Plan your TAX with 'SIP' way...

Dear Patrons,

We are getting bigger & stronger, not by ‘Complan’ way. The secret is ‘SIP’.

We have recently stepped into 35th year of investment advisory at the same time we crossed 5000 SIP mark.

One word question – ‘How?’

Two word answer – Financial Planning

The earning of an individual is growing. Across India Life Standard is increasing which increases need of money to achieve various financial goals. The immediate and most important needs to be planned are retirement & child’s education planning.

Apart of goal planning, taxation is also a part of financial planning. The Government gives enough options to save taxes. If planned properly, one can easily save an ample amount on taxes. Doing job or business or professional activity is our duty. But planning of taxes is as important as business planning.

We, at Shalibhadra with strength of our 34 years of experience, find out every possible way of tax savings from your income with help of renowned CAs. We will be happy to provide you investment + tax savings related services toward peaceful journey of financial planning.

Trending or Trendsetting?

#trending

Or

#trendsetting

The world is changing and so does the trends. Thanks to technology. Through finger tips we access the world.

This excess availability of information has formatted two types of people.

Type one who follows existing trends, so they are trend followers.

Type two who set their own trends, so they set trends for others.

Above is perfectly true for Sensex followers. In Stock Market, large numbers of investor is in following a trend. So they are followers. While only few are trend setter. They are visible and vocal. They appear on TV, newspapers and through various mediums. Their influence is dominant on remaining 90% of those followers.

These trend setters have a most important quality; they are masters in oratory power. Additionally they are a good looking personality and that helps them create an impression. So people follow them.

To keep ourselves out from these trend setters, let me make things very simple. We live in a logical world and common sense will help us. Once we start analyze small happenings in economy, we can set our own trends. Here are some recent examples.

Evaluating simple economic factors a. Focussing on fundamental news and their positive outcomes, b. ignoring nonsense negatives (Our news mediums are full of negative news), c. analyzing the news inflow based on facts and not on rumours.

Initially it is tough but implanting it slowly and making small mistake at starting level, observing results of our actions can lead us to conclusion about our investment. At least layman investors can set their own trends for investments.

Pre budget Note 2015

Pre budget Note

Narendra Modi Government is presenting first full fledged budget this week.

The “Achchhe din” Slogan is in the mind of people and expecting relief from this Government.

As everybody’s belief, I too believe that this is the Pro Growth Government. But… Please Wait, whose growth? “Growth of country?” or “Growth of certain class of People?”  Remember, A Dynamic Government will take all possible action to bring fiscal discipline. And Discipline is never a well accepted idea among any citizen class. But, if we want to see our country on Real Term Growth Path, we should not be surprised by some “unexpected and shocking” proposals in this budget.

Why I am cautious about Budget proposals? Government has to win subsequent state elections. The primary agenda is to acquire majority in upper house (Rajya Sabha). Hence, some populist proposals are expected to satisfy large number of society. 

On the other hand, Government is likely to eye on raising the revenue. So, it may give surprise by abolishing/reducing some of the tax benefits; limit the possibilities of tax arbitrage and tax evasion techniques. Within the tax rules, there are ways to reduce tax burden. Smart people benefit from such proposals. I strongly believe that there will be rationalization in tax benefits schemes. Some “Popular among select class” tax savings benefits may be the history.

So, in my one line take is “Only Expect the unexpected from this Budget”.

There is a probability of benefits to defence and “Make in India” intensive industries and giving boost to Import substitute industries thus targeting more employment generation. So focus will be on controlling Fiscal Deficit and Current Account Deficit.

We put a cautious message in our February News letter for portfolio restructuring prior to announcement of budget & Smart investors have started portfolio restructuring activities. Naturally, front runners will have advantage over others.

 Mr. Siddharth Shah. 

Chief Officer, Shalibhadra Master Investment Broker.

Experience of 33 years in Investment and Financial Industry.

Contact - +91-9426516073

Email - invest@shalibhadra.in

Facebook - Shalibhadra Master Investment Broker.

At this level, Should I enter in to equity or Not?

Investors who are outside the “room” are still waiting for a comfortable time to enter in to Equity market. They carry the "Great Fear Factor”, hence they are extra aware on Capital Protection. They believe that Sensex has reached to highest level and may crash any time. The comfort entry level for retail investors is “Is everybody buying Equity?” But that is the disastrous thinking.

I think my duty is to convey a "Welcome to the market” message to all “Investors in Waiting”. So, I will try to convert market in to three levels.

1. Attractive Level: Here the probability and quantum of loss is very less while growth potential is very high. Financial Advisors are trying hard to convey this opportunity message. But the sad part is, investors are not ready to listen a single word from their Financial Advisor. Friends, this attractive level was 2012 and 2013 but it is history now. 

2. Comfortable Level: Here the probability and quantum of loss is low while probability of growth is high. Financial Advisers are trying to show the possibilities of new market high supported with economy data and market history data. This is a sincere effort of showing great opportunity lies ahead. Only Smart investors are listening and start investing. But the sad part is, investors are investing halfheartedly. They invest small amount of what really they can. Friends, this comfortable level is NOW.

3. Risk Level: Here the probability and quantum of loss is very high while growth potential is very low. Financial Advisers are trying to convey message of caution. But the sad part is, investors are not ready to listen a single word and invest heavily in the market. After a bad experience, these investors establish a prejudicial negative opinion for market.

Financial Advisers have better availability of various data, advantage to identify the market levels (as discussed above) on certain parameters. So, in an uncertain market environment, Financial Advisers are best guide for investors. They advise according to risk appetite and investment time horizon of investors.

 

A layman investor invests in Bull Phase (High) and get out of market during Bear Phase (Low) with bad experience. This is done for years, is being done now and probably will continue the same in time to come. So next time when you invest, try to find out an experienced, mature financial adviser instead of looking what other layman investors are doing.

 

 

 Mr. Siddharth Shah. 

Chief Officer, Shalibhadra Master Investment Broker.

Experience of 33 years in Investment and Financial Industry.

Contact - 9426516073

Email - invest@shalibhadra.in

Facebook - Shalibhadra Master Investment Broker.

How to save yourself from Mis-Selling?

Cobra Post Video disclosing Anti Money Laundering Activity by some leading banks has put a question mark in my mind “Growth at cost of Goodwill”.

When “Growth” bypasses “Values”, customer’s unrest arises.  Shareholder (Owner) asks for Growth in earning. Earning comes from customers. More earning is a result of aggression in Selling means more charging or find new ways of earning. So some “Not to do” (mis-selling) is being done to achieve the target growth.

Let us discussion this mis-selling first, then we will show you the way to overcome the hurdle.

Firstly, in last ten years we have seen various new investment opportunities have been introduced in the market. Investors now have experience that more the complicated product, more the chances of wrong investment decision. Initially investors should try to buy pure vanilla product. Jumping in to market to chase returns may be dangerous.

Secondly, Investor is not serious about his/her future goals. Some survey reveals that the young generation investors are investing just to save the tax. So the basic of future financial planning is not known to even highly educate young persons. They are more aware on new ways of spending.

Thirdly, the seller is not investor centric. Either he is loyal to his employer or his sales targets. Sometimes he tries to sell the well accepted products of the market and saves himself from blame game.

SEBI, RBI and IRDA have introduced various systems for consumer complaints redressal. However we always find news on mis-selling though intermediaries whether it is a bank or even individual advisor.

The introduction of Complaint Channel is welcome move. But can we dream the world of educated investors who understand at least basics of products? Before the seller makes any selling statement the investor should learn to understand the untold facts which seller intentionally or unintentionally hides. This can be possible by education. Investors should attend “investors Awareness Program” known as IAP. IAP is an initiative of SEBI and AMFI to educate investors to understand Inflation, Risk, Diversification, Benefits of Long term investing, Goal Setting, Asset Allocation, Taxation implication, liquidity etc. By attending IAP seminars, investors can avoid wrong investment decisions. The important part of such seminar is Question and Answers session. Sometimes question of other persons gives lot of knowledge as learning from experience of others will reduce wrong investing.

We find need of such IAP seminars and have decided to arrange sequence of Seminars throughout the month of August, September and October at the various locations of Ahmedabad city.

Such Seminars will be held on “No Sales Talk” basis. Talks will be in Gujarati, Hindi, and Easy English as per convenience of participants. Industry experts will deliver lectures and It will cover all aspects where mis-selling happens. Focus will be given on wrong talks, double talks and hidden facts by seller. Important discussion point is to understand Risk, Features of various Asset class and Importance of diversification through Asset Allocation as per risk appetite for optimum return.

At the end of every IAP, We are happy to invite you to join us for dinner so that individual questions can also be handled during one to one interaction. We will be happy to see you to attend the seminar with your spouse. You have to register with us to attend the seminar. We will offer you different dates and Locations. You have to select a suitable date for you.

So friends, join us in this educative IAP seminar. You can spread this message to your friends too and let us move forward from mis-selling to smart investing.

Gold - The metal in hearts of every Indian

It is a belief that gold is hedge against inflation. It is a safe haven investment in a mismanaged world. Let us understand myths & facts of gold that will clear your mind.

The current options for Indian investors to buy Gold is; Jewellery, Gold Coins, ETFs or Gold Savings Funds of Mutual Funds. All was going good till the morning of mid April 2013 when the gold prices suddenly saw a fall of nearly 12% in dollar terms.

Commodities (including Gold), Real Estate and Equity run on cyclical movement. Any of this traded at hype will suffer periodic bursts of sharp rise and bouts of steep decline.

The buyer of gold has theory in his mind. Investors buy gold because of the ‘greater fool theory’ (the next guy will buy it at a higher price). The second popular belief is that gold prices are supposed to rise, as it had always happened in the history too.

It is a general belief that Gold is a hedge against inflation.

Looking at the historical prices of gold and consumer price inflation, In the 1980s, inflation in the US was around 6%, and gold lost more than half its value. This myth of gold being a hedge against inflation has been bunked by researchers many times in the past.

What is fair value of Gold?

At Rs. 27,000/10gm, gold is higher or lower than the ‘fair value’? Gold does not generate income. It does not pay dividends. A good business generates profits, a property generates rent and a bond generates interest income. Since gold does not generate any return of its own, it can only be new buyers with expectation of gold price to go up. This is just a speculative approach.

So, what really drives gold prices?

Money and commodities are moving around the world with improved technology in the financial interconnected world. 

1. Gold is priced in US dollars. Gold prices will go up, if the dollar is weak. 
2. The price of gold is measured in rupees in India. If the rupee is weak against the dollar, the price of gold will go up to that extent.

Indians don’t remember gold prices crashed from a high of $ 850/ounce in 1981 to $ 250/ounce in 2001 over 20 years. In 1981, Exchange rate was $1/Rs. Rs. 8; in 2011 it became Rs. 45 now around Rs. 54. Weakness of the Indian currency pushes the price of gold up. The economic mismanagement in India is remained favorable to gold buyers.

Gold in Indian Context:

In India, Gold has monetary value and social value too. Showcasing ownership of quantity of Gold is a proud statement in Society. Gifting Gold in family celebration is a must custom. Why Indians are so close to gold? While looking back to history of 400/500 years back, United India has always been attacked by outsiders like Aryas, Sikander, Taimur, Allaudin Khilji, Portuguese, Dutch, English and many more. During war, people required to run away with handy wealth (gold) to other places. This insecurity has developed a social custom of possession of Gold. This still remains in the mind of every Indian, every corner of India.

In fact, buying gold is buying fear. So whenever fear is high, the gold will outperform. The fear may be war, currency weakness, economical uncertainties, countries at risk and lot more. More the fear, high the prices will be.

Those who have cash on hand prefer to buy gold as investment. That seems a simple statement but holds too much quantitative importance.