Tuesday, November 15, 2016

DEMONETISATION - MY Finances, MY Investments, MY Actions

Demonetisation, / Actually Currency exchange, especially at this massive scale (86% of Indian Currency being impacted), is a BOLD Decision, by the Indian Prime Minister, Shri Narendra Modi. This is a game changer in terms of the way you EARN, SPEND, DO BUSINESS and INVEST.( Altough this is mean't to curb BLACK MONEY, FAKE MONEY and TERRORISM , this will affect us,daily )

Not talking about the Actions taken, but it's effects, apprehensions and the daily pain that we all go through, I should directly jump to pointers on how a common man should interpret these changes for understanding albeit making changes to her/his day to day life and financial decisions.

Lets begin with the impact of this DECISION and how has to change their way of LIFE , MANAGE FINANCES, BUSINESS and INVESTING.


YES.This is the first area of impact, that has to be talked about. Most of your income will now flow in your bank accounts and surely the percentage should increase (-if not yet). This will be the key driving force of all your Life Finances Decisions. (This part of Finances is not noted or largely talked about, yet). All Income decisions will be consciously taken and the 'in books' income could move higher now (may not be really applicable to salaried professionals, but for business people, this could be a huge change).


All money that comes into your bank will be spent accordingly. So Probably slowly, your 'on books' expenses will  move up, due to Increase in on books Income (also reduction in cash inflows ) and Larger Direction towards Cash-Less economy, i.e. Plastic Economy / Digital Money. Hence watch out your family Inflation,closely. (It could cause disturbance, financial as well as mental, for people who are used to  spending in cash only)
Another side of Expenses is percentage of rise in your outflows,which means ,INFLATION. This is surely going to drop in next 6-8 months and probably we could see to RBI Targeted 4-5 % Range.(Of Course government declared, may not mean your own inflation will drop to that level). This is where watching out your own family expenses closely, is of utmost importance: a better idea is start writing and recording your expenses, regularly.
          This is the time when you and I, are feeling the CASH CRUNCH and ease on operations on                 ONLINE purchases,has to be done conciously- only need based- as the cash expenses that                   could have happened otherwise are now going through banks and so either your on bank                     expenses will increase and / or, next month not needeful purchases will put future pressure.SO             BE VARY on Credit and DEBIT CARD online purchases, ( as unplanned and planned                         expenses may not happen now in cash, but may be systemically routed thru' your bank, for ease           of operations,which should not put pressures, unnecessarily ). If such non- priority expenses               are done than it is found that it hampers your EMI or SIP flow, which are planned outflows.
          ALSO, use the declared system or DEPOSIT , WITHDRAWAL , EXCHANGE Smartly.Talk              with each family member and plan out next few days and months expenses-certain and                        probably- and plan things accordingly.It is found that many people are so unaware, that they                stand in BANK QUEUES, DAILY, for one or other bank transaction and unplanned ,                            unnecessary wasting of MANHOURS is a crime to being PRODUCTIVE

A and B is to be noted closely as

INCOME - EXPENSES ensures SURPLUS to either SAVE & INVEST, consciously. This is the regular cash flow or let's call it approach of the masses. 
What we recommend is
INCOME - INVESTMENTS = EXPENSES, balanced conscious approach. This is smart cash flow or let's call it approach of the class. 

         C- INVESTMENTS 
Fixed Income Instruments
FIXED DEPOSITS - Rates are expected to reduce sharply in next 3-8 months , and also RBI is Expected to declare LOWER REPO and REVERSE REPO Rates (Direct connection with Liquidity of money due to expected deposit amount of about 7 LAC CRORE in Banks)

BONDS- Most of the already floated bonds should see increase in prices and their yield should give better returns.Immediate to medium term gain of any where between 1.5-9 % returns, depending upon your term of investment in bonds, can be expected.

           - Fresh issue of Bonds, should reduce, as dip in interest and liquidity in banks will ensure this flowing back to Businesses easily and at lower interest rates.

(Recommendation- Talk to your SEBI COMPLIED Financial Planner and if adviced,reduce your FD Holdings and Park into DEBT FUNDS or BONDS, as the case may be suggested)

Equity- Direct / Indirect
EQUITY SHARES- DIRECT- This is a time which will test the patience and perseverence of an Investor.In Short term there is Volatility expected, my personal gut says this is going to continue atleast for next 3 months, and even WILD Swings cannot be ruled out.The other side is, if your intent to invest is well directed their could be opportunities to pick and choose and implement.
Their is also TRUMP Effect, which would play on Markets, as few sectors are expected to be directly affected.

(Recommendation - Keep your exposure to DIRECT EQUITY INVESTMENTS within set limits and look to churn the Portfolio with careful watch, pick and choose and remember LIQUIDITY is king, currently.Keep a close watch)

EQUITY - INDIRECT-  Mutual Funds- Keep a watch on your current Portfolio and re-adjust if need be.Also relook at its alignment to your needs and risk taking capacity. Like Direct Equity, there would be wild swings in NAV of Mutual Fund as well, especially larger in MID-CAP and SMALL-CAP Based funds.

(Recommendation-Basically ensuring 2 Important things, it should keep you in peace and it should ensure achieving your defined needs. Check and keep close track of your Mutual Fund Investments. )

Real Estate - Physical
When CASH is king, Liqudity is paid extra.
Real Estate is Largely an Illiquid asset-meaning,when you want money, it is not easily available at its real value.The current Demonetisation announcement, has flushed out the CASH side of liqudity, and their is no other way for real estate Industry, but to feel the Liduidity crunch. The general consensus is that the property market could see anywhere between 10 to 30 Percent fall, depending on a lot of factors,including liquidity. The positive could only emerge due to one factor, i.e. Falling HOME LOAN Rates.

(Recommendation- For First time Primary Home buyers, this could be the best times to be prepared with Down Payments, start searching for property with specific detailed needs, and have Loan SANCTION LETTER in hand, while on the negotiating table. 
                             - For Investors- Look into your whole portfolio, understand holding capability, get in touch with professional real estate consultants and understand all this with your personal SEBI COMPLIED INVESTMENT ADVISOR, before taking any such decission.DISCLAIMER- There could be many luring/compelling offers in next few days and months, but your needs and peace has to be given priority with help of your Expert Advisor)

Gold is one asset class which will also see swings and seems to be direction less currently. In next few days and months a lot of adjustments and fluctuations with global and domestic markets will be reflected in gold. Do not get lured by offers and be vary of trusty buys.When Fixed income investments like FDs are falling down, generally people search for other and riskier assets, which could give better returns and also some will rush for safety. So People who fall into second section will see gold as an option.

(Recommendation- Gold has to be a defined part of your over all Investment and a certain part can be in this asset class, but not a large chunk. The day since GOLD MONETISATION SCHEME and GOLD BONDS have been announced by government, I have started my discussions with clients on the same as well) 


Great news for people who already have ongoing loans and people who are seeking to take new loans.

Current Loan holders- If you have a loan on the Business side, your interest on loan outflow could reduce and so your term or cash flow-as the case may be- will reduce, and hence you will have better SURPLUS and better LOAN Eligibility for TOP-UP LOAN.
Same will be the case for a person who has home loan or car loan.Do not forget to re-negotiate.

Looking for Loan- If you are looking for a fresh Business loan, depending upon industry and stage, your business is and future outlook, there is good chance now to provide a loan and that too at lower cost in due course of time.
                                  - If you are a home buyer especially 1st Residential for self consumption, this could be             best period to start looking for the same and exploring opportunities-especially when real estate industry             would be feeling the cash crunch , if you can sit on negotiating table with even down payment. and                     sanction letter for loan( HAPPY at Lower Rates in few near months), this is GREAT.

                                 - If you are looking for Real estate as Investment, Please talk to your REAL ESTATE                 CONSULTANT ( Professional ), Personal Financial Adviser and Chartered Accountant as TAXATION,                 Investment Returns from Property and Purpose to buy a Real Estate Property and ot any other asset                 class, has to be closely looked upon in conjunction with your NEEDS and PEACE.


While this is time to re-calibrate your cash flows, liquidity and investment calls, this is also a time to look into the Risk, your businesses and your family is / or could be exposed to.
Do relook at your Emergency Fund (If you don't have one yet, sit with your adviser and create one, for uncertain and bad business cycles and expense imbalance and needs based peace)


This is a time when lot of documents outflow is bound to happen, especially, id proofs, Just ensure that you are handing this to a responsible person and write cause as "notes to exchange,RS.500/Rs 1000 only" (as the case may be and initiate across ) , for safety purpose. Also, this is good time to have a look at your Bank account, Investments, Home and Loans including other investments, HOLDING PATTERNS, and also BUSINESS PAPERS.


(Disclaimer- I am not a Business analyst or expert, but the recommendation given below, is purely from Personal Finance and Investments outlook advisory and bringing awareness exercise for a family)

In general, " IN BOOKS ", for business are expected to change depending upon the nature of business and business practicse 
Largely UNSKILLED- LABOUR dependent and LUXURIOUS GOODS Businesses will see a negative impact in immediate to medium term and the way of doing business, if system not altered, may be even long term. There could be direct or indirect impact on industries as per above described criteria's. Also Businesses, which are largely CASH DEPENDENT will take time to change their systems of working

Short - Term

Real estate, Gold and Diamond jewellery, Luxurious Travels and Tours, Luxurious Vehicle Purchase, High end Consumer items such as Mobiles, Laptops, Fridge, Air Conditioner, Foreign Tours, offers based purchase- more than 5000- could see dip in sales.Wedding Related Expenses and Industries will see a huge dip. (2 quarters could be really bad for many ).As described, Equities seems to be volatile due to adjustments and valuations and interest rates are surely to fall. Banks will be the best bets as they have increased liquidity, more to give credit to give at lower interest rates. IT and Pharma, will see swings and seems to be the most researched and balanced sector and consumer durabels should see relative under performance in general.

Medium to Long- Term
Consumer items seems to be first to bounce back.Investments in Equity will increase gradually in next 6 months to one year and the 2-4 year and longer Equity Investment returns basket looks the best, currently. 

The official spends percentage will increase to a certain extent,which will keep this going post 8 months to long term.This will have a positive longterm impact and tactical shift in a lot of industries,including the ones mentioned above.Long term, Equities remains the best bet and in medium to long term shift would be eminent from Bank Deposits and government savings schemes to Bonds and Debt Mutual Funds.

I am restricting myself to general assets and asset classes and avoiding Art, Commodities, Structured Products, REITs, PMS schemes etc as all or most are derived versions of the above described only.

OVERALL CONCLUSION- Watch out consciously, your current MONEY LIFE Decisions, your LIQUIDITY position, including business and Family and KEEP CALM. Stick to your over all defined asset allocation in Investments, and when time comes, do not hesitate to alter the same and take corrective, need based actions.Your current situations have to be discussed with a trustworthy dear one, ideally your SEBI COMPLIED Financial Planner- one who knows not only your investments and their returns, but also your INFLOWS, OUTFLOWS, NEEDS and PEACE Traits for the FAMILY- A TRUELY WHOLESOME ADVISOR.

Let's ensure a better desired overall scenario
Happy Investing.........

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B  O  N  U  S  reads

Heres' a Short video on what is direct/indirect and short/long term impact of Last few days Events, including Rupee ( Rs.500 and Rs.1000, not continue to be a legal tender and so a direct attack on Black Money and Terrorists ) and Trump win in  America, effect.
Here's a video from our team, Amit Rathi where he shares his analysis on the impact of ₹500/₹1000 notes being withdrawn. What does this unprecedented move mean for the financial markets, business, real estate and the economy??

He also shares his views on why we should not fear Donald Trump's  victory in the US...

FOR those who want to read FULL TEXT OF former RBI GOVERNER D SUBBARAO's VIEW's on DEMONETISATION, Click on below link-




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If, you want to know more or in detail for any of your personal finance queries, do write back on vini.bright.ideas@gmail.com and I would be happy to write a ARTICLE on the same.

Monday, June 13, 2016


Youth – a golden period of our life, a period which is free from responsibilities (for the most part anyways), a period which makes us take risks, a period of carefree joy and a period which teaches us life’s lessons. Yes, mistakes we commit in youth teach us lessons we understand when we age and become mature. A famous proverb says – if only youth had the knowledge and old age the strength!
Yes, many mistakes would have been avoided if we had the required knowledge in our youth especially when it came to taking care of our finances. Being carefree and reckless, building up a financial portfolio usually takes a back-seat because the newly attained financial freedom calls for celebrations. The trendy gadgets, that high-end tablet, a new bike or a car, etc. divert our finances from savings to splurging. Well, no one is to blame. Who can resist the temptation of such material comforts when the joy of owning them overwhelms the young mind? 
On a serious note, the bottom line is that taking control of one’s finances and the development of a financial portfolio is usually ignored in the early ages of our life when we become financially free. Other than providing insights into life, our elders also render advice when it comes to taking care of our finances when we are young. Theoretically, we all know how to secure a good future but in practice how many of us apply the knowledge? As Robert Kiyosaki, author of Rich Dad Poor Dad, rightly commented in his book – ‘Most people never get wealthy simply because they are not trained to recognize the opportunities right in front of them’.
He was not wrong because, we tend to suffer from this problem and as a result commit financial mistakes, especially when young, which must be avoided. If you are still scratching your head, trying to figure out what such mistakes could be, here is a list of 4 such common errors most youngsters commit when it comes to finance:


Delaying things is a very common practice which is seen in almost all aspects of our lives. As a famous proverb goes, ‘Procrastination is the grave in which opportunity is buried.’ We tend to delay doing things and investments are no exception. A survey conducted by Ameriprise on 700 Indians in six of the major cities of the country yielded the following result which bolsters my statement.
When asked how many of the individuals started saving before they attained 26 years of age, here’s what the answer was:

Proportion of participants who started investing before turning 26

Though participants in Mumbai were quite aware, the other metropolitans showed a dismal figure and it was actually not very surprising. Inculcating the habit of savings, investing and building up a financial portfolio is usually given a miss earlier in life. Even those who do develop the habit don’t follow it religiously and have a haphazard saving pattern.
The Power of Compounding ,which yields great returns and is also the applied principle in almost all investment instruments, depends largely on the time factor. Longer the duration of investment, larger would be the accumulated fund. If numbers are your thing, here is how it works:
Say, four individuals – A, B, C and D, aged 25 years each, are asked invest Rs. 5000 per month till they reach 60 years of age. They are given the choice of timing their investments. A starts his investments immediately while B delays it by 3 years. C delays his investments by 5 years while D starts investing after 7 years. Their respective corpus at age 60 would be:

Expected corpus at 60 years

A slight delay of 3 years caused B to lose about 10 million, whew! This is the power of compounding I was talking about and the later you start investing, the smaller your corpus would be.
Early in our adulthood when we become financially free, we tend to take more risks. Free from any major responsibilities, most of us favor equity investments because of the thrill of risk inherent in them. On the contrary, some of us are more conservative and tend to invest only in debt securities, bonds or fixed deposits, to protect our returns, however small. Playing favorites when it comes to investments is a bad practice. Wise men say – Don’t put all your eggs in one basket and they are right. Having a lopsided portfolio would make your investments risky. While favoring debt would mar the return potential, heavy equity exposure would make you prone to market volatility.
Diversification is the key to wealth. If you want to retire rich, diversify your investments among the investment avenues available to reap the benefits of diversified returns. Diversification is a three step process which first starts with -
  1. Capital Allocation which earmarks the amount to be invested in risky funds, moderately risky funds and non-risky funds.
  2. The second is Asset Allocation which tries to maximize the returns generated from the earmarked quantum of risk. This step identifies the assets to be chosen for the different funds classified in the earlier step as per their risk profile. 
  3. The third and the last step is Security Selection which includes selecting the securities for each asset class chosen in Step (b) above.
The pyramid helps depict the diversification levels at a quick glance:

The pyramid helps depict the diversification levels at a quick glance

No Financial Planning

Building up a financial portfolio is very essential when it comes to managing investments across various assets. However, when we are young, we are in the learning stages when we grasp the meaning of financial independence. As such financial literacy is very low which results in a lack of financial planning. As such individuals don’t have any objective-aligned financial strategy which results in haphazard investments and lack of disciplined investments. Some common traits found in young investors include:
  • No perception of financial objectives

  • Performance chasing investments

  • Undisciplined investments

  • No long-term perspective in investments

  • No financial strategy
I can make the list as long as I want and I am sure you, as readers you are agreeing with the stated points and are even suggesting some yourself, but, to cut the story short, the gist of the matter are that there is no financial planning in early life. Thus, a goal-based investment strategy, if not adopted will never yields the expected returns. A goal-aligned investment is the only approach for a financially free life which, sadly, is a very common oversight in early stage investments.


Yes, early life seems like a party when we want to have it all. We spend carelessly and save little because we feel that we have our entire lives ahead of us for savings. Is it prudent? As explained earlier, the power of compounding works wonders and investments started earlier, no matter how small, yield the best returns. So don’t blame your earnings to be meager which prevents savings. Blame it on those parties and gadgets that you indulged in which ate away your earnings leaving nothing for investment. 
Another very common found practice is availing different types of loans. That flashy car or having own home motivates many individuals. Even if owning a house is given a miss (because of the huge financial costs involved) most of us give in to the temptation of owning a car. I agree that having a car has become a necessity in today’s age, but indulging in debt for it is not justified.
When we begin our careers, most of us are already burdened with student loans which require paying off and adding more debt burden to our income is foolish. Investors should first pay off their education loans, build up a financial portfolio, start investing for a couple of years and then go about availing a loan for buying a car or for other purposes. ‘Don’t bite more than you can chew’, is a common expression and it holds true in this scenario as well. Don’t overspend, or indulge in loans until you have a sufficient income level. Instead, start saving and see the power of compounding work its miracles.
There are other mistakes committed earlier in life which spell disaster and should be avoided but for now, the above four are the most important ones. They say, ‘take care of the pennies and the pounds will take care of themselves.’ Start avoiding the above-mentioned mistakes in the first place and the other mistakes would be easily identified. So, when financial freedom sets in welcome financial literacy too and follow the basic guidelines of investing which are:
  • Make a financial plan based on the life goals you have and the finances required for meeting such goals

  • Build up a financial portfolio and diversify your investments

  • Follow a goal-aligned investment strategy

  • Lastly, maintain a disciplined approach to investments and avoid the temptation of dipping into your investments randomly.
Becoming wealthy is not luck; it is intelligent and disciplined investments. Keep in mind the mistakes that occur when we are young, avoid them and have a financially stress-free future.