Roll a Dice & SAVE money game

Every Sunday night before going to bed, roll 2 dice with your kids: Do this for 52 Sundays & you could see how much is accumulated at the end of the year:

If the Dice shows:

* 2-5 – Save 50/- in the piggy bank
* 6-10 – Save 100/- in the piggy bank
* 11 & 12 – Save 500/- in the piggy bank

Possibly, you can have 2 piggy-banks one for you & one for the child (if there are two children, one each) & see who has accumulated more at the end of the year.

*At the end of the year, collect all the money together – spend some, save some & donate some…

Financial Lessons from Pharaoh’s Dreams

One night Pharaoh has two very special dreams, and he wonders what they mean.

Seven fat cows, seven thin cows

Pharaoh gets Joseph, who is in prison & tells Joseph his dreams: ‘I saw seven fat, beautiful cows. Then I saw seven very thin and bony cows. And the thin ones ate up the fat cows.

‘In my second dream I saw seven heads of full, ripe grain growing on one stalk. Then I saw seven thin, dried-out heads of grain. And the thin heads of grain began to swallow up the seven good heads of grain.’

A thin, dried-out head of grain and a full, ripe head of grain

Joseph says to Pharaoh: ‘The two dreams mean the same thing. The 7 fat cows and the 7 full heads of grain mean 7 years, and the seven 7 cows and the 7 thin heads of grain mean 7 more years. There will be 7 years when a lot of food will grow in Egypt. Then there will be 7 years when very little food will grow.’

So Joseph tells Pharaoh: ‘Choose a wise man and put him in charge of collecting food during the seven good years. Then the people will not starve during the following seven bad years when very little food will grow.’

Pharaoh likes the idea. And he chooses Joseph to collect the food, and to store it up. Next to Pharaoh, Joseph becomes the most important man in Egypt.

Lesson for us: 
SAVE money during our active earning years - it will come to help us during our non-earning (or) less earning retirement period.
Always SAVE for emergency & rainy days!

Shirdi Sai’s Two-Point Solution

Devotees of Shirdi Sai Baba would savour his two golden words: “Shraddha” & “Saburi” meaning faith & patience. These two words (qualities) form the basis for all that we can achieve in this world. Faith & patience is also very much required in our personal financial planning, more importantly when we are investing in Equity Markets.

1 5 March 2012

“FAITH”: When ever we are investing anywhere, we should have a minimum level of faith & positivity about the future prospects of growth of the economy. Without faith, there cannot be any investments happening any where & in anything. Faith would mean unwavering faith which is different from our belief system or being positive. Any one can have faith about the equity markets when the markets are going up. But to sustain the faith in the economy when the markets are going down, separates the successful investor from the not so successful one. And this FAITH can manifest in our decisions only if we are equipped with proper knowledge of our investments for which we will have to invest our time to understand the nature of investments in a systematic manner. Or the easiest way is to engage a trusted financial advisor who would guide the investment decisions for your financial goals. Naturally, here again your “FAITH” would have to get shifted to the financial advisor.

“PATIENCE”: For many people, even though they have “SHRADDHA” (Faith), they may want the results too quickly. Their goals may be far away – but they want those to be achieved today itself. Every one loves making money soon – but then wealth creation, just like nurturing a relationship, growing a tree, education takes time. During this process, one should develop the art of “PATIENCE” (Saburi).

With “FAITH” we can be confident / positive about the future & with “PATIENCE” we will be peaceful till the goals are reached / achieved.

So, remember Shirdi Sai Baba for these two wonderful qualities he wants us to embrace for a peaceful life & wealth creation – “SHRADDHA – Faith” & “SABURI – Patience.

Understanding Equity Returns & setting our Expectations – ROLLING RETURNS

Stock Markets give good return in long term is what has been continuously conveyed from all directions. But how long is long term, what should be my return expectations during my investment period, what is the return I would get at the end of my investment period – the questions are many!

We shall see if we could get any answers by looking at the rolling returns of the fund rather than just the point-to-point returns as specified by the fund houses. Typically, a point-to-point return of the fund for say 3 years will be calculated by looking at the start date NAV 3 years back & the latest NAV as on today. But many a times, the returns we get as an investor may not be the same as published by the fund house as the start / exit points for us may be different for each investor.

In Rolling Returns, for example if we would like to calculate for a 3-year period – what we do is we take up all possible 3 year return of the fund over a long period of time & then take an average to see how the fund has performed over different time periods of 3 years since its inception. For example, if a fund has begun on 9th July 1998, the rolling return for a 3-year period would capture all possibilities starting from 9th July 1998 to 8th July 2001, 10th July 1998 to 9th July 2001 & so on till 14th of May 2016 till 13th of May 2019 [current date as on writing this post]. This return would show the fund’s consistency over a period of time & is much better measure than looking at just the point-to-point return.

Now let us take the example of a fund – ICICI Prudential – Large & Mid Cap fund; one of the consistent performers in its category & which has been in existence since 9th of July 1998 (for about 21 years now)!

Rolling returns of the fund over a 1-year period since inception: 


As we can see from the above figure, for a one-year period, the fund has given a maximum of 231.74% & a minimum of -52.88% even though the average one-year return across all possibilities was around 23.51%. So when you invest in this fund for just one year, we should expect as per the past performance, at least 22.73% of the times negative return; we may also end up in single digit return around 17.15% of the times & greater than 30% return around 32.31% of the times. Hence though the average return may be 23.51%, the returns were hovering between -52.88% to 231.74% and you would get that return based upon your entry & exit time.

Now the question comes – do we have to time our entry & exit? The answer is simply NO – because we really do not know when the market is up & when it is down. Instead, when we just extend the time period of our investments, we see that the probability of getting a negative return diminishes because we would have invested in both the ups & downs of the market (AND) more importantly the probability of getting a better return than any other asset classes increases.

Rolling returns of the fund over a 3-year period since inception: 


Rolling returns of the fund over a 5-year period since inception:


If you look a this 5-year period, the probability of negative return has become ZERO. Still, there is a 17.14% probability that you may end up in a single digit return & that may even 1.71% once.

Rolling returns of the fund over a 7-year period since inception:


Rolling returns of the fund over a 10-year period since inception:


For a 10-year period, we see that the minimum return the fund has delivered is around 9.23% & at the same time you may end up with this return just 2.48% the times across all 10-year investment period.

From the above data, it is clear that the longer your investment horizon the better will be risk adjusted return and the probability of loss also becomes almost ZERO.

Though, future is always unpredictable, in a growing economy like India, we can expect robust stock market growth for at least next decade or so. But we should also understand that this return is NOT going to be linear & we will have to go through a series of negative returns in between! There is no other way out…

Care has been taken to provide accurate data information. 
Still any errors may not be ruled out...
Take the article with a pinch of salt to understand the concept only!

Help File for Mutual Funds P&L Statement Download

Confused how much Gain / Loss to be reported out of your Mutual Funds redemption while filing your Income Tax Returns?

We have made this task simple – now you can download the Profit & Loss Report as an Excel (or) PDF from your NJ CLIENT DESK PORTAL and simply forward it to your auditor.

Given below is the HELP FILE on how to download the same from (y)our portal.

Help-File-for-Mutual Fund-P&L-Download

* The portal / above help file is applicable only for our clients!

Star Health: Free Health Check up Details

Star Health’s insurance plans provide for free health check up if there has not been any claims in the preceding 1/3/4 years, based on the plan & the sum assured as below:

health-check-upThe medical tests are to be taken only in any of the network hospitals of Star Health & reimbursement of the same can be claimed. Below are the documents required:

  1. Duly Filled Claim Form (as attached)
  2. Cancelled Cheque (with your name printed)
  3. Original Medical Reports + Original Bills as obtained from the hospital

The amount will be reimbursed in two-three working weeks time approximately.

Click here for the list of Network-hospitals-Chennai

Click here for Star-Health-Claim-Form

Impermanence Nature of Wealth

This “KURAL” comes under Adhikaram 33 (Section) – “Nilayamai”, meaning Impermanence.

Philosophical Meaning: This Kural talks about the impermanence nature of money or wealth. Most of us think that once we accumulate a certain amount of wealth, it will bring about security / happiness in life. But once we reach that stage, the line gets further extended & we feel “A little More” is still required to bring that happiness and this continues forever…

Tiruvalluvar in one of the other Kural in the same Adhikaram states that to fix our happiness / security on such a impermanent & unstable thing as wealth is a foolish act. In one other Kural in the same Adhikaram, he states that one should involve himself in imperishable righteous deeds immediately with his accumulated wealth as the nature of wealth is always perishable & may become NOTHING in no time.

Practical Meaning: Wealth accumulates little by little over a period of time just the way people enter into a cinema hall at different times before the show begins. Once the show is over, the crowd disappears from the hall at one go immediately and the hall becomes empty soon. Similarly the accumulated wealth disappears instantaneously & melts away too. 

Inference: Given this impermanent nature of wealth, one should be careful in managing one’s wealth. To BECOME RICH in a way is easier when compared to STAYING RICH. We earn money & invest it to accumulate wealth over a period of many years. But then, if not planned properly, the accumulated wealth can vanish in a jiffy in the following situations:

  1. Unfortunate Death of the primary bread-winner of the family without Adequate Life Insurance & much worse with lot of debts to service.
  2. Loss of Employment caused by Permanent Disability due to an accident
  3. Health related expenses due to critical illness & not having adequate health insurance cover
  4. Greed in making more money by involving in speculative investments without proper knowledge about them & relying on false promises made by agents, distributors, brokers, bank officials, friends, relatives, etc.
  5. Unmindful spending to please others (or) to live like others to show off

If we carefully look at the above situations, we notice that all the above are nothing but GAMBLING. The first 3 items can be avoided by passing on the risk to an insurance company. The 4th & the 5th items can be avoided by pure self-restraint – having our own financial goals, consulting a trusted financial adviser and making sure a financial plan is charted for the same so that the money is well-budgeted for the goals first leaving the rest to be spent without any guilt.

Tirukural, one of the most revered Tamil literary work by Saint Tiruvalluvar & praised as "The universal Veda & the Universal Code of Conduct" is a master-piece manual to lead a happy, successful & satisfied life...
Picture Courtesy: merkol