capital letter jan12

8/2/2019 Capital Letter Jan12

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“ Tim e to welcom e the pr ospects of better thi ngs in 2012”

Greetings from FundsIndia!

It was not hard to say goodbye to 2011 - the year witnessed one of the worst equity markets, an economicpicture that was dismal globally, and a crisis of governance on the domestic front. So, with not muchfondness, we bid adieu to the past year, and welcome the prospects of better things in 2012.

For us, the one thing that kept us going through the last year was the tremendous amount of support and encouragementthat we received through out the year from our customers. The kind words and referrals kept pouring in and really en-thused us to keep going.

At FundsIndia, we are welcoming the new year with a new value-added service on our platform. Last year this time(January 2011) is when we introduced the idea of Flexi SIP and it was received with great enthusiasm by our customers.This year, we are taking this concept forward with a variant called the "Step-up SIP".

The idea behind Step-up SIP is very simple - it lets you start an SIP with a particular amount which will be gradually,automatically increased until it reaches a maximum. The investor can specify all these parameters - what should be thestarting amount, what should be the step-up frequency (quarterly, semi-annual, or annual), what should be the step-upamount, and what should be the final SIP amount. For example, one can start an SIP with Rs. 1000 per month and in-crease it on a semi-annual basis by Rs. 500 till it reaches Rs. 5000, after which it will remain at that level.

We think this service would be of particular use to beginning investors who would like to save for a goal, but cannot af-ford to start off with the full installment amount immediately. Please check out this feature in the 'SIP setup' page in the'Mutual funds' section of your account.

On the other front, it is raining infra bonds - we have two issues going on now - from PTC and REC, and one more (fromL&T) coming up shortly. If you have not already bought into it, please do so at the earliest. Also, with signs that the DirectTax Code will be off by another year, the tax saving funds will probably have an extended lease of life. So, if you are having

an SIP in an ELSS fund, you can keep it going!

Happy investing!

CAPITAL LETTER

Volume 4 January 09, 2012 Issue 01

CAPITAL LETTER




I nvesti ng in 20 12

BY DHIRENDRA KUMAR

This short article is about investing in 2012. Actually, that doesn’t define the subject with enough precision. It could be about how investments will do in 2012; or, it could beabout where to invest in 2012. Those are two different things.

About how investments will do in 2012, frankly, I don’t think it’s possible to make a pre-diction with any degree of precision. To anyone who is a knowledgeable and aware, andthat would definitely include readers of this newspaper, the business and investmentlandscape would be familiar. Indian equities are looking decidedly downtrodden, butthat’s not to say that they can’t be trodden upon even more. Declining corporate profits,

worsening government finances, high interest rates and the constant overhang of furtherdrama in Europe could well make things even more difficult in the coming year.

Indeed, the mood d’jour among the investment and business community is one of extraordinary pessimism. How-ever, it’s entirely possible—I would say even probable—that this pessimism has now moved from being a rationalresponse to real problems to being a sort of an irrational melancholy—the opposite of Alan Greenspan’s much ma-ligned irrational exuberance.

One can only hope that this pessimism does not become self-fulfilling prophecy, which can easily happen. Among business decision makers as well investors, a widespread expectation of bad news will itself become the cause of bad news. My guess is that sooner rather than later—certainly, long before 2012 ends—there will be a change of perspective. Investors will start paying more attention to how reasonably-priced investments.

At this juncture, one should step back and take in India’s economic history in large, ten-year swathes. If you selectany ten-year period in the last forty years, there has always been a vast improvement. Were things better in 1970 or1980? The answer is obviously yes. 1990 or 2000? 1984 or 1994? 2000 or 2010? It’s the same answer every time.

When you stand back and take a ten-year perspective, the forward surge of Indian economy and businesses is always obvious. Certainly, some ten-year periods are better than others but the situation never regresses. Somemight say that a ten-year period is too long, but that’s not much longer than what would qualify as an appropriateperiod for a long-term equity investment.

Now, it’s possible in theory that the next ten years will be different and the country will be much worse off in 2022than it is now but I wouldn’t give too much to the chances of this happening.

That’s as far as the general investment environment goes. As far as the actual investment strategy for the individualinvestor goes, that’s no different for 2012 than it was for 2011 or for any other year. Investors should keep money they might need over about the next two years and keep that in fixed-income options like government small-savings schemes or debt mutual funds. Everything else that is for the longer-term should be invested gradually into equity-backed funds. The best way to do this is to choose a small number of balanced and/or diversified equity

funds and invest through monthly SIPs. It’s a simple and effective strategy, and has the advantage of not changingfrom year to year.

-Syndicated fr om Value Research Onli ne

Ar ticle is available online at: http://www.valueresearchonline.com/story/h2_storyView.asp?str=18841




6 Im por tant Rul es for Reti r ees…and other I nvestor s

BY PV SUBRAMANYAM

There are some basic rules for investors and more importantly for Retirees:

1. What you do not understand, is not worth knowing: If a financial planner tells you ‘Sir, you do not understandthis, I will explain it to you’ – please be IMPOLITE and ask him to …….. (unprintable!). NOBODY (repeat NO-BODY) is interested in ‘teaching’ you. Normally it is in the interest of the oil skin salesman that you understandLESS, rarely more. Unless of course he is a professor. If he is a professor, he is not really interested in teaching

you, so he will not attempt.

2. Be careful of what your broker can do for you: First of all have less expectation from your broker. Then meethim. Then lower your expectations to the right level. He is interested in getting you to fill some forms, buy someshares, mutual funds, unit linked pension plans, etc. YOU and YOU alone are interested in knowing what is goodfor you. Take inputs from your broker, use your OWN brain and then decide. If he pushes you for time, ask him totake a chill pill.

3. ANYBODY who has a secret way of earning more is telling you a LIE. A pure blatant lie. There are no secretsthat people go around giving free to all and sundry. Sadly some such people go around the world -and they have afantastic affinity to recent retirees sitting on Rs. 85 lakhs and wondering what to do with that money. Be damncareful.

4. Oil skin salesmen today have many qualifications, be careful. Once upon a time you could trust your banker – but like I said that was once upon a time! So in the alphabet soup of qualifications they pick up a few alphabetsand threaten you with their lingo. See point 1. What you do not understand is NOT WORTH KNOWING especially once you have retired.

5. Do not be overconfident (It cannot happen to me syndrome): Remember that is what everybody thinks, till it

actually happens. Be careful. Ask your kids, friends, neighbors,….but decide on your own.

6. THE MOST IMPORTANT one: know whom to trust. Not your brother, brother -in-law,…..boss, exboss, banker….remember finding the right person is not easy, but it is a MUST – and you should have 3-4 people with whom you can discuss. Choose such a person carefully.

Risks are worth taking, only if you understand them.

If you are sitting in a group where investment advice is being given FREE and you do not know who is paying the bill, boss it is you. You are sucker who is being had :D

-Syndi cated f rom Subramoney.com

Art icle is available online at: http://www.subramoney.com/2012/01/6-important-rules-for-retirees-and-other-investors/

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capital letter jan12

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