PAISA WISE RUPEE FOOLISH

My neighbor AtiBhudiram doesn’t shy away from going to the city outskirts for bargain shopping. He doesn’t mind spending money on petrol to save a few rupees. His wife proudly displays the clothes he has bought at such bargain prices to my wife to showcase “Neighbour’s Envy Owner’s Pride”!

Atibhudiram also bought a luxury car last month at a bargain price from a popular used car website. Since then, my wife has been behind me: “Look at AtiBhudiram – he has a luxury car and we always either take an auto or a cab. And you call yourself a Financial Advisor!”

Now, this hurt my male ego and pricked my conscience. I had to explain: “AtiBhudiram, true to his name, uses his brain too much and is actually losing money. The second-hand car he has bought will soon result in spending twice the purchase cost due to repairs.”

I continued, “If you remember, last time when Mr. AtiBhudiram had a prolonged fever, he visited the friendly neighborhood pharmacist, who doubles up as a Doctor to AtiBhudiram, and took the medication.”

Now, this Pharmacist was very “knowledgeable” and recommended tablets to his “patients”. So, most of the neighborhood “saved” Doctor’s fees and took his esteemed recommendations.

I faced my wife, my gaze locked onto hers. “But, what happened? The fever didn’t subside and he was forcefully hospitalized. And, AtiBhudiram had to spend a huge amount of money as the fever had not only blown up but also brought with it additional ailments.

“And, most importantly, Mr. AtiBhudiram’s elder brother, Mr. AtiChatur, had a big accident wherein his car was badly damaged and was bedridden with injuries for more than 2 months.”

My wife intervened: “But his car was insured, isn't it?”

“Yes,” I explained, “his car was indeed insured, but to save a few rupees, he didn’t go for Zero Depreciation Cover and his insurance company did not pay 100% of the claim due to segregation of parts like plastics, metal, and rubber.

And my friend Mr. AtiChatur, just like his brother, did not even have Health Insurance or a Personal Accident because he wanted to save Rs.1200 or Rs.6000 per annum. With this accident, not only did he pay for his hospital expenses from his own pocket, but he also had to forgo his business income because he was bedridden for a few months and did not have a Personal Accident Policy.

Now, if Mr. AtiChatur had a PA policy,

he would have got a weekly allowance, which would have been paid by the insurance company due to the disability caused by the accident.

“So, my dear Dharmapatni, I buy quality and not try to be Paisa Wise Rupee Foolish”. 
Sipping a lassi, I continued, “It is not that I am against second-hand cars, but I always buy quality and do not mind paying extra if it is worth it. Just like I do not mind paying my Doctor his fees – I don’t try to avoid him by going to the friendly neighborhood pharmacist.

“Yes, people can avoid going to a Financial Advisor too and avoid paying fees for financial advice when they can get it for free on countless websites, but the quality of the advice and his approach to investment decisions when it comes to a competent Financial Planner is priceless.

“So, my dear,” I concluded, “please remember there is an old Hindi saying,‘Kuch Paane ke Liye, Kuch Khona Padta Hai,’ meaning,‘you should be prepared to lose something to gain something.’”

YOU GET WHAT YOU DONT PAY FOR!!

Self-styled experts harp on the low fees of the Index and Passive funds

But is the Expense the only cost you incur as an Investor?

What about the Emotions?

The volatile equity markets can test the patience and logic of any and every investor. 

Having an AMG (Advisor/Mentor/Guide) is the guaranteed way 

AMG hand-holds you and ensures you reach your goals by filtering amongst 46 Fund Houses, 1000 plus Equity funds and suggest funds based on asset class, market cap, investment style, and most importantly according to YOUR risk profile, YOUR investment horizon, YOUR Asset Allocation, and various factors.

Dont become #PaisaWiseRupeeFoolish

Good things in life come with a price, but value and wisdom come with it - priceless. Only one right piece of advice can make good of the cost paid during a lifetime.

Regards, 

Srikanth Matrubai

Qualified Personal Financial Professional

Author 

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/

RECESSION FEARS ARE UNFOUNDED

 

Every day the newspapers are full of depressing news on the World Front

Ukraine-Russia War

UK inflation at decade high

High Unemployment in the US

600% rise in Petrol Prices in Germany hurting its citizens

Large parts of China still shut down due to Covid effect

The talk of Recession around the World is getting louder and louder each passing day as the World deals with Gas Supply issues, double-digit inflation, etc

 

 

How is our India placed?

Let’s do a reality check

From the data we are having, it sure seems like India does not know what recession means!

Why do we say so?

Let’s deep dive.

 

RUPEE WEAKENING?

Yes... The dollar is at an all-time high

but, in reality, India is actually the BEST PERFORMING currency in the World in relation to the Dollar

The Japanese Yen fell by 22%

Euro fell by 13%

and the Indian Rupee has fallen by 6%

Since the Dollar is the de-facto currency across the World even now...its strength is inevitable (at least in the near future). The dollar's share in World exports is still a huge 40%!!

 

Russia-Ukraine has NOT resulted in any damage to Oil (Petrol) prices to the layman

a) Due to shrewd Political moves by Modi Govt

b) India gradually moving more and move towards non-oil dependency like Solar, Nuclear, Hydro, etc

c) India starting to deal with non-Dollar payments which is helping us to cushion the Dollar rise

 

 

THE ECONOMY:

India recently overtook Britain to become World's 5th largest economy. And only 10 years back, India was not even in the Top 10 economies.

IMF projects India to be the FASTEST growing economy in the World for the next 2 years.

But you would say, I am a layman, I don’t understand this GDP, etc.

 

LET'S MAKE IT SIMPLE with a couple of recent Real Data:

 

1. During the just concluded Deepawali festival, more than Rs.1.5 lakh crores of GOLD were bought by the Indian Middle Class. Gold sales were 35% more than last year. Delhi alone bought 25,000 crores of Gold!

2. The Waiting period for Cars in India has gone up to nearly 8 months as there are nearly 10 lakh customers who have booked Cars and SUVs. There was a 92% jump in sales of Cars (nearly DOUBLE of last year) 

3. The White Goods Sales (Washing Machines, Fridges, etc) saw a 30% jump in the Deepawali festival

4. Crude Oil, Palm Oil and other commodity prices are coming down in recent weeks helping us to purchase at LOWER prices.

5. The Unemployment rate has fallen to its LOWEST level in more than 4 years

6. Sale of Flats/Apartments hit a 9-year at 1,58,700 plus in top 8 cities of India.

7. India has now 119 Arabpatis (Billionaires) compared to just 9 in 2000.

OXFAM REPORT SAYS INDIA IS SEEING 70 NEW CROREPATIS EVERY SINGLE DAY!!!

 

(That’s why I say, Crorepati ka Zamana Gaya.

Think of becoming an Arabpati or at least Drudpati )

Crorepati is 1 crore

Drudpati is 10 crores

Arabpati is 100 crores

 

The only outcome of the above data points which we shared shows only 1 thing...

there is MONEY with Indians

And when you have money, you spend.

And why do you have money... because your income is good, there is good business happening all around

When good business is happening all around, it clearly means there is no recession! Simple!!

 

 

WHY IS THIS BULLISHNESS HAPPENING IN INDIA?

1. India is still largely rural-dependent. 66% of India still lives in non-urban

And the good rainfall continuously for the last 4 years has helped the Indian farmers. In fact, e-commerce (Amazon, Flipkart, Meesho) saw nearly 60% of their orders coming from Tier-4 places

2. Covid had seen many holdings back their cash due to fear but now they are ready to spend and spend at a higher volume and higher speed to make up for the lost time.  It’s like Revenge! In fact, it’s called Revenge Travelling, Revenge Spending.  The pent-up demand, and the pent-up dreams are all getting realised by spending and spending more.
In fact, earlier if a family was targeting an Rs.20,000 Washing Machine…now they are wanting to get a bigger, better one and don’t shy away from spending to get a quality one

This is resulting in a cycle of high spending leading to higher production which in turn leads to higher demand for raw materials, and labour, which again, in turn, leads to higher income

 

3. The salaries are going up and disposable income has seen a rise. This is leading to higher spending. In fact, India’s 200 million plus middle class and the upper middle class are growing at 15% annually.

5. India has leapfrogged 2 generations ahead by the simple concept of UPI which even a layman is using now.
Even a fruit vendor, coconut vendor, tea wala everyone is getting paid in UPI.

This is leading to higher transparency.
In fact, this is leading to higher GST collections and Income Tax collections helping Govt to spend more on Infra projects like Roads, etc

 

(In fact, my roadside Iron wala who has never paid Income Tax life was forced to pay Rs.35,000 in taxes as now 99% of his service is getting paid in UPI which gets directly credited to Bank which is 100% tracked)

 

So, in short,

If the World is dirty laundry, India is wearing the BEST Shirt!!

 

 All the Best, 
Srikanth Matrubai

Author : Dont Retire Rich and WOW-WealthOfWisdom

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/

IMPORTANT LESSONS TO BE LEARNT FROM JM FOCUSED FUND:

 

We keep getting all kinds of requests from our clients and once in a while, we get a request to help a client whose friend has invested in Mutual Funds and needs help in knowing the current value and redeeming the funds as funds are needed.

 

Invariably, among the list of funds, we get to see... some common names are

MORGAN STANLEY GROWTH FUND

SBI MAGNUM FUND

BIRLA TAX SAVER 96 FUND

ICICI VALUE DISCOVERY FUND

DSP TIGER FUND

HDFC PRUDENCE FUND

RELIANCE GROWTH FUND

99 out of 100 times, these investments would have yielded a decent 14% plus returns.

But here we discuss a fund that went through a rough patch. A very rough one at that.

 .

 

THE SHOCK:

The investor had invested in JM Core 11 Fund (now JM Focused Fund) in 2 ways.
a) Lumpsum of Rs.1 lakh

b) SIP of Rs.1000

 

The Lumpsum of Rs.1 lakh invested in March 2008, after 14 plus years, has grown to (hold your breath) Rs.1.25 lakhs!!
Yes, a grand growth of Rs.25,000 on Rs.1 lakh after 14 full years.

The Annualised return works out to 1.51%

1.51% ??
Yes. I am indeed serious.

 

Then what about his SIP investment of Rs.1000?

The magic of SIP:

The magic of SIP is now revealed. 

The investor has invested only Rs.1000 per month in JM Focussed fund and his total outflow has been Rs1,75,000.  Can you imagine the return?

His investment of Rs.1,75,000 is yielding him Rs.4,00,069 giving an annualised return of 10.68%

The lumpsum returns work out less than even an SB returns but the in the same fund, a SIP investment has resulted in a DOUBLE-DIGIT return of 10.68%.

This return beats fixed deposit returns and bank savings bank returns by a handsome margin.

While this return may be lower than the return earned by other funds it is not too bad either.

Keeping faith in a good fund house and a diversified quality fund is still the best way to make your money grow.

 

HOW DID THIS HUGE VARIATION HAPPEN IN THE RETURNS?

LET’S DEEP DIVE AND UNDERSTAND

The volatility in the markets and the huge movements in the NAV of a fund actually is hugely beneficial for a monthly SIP investor.

Let’s understand with the same JM FOCUSED FUND example...

As you can see from the attached image, a sip of Rs.1000 even after 6 years was showing NEGATIVE returns.

Rs.72,000 investment was showing a loss of Rs.4,000 !!(after 6 full years)

But, as we all know and have seen in so many live examples, it takes just 1 single good year of positive equity returns to take out of the negative territory and jump to more than
decent positive returns.

After a good 1 year of positive 2014, the fund shows that

an investment of Rs.84,000 was showing a return of Rs.1,25,000

Yes.

a jump from Rs.68,147 to Rs.1,25,489!

A jump of almost 90% plus in the value of your investment.

So, if your funds are not showing good returns and markets are volatile / showing downward bias...

please DO NOT STOP YOUR SIP

CONTINUE YOUR SIP

and if possible,

TOP UP YOUR SIP

 

BTW, as mentioned earlier...

from inception, an investment of Rs.1,000 in this fund has seen an outgo of Rs.1,75,000 and the valuation today (15th Sep 2022) is Rs.4,00,000 giving an XIRR of 10.68%

 

Before going ahead, let me assure you that Fund Houses do Transform and move up

 I have so many funds which have struggled to even come to their face value of Rs.10 NAV for many years after their launch.

HDFC TAX SAVER FUND

ICICI TECHNOLOGY FUND (see the image attached taken from my book 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/ 

And all SIP investors in all these funds actually have more money than even lumpsum investors.
I am not at all telling you to skip Lumpsum. My point is… SIP DOES HELP YOU IN AVERAGING YOUR NAV faster, and quicker and is capable of giving you BETTER returns.

The example performance of the JM FOCUSED FUND is a classic example of how a Fund House has swallowed its bitter poison and has taken great pains to put the right systems, and processes in place.

Whenever we speak to investors, the investors tend to point out the JM CORE 11 Fund (now called the JM FOCUSED FUND) and its below-par performance.

We examined further and did a detailed study and that JM Focused was an exaggerated aberration in JM’s product offering.
Yes JM Focused Fund has had a turbulent past but it has definitely stabilised now thanks to the systems, process, and research the fund house has put in place.
And most importantly getting top quality knowledgeable investment gurus like Amitabh Mohanty and Satish Ramanathan joining JM Mutual Fund has already yielded results.
Their JM FLEXICAP has been consistently in Q2 and even Q1 

 

Let me assure you, THIS IS NOT A PAID ARTICLE. The reason for taking the name of a Fund House and putting the right picture in front of you is only because lay investors tend to have a bad image of the entire fund house on basis of 1 single bad fund. Every fund will have its share of good and bad funds and every fund has its performance cycle, do not ignore a fund house based on 1 fund’s experience.

 

 

My simple point is...

JM Focused Fund has seen the worst of times and investment in such a fund even in its WORST period would have still yielded  a decent DOUBLE-DIGIT return which is better than any of the DEBT funds making it a case that

IF YOU ARE LOOKING FOR GOOD RETURNS OVER LONG PERIODS, EVEN A WRONG CHOICE IN AN EQUITY FUND WILL GI
VE YOU MORE RETURN THAN THE BEST OF DEBT FUND

This huge variation between 1.51% CAGR and 10.68% CAGR is what got me thinking and I dug deeper and my study revealed what we all already know SIP IS AN AMAZING TOOL FOR WEALTH CREATION.

 

Finally, do not forget

EVEN A WORST EQUITY FUND RETURNS MAKES MUCH BETTER SENSE THAN THE BEST DEBT FUND, especially if the time horizon is 10 years plus

 

Regards,

Srikanth Matrubai

QPFP, Author

AMFI Registered Mutual Fund Distributor

 

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/