Do you know that direct plans of mutual funds offer much higher returns than regular plans, more than the difference in their expense ratio? To know better, read it till the end. Every mutual fund scheme has two plans to offer – Regular & Direct. Both plans have the same fund manager and the same portfolio. The only difference is the expense ratio. Ideally, the difference in the expense ratio of the direct and regular plans should be the difference in the returns of the two schemes. Interestingly, this is not the case. Regular plans have two sets of expenses – Expenses charged by ..read more

As many of you know, I am an investment professional. Very few know that I am also a regular table tennis player. I play at least 4 to 5 times a week. Therefore, it’s natural for me to think of analogies from table tennis that apply to winning the game of investments. Here are three fundamental qualities that you need to win in sports and investments (applicable to many sports but I will stick to table tennis here): 1. Watch the ball like a hawk Never take your eyes off the ball. When you take your eyes off the ball, you will probably misread the ball’s trajectory and miss hitting the ..read more

One of the questions that bothers a lot of people is whether they should invest their savings or use them to pay off their outstanding loans. I have encountered a few cases where a significant amount of money was kept in a savings account that was yielding 2.5-3.5% returns while an outstanding loan costing 8-9%. Most of the time, it’s because of indecision regarding the usage of money and a lack of understanding about compounding. Ideally, staying debt-free is the best option. It drastically improves your financial health, brings peace of mind, and opens up more options in your lif ..read more

Imagine you have been told about an investment opportunity in a business. The numbers look fantastic from all angles. High margins, rapid growth, superb financial ratios like high ROE, low debt/equity & interest coverage ratio, etc. The company is led by charismatic founders telling captivating & convincing business success stories. You are excited about the opportunity and ready to pay a much higher premium compared to other businesses in the same industry. However, one fine day people come across some disturbing red flags regarding corporate governance practices i ..read more

A write-up by Sumit Duseja (co-founder and CEO, Truemind Capital) in LiveMint. Sebi introduced Registered Investment Adviser(RIA) as a category of intermediaries in 2013 to safeguard the interests of investors. RIAs are competent professionals offering unbiased and optimum investment advice to their clients. Nearly a decade thereafter of changes in regulations, challenges still prevail on the awareness of the benefits of hiring an RIA, limiting the growth of the profession. But what led Sebi to introduce the regulations for investment advisory? Wealth management is a noble career path. A wealt ..read more

If I tell you, I flipped a coin 5 times and all the time I got head. What will be the outcome on 6th flip? Most of us will say head. Then I tell you that before this when the coin was flipped 20 times, the outcome was 50% head and 50% tail. After this information, we may get a little hesitant in calling out the outcome as head on the 6th flip but mostly still go with the head. This phenomenon is called recency bias. And it plays a dominant role in the world of investments. When the markets keep rising over the recent past, without much correction, most of us start believing that it will c ..read more

Many people rely on historical returns to estimate the expected returns on their debt mutual fund investments. Unfortunately, this is a very misleading way of evaluating debt fund returns. The historical returns vary significantly from future returns in debt funds due to changes in interest rates. The last year’s return may appear low if the interest rates on average were lower. Now if the interest rates have shot up in the last few months, it won’t reflect in the last year’s return on the debt funds, or rather mark-to-market impact (inter ..read more

A few days ago, I had a very unusual request from the HR of a multi-billion dollar company with whom I was in discussion regarding sessions on financial well-being for their employees. She asked me- Can your company provide training on stock trading to the female employees? Since we have expertise in long-term investment strategies and financial planning, I told her that we could not help her with this requirement. The next thought in my mind was why she was making this unusual request. I reasoned with her about why she wants her employees to learn to trade. Instead, trading is not just d ..read more

In the wake of the Paytm crisis, many knowledgeable folks have shared insightful views. Some are supportive of and some are against Paytm. However, a key aspect has been missing in all the debates and arguments which I felt should be highlighted.  We being a SEBI-regulated entity very well understand the importance of regulatory compliance. Compliances are in place to ensure: – Services provided in the interest of the end consumer – Reduce the risk in the system – Provide clarity regarding the operating framework for checks & balances The most important compliance requirement in regul ..read more

Do you want to create wealth from compounding? Aim for 12-15% returns and not 25%! You must be thinking why not target 25% returns? Well, here is the story. There is a typical cycle for most of the investors in the market. The most convenient and traditional investment options are FDs and real estate. When any FD investor wants to create a mutual fund portfolio, they expect returns slightly better than FDs.So if the FD is giving 7-8% returns, the expectation is to generate 10-12% returns over a diversified portfolio in the long term with low volatility. At some point, the m ..read more