooth running of their day-to-day operation.

 

There are many platforms that have started offering small investors an opportunity to participate in Invoice Discounting.

 

 



GOOD OPPORTUNITY FOR SHORT TERM

 

Retail small investors had limited to nil opportunity to participate in these Invoice Discounting but now with platforms like JIRAAF / Orowealth / TradeCred coming up... it’s getting easier to invest.

 

The investment amount starts as low as 50k.

 




ALL GAINS ARE ADDED TO YOUR INCOME AND THUS TAXED AT SLAB RATES

 

 

ADVANTAGES:

a)       Definitely better returns compared to traditional avenues like Bank FD, RD, and even Debt Funds

b)       Beats even newer short term investment avenues like P2P

c)        Relatively Safer

d)       Provides Diversification in terms of Asset Allocation

 


TO INVEST IN INVOICE DISCOUNTING VIA JIRAAF PLATFORM, YOU CAN CLICK ON THE FOLLOWING LINK   https://bit.ly/38oRDLM/ 

 

 

CAVEAT FOR INVESTORS:

Yes, the Bank / NBFC will have the Invoice in hand and can go to court if the company (in our example, Powder company P) does not make the payment.

Even though this rarely happens, we as investors need to do our homework and ensure the following

 

1. You, as an investor, should make sure that the company which is making the final payment has a good reputation for fulfilling its commitment on time.

Their cash balance, credit history, and debt book should be thoroughly analyzed before you commit your money.

 

2. Even the supplier should also be a reputed one so that the goods sold do not come back due to lack of quality and the invoice stands canceled!!

 

3. The Invoice could itself be a fraudulent one!

 

Thus, though Invoice Discounting looks great on paper, it has its own risks, and hence its better to take an expert’s opinion before going ahead with allocating money.



Srikanth Matrubai




 

All the Best,

 

Do read my new book WOW - WEALTH OF WISDOM
And please share your feedback once you complete the book 

Do click this link for the book   wealth of wisdom









All the best,
Regards,
Srikanth Matrubai
MUTUAL FUND DISTRIBUTOR
REBALANCE VOLATILITY CERTIFIED COACH
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH


You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.



Once again request you to note that this article is purely for information purposes and is the author's personal views. 
You are strongly requested to take the opinion of an expert before committing any money to any investments. 
The author is entitled to change his views / opinons


Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

Do read the book and give your valuable feedback and request you to post positive comments on Amazon. https://amzn.to/3cHUM6M/ 

You can purchase the book on Amazon and Flipkart 

For the best of ideas on where to invest to create Mountains of Wealth 
join my TELEGRAM channel
WEALTH ARCHITECT
    https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/

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