All the best,
Every day the newspapers are full of depressing news on the World Front
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.
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
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
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.
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,
Author : Dont Retire Rich and WOW-WealthOfWisdom
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 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%
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)
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
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.
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
AMFI Registered Mutual Fund Distributor
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