Wednesday, 29 May 2019

Cricket & Investing !

Now that NAMO 2.0  is well entrenched and the Election 2019 Frenzy has got over, India is going to pursue its second most passionate subject after politics for the next 45 days. The 12th ICC Cricket World Cup gets underway on 30th May 2019 and culminates with the Grand Finale on 14th July. The total prize money at $10 Million with the winner taking $ 4 Million remains the same as in the 2015 edition.
 
England have never won the Cricket World Cup but they may never get a better chance with bookmakers rating them favourites to win this year’s tournament on home soil. India and Australia are rated the next best bets with Bangladesh and Afghanistan rated as rank outsiders to reach the play offs or win the Cup.
Investing lessons from cricket are aplenty and a cricket crazy nation like ours can learn a lot from this gentleman’s game.
  
In 2011 after India won the Cricket World Cup, Thousands of eyes got wet (including mine) when Virat said “He has carried Indian cricket for 23 years, and now it was our turn”. Sachin was not able to contribute much in the final but he was the backbone of the line up. In life and particularly in Financial life we all should have inspirations who take us to the next level.
 Investing lessons are not the enigmas or mysteries that only financial wizards can crack. In fact many real life experiences from various disciplines can be applied to investing as well. Some lessons can be learnt from sports, media, politics, mythology and other fields as well.
We can learn a lot from sports and draw analogies to be used in our life journey.
 
There are several parallels that can be drawn between cricketand investing. Although a one-to-one comparison doesn’t work, we can use some examples to understand the intricacies of investing, through cricket. For instance long-term investing can be compared to test matches whileday trading can be compared with the strategies used by sprinters.
For me, Kapil Dev, our 1st World Cup winning Captain has always been an inspiration and his famous quote is equally applicable in our financial journey.
 
 He also believed in the fact that Playing cricket is not only about money, but also about pride.
  
Similarly, you invest not only to make money but also to be able to pursue your passion, to achieve your goals and to live a comfortable life.
 Chase your Dream
 Before you start your investment journey, remember the favourite quote of Sachin Tendulkar after winning the World Cup in 2011.
Persistence and conviction in your ability to achieve your dream are the keys to success.
Is talent the only key to success?
When we hear the word investment we are impatient to see the returns. We tend to jump to the money and wealth aspects of the investment whereas Success in investment, on the other hand, comes from many other factors— your patience, discipline, temperament, strategy, review, the role of an advisor etc. And, this is what determines your returns.
 
Cricket also follows the same rules as investment, your attitude is more important than your talent. Vinod Kambli is a prime example of exceptional talent having gone waste and left with unused potential.
So, let’s learn from cricket about how you get all these factors into play when you play your game of investment!
The importance of Knowledge and Training
 
 In cricket as in investment, continuous training (Knowledge and practice) is the key to success and basic pre requisite. There are no short cuts in both, just talent is not enough. Sachin, Virat, Kumble, Dhoni and anyone you can name, spend countless hours honing their skill, removing their weaknesses, studying the opposition, practising and simulating each possible alternative and training hard before they enter the ground to play the match. Similarly in investing, you need to finalise the goals, decide on the right strategy based on your risk profile and current situation, finalise the asset allocation and do much more even before you start investing.
 Match Format (Investment Horizon)
One of the first questions that we ask any new Investor is regarding his investment horizon; the strategy for a long-term investor is totally different from that of a short term or ultra short-term investor.
Similarly whether you are playing a test match or ODI or T 20 will determine not only your team composition but also your strategy.
Pujara despite being one of the finest batsmen doesn’t figure in the shorter version of the game; similarly the best small cap or equity fund may not be suitable for a short-term investor.
Goal Decides the Strategy
Your Return expectation and requirement will decide the strategy. If you are satisfied with a 10% return, your investment strategy will be different from an investment strategy for a requirement of 18% return. The risk taken in each case will be totally different.
Similarly in cricket, your required run rate will decide the batting order. Do you need a Pinch hitter or someone who can bat through the innings and hold one end up, depends on the match situation and distance from the goal.
 The Pitch and Weather (Economic & Global Conditions)
The pitch and weather conditions give you an indication of the overall behavior of the ball – the bounce, speed, how it comes on to the bat, etc. In some cases this becomes very important and can determine the outcome of the match itself. Examining the ground/pitch is critical for both teams because there are several matches which are won during the toss stage itself.
 Similarly in investments, the domestic economic climate, global economic conditions, Macros, industry trends, etc. have an influence on the market and your investment as a whole.
Having said that it does not mean that toss itself can significantly influence the match, because similar to investing in quality companies for peak performance, factors such as good fielding, fielding placement, Captaincy, quality of bowling, partnerships, etc. are important to win the match.
Just like winning the toss does not guarantee success, it just improves the odds, similarly only favourable macros don’t guarantee success, you still need to invest in the right stock to maximize profits.
Portfolio Management (The 11 member squad)
 
Though he may be the best, only Virat kohli or for that matter 11 Virat Kohlisalone will not be able to help you win the World Cup. You need a well balanced and well diversified team, Good Openers, Solid Middle Order, Quality Pace and spin attack, Pinch hitter,a Dhoni behind the wickets who can also play the role of a finisher and provide strategic inputs too.
Isn’t this comparable to a diversified portfolio of investments. However, in investments one has to go one step further to diversify across asset classes such as equities, debt, gold, real estate, etc.
 Don’t step out into the field without protective gear 
Like in investment,not taking adequate precautions can make players vulnerable to injuries on the field and miss the balance part of the tournament or the match. Similarly, if your financial planning and investment strategy is not balanced and does not have an element of protection, it exposes you to several risks. 

Before you start investing for wealth creation, secure yourself against the risks to finances, life and health. In your financial hierarchy of needs, an emergency corpus, a health cover and term cover is most important, before you start investing for your goals. 
Play for the long term
Every new batsman on the crease, despite the situation, takes his time before going after the bowlers. Giving in to the adrenaline rush or buckling under pressure, has often been the undoing of several batsmen. This is akin to investors who, in their bid to make a quick buck, or due to panic, exit during a market downturn and suffer losses. The best knocks require grit and patience to tide over turbulent phases. A good batsman will have his eye on the target and plan his innings accordingly. Equity investors should also invest basedon their goals and not be disturbed by short term volatility. 
Sneaking ones and twos regularly with an occasional boundary can help build a decent score, especially on a tricky, batsman unfriendly pitch. Similarly, systematically investing small sums can help navigate choppy markets and build wealth. Don’t put off investing till you have a ‘large’ surplus. You can start small and increase your investment when the situation allows. SIPs in mutual funds are a smart way of achieving financial goals through small and regular investments.
 Yuvraj, my favourite cricketer and one of the most positive players who overcame a life threatening issue, always played for the long term.
 Being overly defensive doesn’t pay 
Not taking chances at all and relying on singles alone won’t help build a good score. Similarly, investing just in debt products is unlikely to help meet your financial goals. 
Investing in equity is the best way to earn decent, inflation-adjusted returns. Don’t shy away from equity, especially if you want to meet long-term goals such as children’s education, retirement, etc. 
Rebalancing
Since the ground conditions, match situation and environment changes continuously, you must have a dynamic strategy. You must keep your portfolio updated to match with the current environment. This is where portfolio re-balancing and asset allocation plays a key role.
THE REVIEW
Do you know how players make their game better? They review their game regularly. They sit down with their coach and analyse their strengths and weaknesses and how they can take their game to the next level. They see what they did wrong; they make sure they do it right at every next chance they get.
You must similarly review your portfolio regularly and rebalance by weeding out the investments, which do not give acceptable returns. You must sit with your coach, your advisor, and review your investments and strategy at regular intervals so as to maximize your gains.
Role of a Coach
The cricket legends, the masters, the icons of cricket, all have a coach and cant dream of practising and playing without him. Selection of the coach is as important as the selection of the team. The players regularly take feedback and consult their coach on each aspect of their game, on how to remove the weaknesses, check the reasons for failure, the mistake they are making and the corrective action they need to take to improve their game.
An Advisor plays a similar role in your investment journey. He guides you, holds your hand through the volatility, reviews your portfolio and makes the necessary corrections in the strategy so that you can have a smooth investment journey and achieve your goals.
Focus :Cricket and investment
When you are playing the game or during your investment journey, you must focus on improving rather than get distracted by the comments of others. Once you have built your conviction and decided your strategy, don’t get disturbed by volatility. Success in cricket as in investments comes from patience and by being totally focused on the job at hand.
 
Don’t invest to show off but invest for your goal, to achieve what you have set out to achieve.
One of my favourite quotes from Cricket is the one by Ricky Ponting:
Similarly in investing, you have to look for gaps in your asset allocation and your portfolio and match it with the opportunity provided by the market from time to time to maximize your gains.
In the end, always remember that
Selection of the right investment option is very important, but more important is to see and review how your investments are actually performing and whether they can help you achieve your goal or not and take corrective action.
If you follow the best practices of cricket in investing,  over long-term you too can become a successful investorabd achieve your financial goals.
Lets have a great World Cup and I join a Billion people in praying that India lifts its 3rd World Cup trophy on 14th July.
I invite all cricket enthusiasts to share comments, examples, feedback or views on this subject.
Happy Investing!
Stay Blessed Forever
Sandeep Sahni
Disclaimer: The examples, illustrations and comparisons between cricket and investing is only for easier understanding. Readers are requested not to take such comparisons at face value, but just take it as a story or anecdote for the purpose of understanding the basic principles of investing.All information provided in this blog is for educational purposes only and does not constitute any professional advice or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.

About The author
Sandeep Sahni

Sandeep is an alum of IIM Lucknow with a Post Graduate Degree (MBA class of 1988). His also an alum of Shri Ram College of Commerce, Delhi University (B.Com. Hons. Class of 1985.)
Sandeep's investing experience and study of the Financial Markets spans over 30 years. He is based in Chandigarh and has been advising more than 500 clients across the globe on Financial Planning and Wealth Management.
He has promoted “Sahayak Gurukul” which is an attempt to share thoughts and knowledge on aspects related to Personal Finance and Wealth Management. Sahayak Gurukul provides financial insights into the markets, economy and Investments. Whether you are new to the personal finance domain or a professional looking to make your money work for you, the Sahayak Gurukul blogs and workshops are curated to demystify investing, simplify complex personal finance topics and help investors make better decisions about their money.
Alongside, Sandeep conducts regular Investor Awareness Programs and workshops for Training of Mutual Fund Distributors, and workshops and seminars on Financial Planning for Corporate groups, Teachers, Doctors and Other professionals. 
Through his interactions and workshops, Sandeep works towards breaking the myths and illusions about money and finance.
He also writes a well read blog; 
He has also conducted presentations, workshops and guest lectures at Management institutes for students on Financial Planning and Wealth Creation.
He can be reached at:
+91-9888220088, 9814112988
        Follow us on:

Saturday, 25 May 2019

Sensex @ 40000 and beyond..

The BSE Sensex, The benchmark index, made new highs on the 2019 results day and scaled the hallowed 40000 Mark, achieving a growth of 400 times in 40 years.
The 30-share Bombay Stock Exchange sensitive index (BSE Sensex) has forever been the barometer of India’s growth since inception in 1979. When someone says ‘Sensex’, it is synonymous with the stock market in India.
At a record high of 40000, the barometer has traversed a path through many peaks and bottoms and has reflected the Indian Economy in many ways.
The term Sensex was coined by Deepak Mohoni, a stock market analyst and is derived from the words Sensitive and Index.
The BSE SENSEX (also known as the S&P Bombay Stock Exchange Sensitive Index or simply the SENSEX) is a free float market weighted stock market index of 30 largest and most actively traded stocks, representative of various sectors of the Indian economy.
Published since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the SENSEX was taken as 100 on 1 April 1979 and its base year as 1978–79.
The index is calculated based on a free float capitalisation method, a variation of the market capitalisation method. 
The S&P BSE Sensex is a reflection of the evolution of the Indian economy, having passed many milestones in the last 40 years. The benchmark closed for the first time above the 10,000 mark in 2006, above 20,000 in 2007 and reached 30,000 in 2017 and crossed 39000 on its 40th Birthday on 1stApril, 2019 and again on 20th May after the release of the Exit polls which gave a clear majority to the NDA government.
MILESTONES: SENSEX JOURNEY
Sensex at 1,000: The Sensex crossed the 1,000 mark for the first time in 11 years (since its launch) in 1990 on the back of good monsoon and upbeat corporate results.
Sensex at 5,000: The sensitivity index of the BSE climbed to 5,000 mark in 1999 backed by the boom in the technology sector.
Sensex at 10,000: Owing to a sharp run in commodity pricing, Sensex touched the 10,000 mark in 2006.
Sensex at 20,000: On the back of the rise in investments from foreign institutional investors and aggressive retail buying, Sensex touched the 20,000 level for the first time in 2007.
Sensex at 25,000: Post the subprime crisis in 2008-09, which negatively impacted the economy and the investor sentiment, the benchmark index bounced back to hit a new high of 25,000 in 2014 after the NDA formed a stable government.
Sensex at 30,000: Sensex spurred to 30,000 backed by global liquidity provided by central banks of major economies in 2017.
Sensex at 36,000: Sensex touched record high of 36,000 in January 2018 on the back of IMF’s prediction about India’s growth, which boosted the investor sentiment.
Sensex at 38,000: Sensex crossed the 38,000 mark in August 2018 on account of India’s economic growth expectations.
Sensex at 39,000: Sensex achieved this figure on its historical 40th Birthday during the pre election rally and FPI inflows and again on 20th May after the release of the Exit polls gave a clear majority to the NDA government.
Sensex at 40,000: Sensex scaled the hallowed mark on 2019 results day on the back of a clear mandate to the NDA for a second time.
The Sensex has given a compounded annual growth rate (CAGR) of 16.1% in the period from 1979 to 2019. If you take the total return index, then this is well over 17%. In the same period, gold gave a rupee return of 10%.
Simply put, Rs 10000 invested in Sensex in 1979 has grown to Rs 39 Lacs currently. The same amount of money invested in gold over the same period would be worth ₹4 lakh today and in bank fixed deposit would have grown to a little over ₹2.5 lakh, without factoring in the tax.  This clearly highlights and reinforces the fact that nothing can beat equity as an asset class, as an instrument of wealth creation over the long term.
Ashok Chauhan, the MD & CEO of BSE rightly said, “If you look at the chart of Sensex since the beginning, you will be able to see that when India smiles, the Sensex smiles, and when India cries, the Sensex cries too. It is a witness and representation of India’s victories and struggles, its hopes and worries. It is a measurement that shows India in its myriad true colours. It is the symbol of India’s aspirations and it will continue to guide India’s future generation as it has done in the past."
 The spectacular journeyin which the Sensex has grown 400 times in 40 years, has not been a linear upward journey but a volatile one with its share of ups and downs.

Amongst the world’s ten largest stock markets, the Indian stock market has the highest level of churn. On average over the past 20 years, churn in the market has been around 50% i.e. if we begin the decade with 30 companies in the Sensex, by the end of the decade only 15 are left. However, this average churn of 50% does not tell the whole story - An analysis of Sensex churn across 10-year windows reveals that churn peaked at 67% (or 20 replacements in a 30- stock index) in the years following the 1991 reforms (1993-1995). From those levels, Sensex churn has fallen to a low of 27% (8 replacements) in the period from 2004 to 2014. Going forward, expect a reversion to 50% churn, implying that around15 companies will exit the Sensex in the next decade.

Though there have been corrections and regular bear markets, the Sensex has maintained a long term upward trajectory and has always rewarded those who have shown patience and have had the conviction to stay invested through the volatility of the market.

Going forward, the India growth story remains intact, with our GDP slated to touch the hallowed $5 trillion mark in the next 5-7 years. There is always a direct correlation between GDP growth and Sensex growth. (Read our earlier blog on the subject, https://www.sahayakassociates.in/resources/our-blog/2553-sahayak-associates/sahayak-associates-blog/8616-chronological-lottery )

In the last 40 years, The Sensex has given a 16.16% CAGR to reach 40000 from a start of 100. This growth has come in the Sensex despite, two prime ministers being assassinated, 10 different governments, unfair share of natural disasters, poor infrastructure, major financial scandals like the Harshad Mehta & the Ketan Parekh scam, lack of regulations, transparency and government controls, Global crisis like Dot Com Bubble, Iraq war, 9/11, Sub Prime crisis of 2008, and at least three major recessionary periods and Bear markets.

Going forward, with India being the faster growing economy in the world, much improved infra, high level of Digitisation, an over zealous SEBI and RBI with improved controls and regulations, the going should only get better.

However even if the Sensex maintains the same growth rate of 16% CAGR, it will touch a level of 97456 by 2025, a level of 429,920 by 2035, 18,96,565 by 2045 and a level of 1,51,48,846 by the time next 40 years are completed. Putting it another way, if a 25 year old does a SIP of Rs 40000 per month in an index fund, when he retires @ 65, he can have a retirement income of Rs 1.51 cr per month for the rest of his life.

Hence, if you believe the India story and have the conviction that our GDP and the economy will continue to remain one of the fastest growing economies in the World, be rest assured that the Bull run will continue and the Sensex will continue to scale new Peaks and possibly touch the six digit mark in the next five years.

Here is to new Peaks of the Sensex and continuous growth.

Happy Investing!
Stay Blessed Forever 
Sandeep Sahni


Sandeep Sahni




Note: All information provided in this blog is for educational purposes only and does not constitute any professional advice or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.
Sandeep Sahni
Sandeep is an alum of IIM Lucknow with a Post Graduate Degree (MBA class of 1988). His also an alum of Shri Ram College of Commerce, Delhi University (B.Com. Hons. Class of 1985.)
Sandeep's investing experience and study of the Financial Markets spans over 30 years. He is based in Chandigarh and has been advising more than 500 clients across the globe on Financial Planning and Wealth Management.
He has promoted “Sahayak Gurukul” which is an attempt to share thoughts and knowledge on aspects related to Personal Finance and Wealth Management. Sahayak Gurukul provides financial insights into the markets, economy and Investments. Whether you are new to the personal finance domain or a professional looking to make your money work for you, the Sahayak Gurukul blogs and workshops are curated to demystify investing, simplify complex personal finance topics and help investors make better decisions about their money.
Alongside, Sandeep conducts regular Investor Awareness Programs and workshops for Training of Mutual Fund Distributors, and workshops and seminars on Financial Planning for Corporate groups, Teachers, Doctors and Other professionals. 
Through his interactions and workshops, Sandeep works towards breaking the myths and illusions about money and finance.
He also writes a well read blog; 
He has also conducted presentations, workshops and guest lectures at Management institutes for students on Financial Planning and Wealth Creation.
He can be reached at:
+91-9888220088, 9814112988
        Follow us on:

Saturday, 18 May 2019

Economic Agenda for the Next Government

Today, I too voted, exercising my constitutional and fundamental right to pick a party and a candidate of my choice. 
My list of priorities apart from economic and social development is to choose a candidate and party who can uphold our constitutional rights of equality, secularism and liberty in letter and spirit and also ensure national security. The party that is given the mandate to govern  for the next five years should have the vision to take India forward to a $ 10 Trillion economy, uplifting vast sections of the society and upholding the values enshrined in our constitution.

It was heartening to see the manifesto of both the major parties contain the roadmap to Economic growth for a $10 Trillion Indian economy, but it was disappointing to note that the lead players of both leading National parties were mostly silent on the most pressing economic issues during the campaign and run up to voting.

Even if political parties implement only 5% of all their promises, especially with regard to growth, jobs and social stability, they will be able to transform large sectors of India. 


Slowing economic growth and lack of fiscal space to boost growth are going to be the main challenges for the new government. Boosting investment, especially private capex would be the key to ensure growth. For this, the government not only needs to provide ease of credit availability at viable rates but also improve sentiment and undertake key difficult reforms to ensure “Ease of business.”

Any country that has high interest rates, high land prices and high labour cost, cannot dream of achieving high single digit or double digit growth rates. For the Indian economy to achieve its true potential, the new government will have to address these basic issues on top priority.

Business has to be main priority if we want to revive economic growth and investments which have stagnated. We require rapid economic growth for job creation or we shall soon have our demographic advantage turning into social unrest.

In the years ahead, Disruption and change is going to be the only constant. Three primary forces are going to be driving this current wave of disruption: technology, globalization, and demographic change. Apart from other things, in today’s world, Disruption and change has resulted in reduced life cycle of most businesses.

Artificial intelligence and robotics are reinventing the workforce dynamics. Changing consumer preferences and expectations – most notably in the millennial generation – are altering consumption patterns and demand for everything from cars to real estate.

Advances in technology have been disrupting business models for centuries. In our lifetime, successive waves of the IT revolution, PC, online, mobile, social media, have democratized data, empowered consumers and spawned scores of new industries. The next waves – the Internet of Things (IoT), virtual reality, AI, robotics and God knows what else– promise to be even more revolutionary and disruptive.

Gig economy start-ups are already challenging regulations governing the operation of hotels, restaurants, taxis, E commerce and more. As the trend accelerates in the machine economy with advances in AI, Robotics  etc, governments will need regulatory regimes designed for the future – nimble, real-time and powered by big data and smart technologies.

The march of disruption is unrelenting and this can leave today’s decision makers and leaders grappling with tremendous uncertainty and a broad array of challenges. Responding
to disruption has become a central issue for incumbent organizations including the government, everywhere.

Are our institutions and the Government geared up to face this challenge?

More than money or tax cuts, what new-age companies certainly need is a less onerous regulatory culture that unshackles innovation and entrepreneurship.

The need of the time for all players whether the government or the businesses themselves is to be nimble footed, flexible and ultra responsive to change.

Apart from the above challenges, any new Government in India shall face several other immediate challenges so as to get the economy back on the rails. Leading economists fear that India may be stuck in Middle Income trap with growth rate stagnating at 5-6%.

In our more than seventy years since Independence, we have got political freedom, freedom of speech and all kinds of freedom to do what we want as citizens but unfortunately, we still have to get and enjoy Economic Freedom. The governments continues to control through various direct and indirect means our freedom to do business, to enter and exit businesses, to run businesses at optimum level and change businesses.

It is a tiny miracle that despite the high cost of capital, low productivity levels, lack of availability of skilled manpower, archaic controls on land use, excessive regulatory controls and low levels of automation and technology absorption, our country continues to be the fastest growing economy in the world.

Can you imagine the heights our economy will touch if the next government unshackles businesses; provide a more vibrant domestic venture capital system to tap the surplus overseas capital, reduce real interest rates, invest in human capital to create a productive workforce, rationalize land reforms to ensure land availability for Industry at viable rates, create a conducive environment for boosting innovation, entrepreneurship and startups, boost business confidence by ensuring clarity and continuity in Government policy and improve business sentiment.

I recently read a wonderful tweet by a leading CEO, “The best thing the new government can do for the business, is to let them do business.”

True indeed! The more the government tries to rope in and regularize businesses, the more obstacles it creates for itself and the growth of businesses; and mind you we are talking about legit, compliant and tax paying businesses. It tries to create conditions without fully understanding the dynamics of the business and the impact the controls can have beyond that business. Time and again we have seen that market forces alone can bring in controls and regulate the behaviour of respective businesses. We need a Government that stays away; Leave it to the business and let the business do business.
This is not to say that the government has no role to play and should not play in business. The best role the government can play is to create a conducive environment and regulatory framework to ensure the “Ease of Business.”

A strong economic revival package and right implementation of policies by the new government can help create as many as 150 million jobs in the next 10 years, the utmost need of the hour.

We have largely been dependent on a consumption led growth but now for the economy to grow in high single digits, it needs a  boost in investment.

This cannot happen with government investment alone, it just does not have the funds or the fiscal prudence to bring in the kind of investment required.

Immediate steps need to be taken to address the issue of capital inadequacy. What the government needs to do is to create an environment and remove hurdles to tap the vast resources of capital available worldwide.

Government needs to make capital available for businesses at lower  real rates. Consumer price inflation at less than 3% and a repo rate more than double that, is not the perfect recipe for capital investment.

India currently faces a major liquidity crisis. If global history is any guide, liquidity crisis not handled well can translate into a contagion and solvency crisis. NBFCs are facing acute stress due to asset liability mismatch. In corporate India, promoter entities with high leverage, are also facing stress. The real challenge for markets will be when liquidity risk intersects with default risk, which could then amplify credit risk into a downturn and have contagion effect. Policy makers need to act swiftly and ensure liquidity injection at reasonable rates to overcome the current crisis.

The new Government needs to build an eco system to nurture Start ups. It must remove regulatory hurdles, clear and bring consistency in tax matters, promote  vibrant domestic venture funds and private equity culture. The solution lies in developing the Alternate Investment Fund (AIF) market, where we have patient capital with highly specialized skill-set. These funds can channelize a part of long-term savings with higher risk appetite into start ups.

To make efficient use of limited capital, we need to move up the value chain in terms of allocation of capital. It is about time that we move from “Make in India” to “Innovate in India”. The prime example in this case is of Apple which sources its products from China,  India and the like at 10% of the selling price, and sells it back to them at a value addition of multiple times.

To ensure efficient use of available capital, government needs to exit from businesses not having any strategic interest and in loss making businesses which are becoming capital guzzlers and a constraint on government capital and finances.
Over the years, with improved digitalization, the access to credit has improved. But we still have a long way to go. India’s credit as (% of GDP) is low and financial system will need to deepen a lot more.

the government needs to ensure the allocation of available capital on purely economic factors to productive assets rather than misplaced priorities like “Cow Shelters” and the like.

Catalyze the financialization of household savings in India for a sustainable and stable liability side of banks, NBFCs, Mutual Funds, Pension Funds etc.

India’s wholesale funding market has not grown in line with the size of the economy. Refinancing options are not available for most lenders.

Structural reforms are immediately needed in the money market, corporate bond market space and also at the institutional level including banks, mutual funds, pension funds, insurance, auditors, NBFCs and rating agencies. Greater access should be given to the foreign investors who will bring in not only much needed capital but also best practices.

10) Steps need to be taken ti improve our tax to GDP and credit to GDP ratio which rank amongst the lowest in the world. No country can dream of sustainable Growth with such low level of compliance and disbursement ratios.
These above measures are just the beginning to address the economy’s structural problems. But, currently negative sentiments at the micro level is India’s most urgent economic problem. The government needs to boost the economy for a sentiment turnaround, after which the new government will be in a better position to address the more complex economic issues.

If nothing is done to quickly reverse sentiments, we would have lost a golden opportunity to reap the harvest of huge potential that our economy offers.

May the best man win. Here is wishing the new government support in its endeavour to take our country to greater heights. India’s youthful and aspirational population deserves a rapid transformation of the economy, which can deliver double-digit growth, jobs and prosperity to all.

Happy Investing!
Stay Blessed Forever

Sandeep Sahni








Note: All information provided in this blog is for educational purposes only and does not constitute any professional advice or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.
About The author

Sandeep Sahni
Sandeep is an alum of IIM Lucknow with a Post Graduate Degree (MBA class of 1988). His also an alum of Shri Ram College of Commerce, Delhi University (B.Com. Hons. Class of 1985.)
Sandeep's investing experience and study of the Financial Markets spans over 30 years. He is based in Chandigarh and has been advising more than 500 clients across the globe on Financial Planning and Wealth Management.
He has promoted “Sahayak Gurukul” which is an attempt to share thoughts and knowledge on aspects related to Personal Finance and Wealth Management. Sahayak Gurukul provides financial insights into the markets, economy and Investments. Whether you are new to the personal finance domain or a professional looking to make your money work for you, the Sahayak Gurukul blogs and workshops are curated to demystify investing, simplify complex personal finance topics and help investors make better decisions about their money.
Alongside, Sandeep conducts regular Investor Awareness Programs and workshops for Training of Mutual Fund Distributors, and workshops and seminars on Financial Planning for Corporate groups, Teachers, Doctors and Other professionals. 
Through his interactions and workshops, Sandeep works towards breaking the myths and illusions about money and finance.
He also writes a well read blog; 

He has also conducted presentations, workshops and guest lectures at Management institutes for students on Financial Planning and Wealth Creation.
He can be reached at:
+91-9888220088, 9814112988
        Follow us on:

Saturday, 11 May 2019

What my Mom Taught me about money….





My mother is a Financial Superwoman!
All mothers are financial superwoman, aren’t they?
 Mother, they say is the first teacher. It was probably Ben Franklin's mom, who taught him "a penny saved is a penny earned.” 
 Long before financial gurus started preaching about the value of financial planning and financial rules one must follow, my Mom had already been practicing it, albeit informally.
 Sacrificing her own desires, Balancing the needs and the wants of each member of the family, still sticking to the budget and also keeping aside in different jars and saving for the rainy day is all done so effortlessly and without any formal training or knowledge.
 Don’t Waste money. Money doesn’t grow on trees. We cannot afford it, Each paisa counts.
How many times have we heard these words from our mother in our growing up years.
Despite many tantrums, a no meant no, come what may and then came the explanation and perspective from her on why our wish couldn’t be fulfilled.
 There are some fundamental yet powerful financials lessons that each person learns from their parents in general and mother in particular. Often, we do not realize how our mothers teach us important financial lessons that we use for life.
She leads by example when creating a budget and managing the household financials effortlessly.
There are innumerable financial lessons to be learnt from our mothers.
Among all the things that a mother teaches and bestows upon her children, financial lessons sometimes do not get the deserved limelight!
Everyone acknowledges the ethical and moral values that a mother teaches her children.
However, that is not all that a mother offers.
If you keenly observe your mum and look back, you can realize that she had designed a certain system for herself every step of the way. Be it grinding vegetables, or waking her children up, or even saving money!
Thinking back and connecting the dots, we can realize that there is a lot more that we have learnt from our mother.
Create a Budget
The main finance lesson that each of has learnt from our mother is creating a budget. We all agree that mothers are called the Finance Ministers of the house and now we can understand why.
It is amazing, how accurately and efficiently our mothers create a budget for monthly expenses. Mum also decides beforehand how much money is going to be spent and where. No shortfall, no overspending, all deadlines met, totally balanced. (I wish a mother could be the Finance Minister of our country)
This is truly an art and a world-class one at that! Now, whenever we make a good budget, we know whom to give credits.
Save Away, No matter how small the amount.
Let us recall the time when our mom gave us a piggy bank.
Back then, it used to be a fun activity for us. But you know what that fun piggy bank activity taught us?
Saving.
I Remember how Ma would give us a coin every time we helped her out in a chore or finished our homework on time or behaving when the guests had come; And then she would say “Put it in you piggy bank, once it fills up, you can buy that remote control car”             
Now, how can you apply that in reality?
Today you know you need save in substantial investment instruments like mutual funds or stocks to fulfill your short-term and long-term financial goals But that financial journey kick-started with your Mum.
 Then came the valuable lesson behind the entire exercise. She told us so accurately that savings is an important exercise and encouraged us to do the same.
 Not only did she tell us this, she also led by example.
The money could have been saved in a box, in a drawer, between her clothes in the cupboard, or somewhere else but she would put some money away every month. No matter how much small the amount was.


 I distinctly remember that my mother was the first person who told me that from whatever you earn, big or small,  you must first set aside some amount, as deemed fit, in the form of savings. Then, out of the remaining, you can look to plan your expenses. Today, this is exactly what we advise all our clients; Your expenditure should be Earnings minus savings and not Earnings minus expenditure should be equal to savings.
Setting Financial Goals
This one is an extension of the earlier financial lesson of creating a budget and developing the habit of savings.
Setting a financial goal goes a long way in accumulating money required for various essential milestones and activities in life.
My mother always encouraged us to make and implement a financial plan for our goals. Be it a trip that we want to go to next year, or a bike that we want to purchase after some time, planning always helps.
 Be it children’s marriage, education or something else; setting financial goals or buying a slightly more expensive appliance, mothers always have a goal which they always seem to fulfill and within the stipulated time!
Taking Monetary Decisions Calmly
This advice is like the universal truth said by all moms, each and every time. Though it might seem to be very trivial at the moment, its importance cannot be undermined.
In a lot of situations, wherein significant and important money decisions are involved, it helps to sit back, take a deep breath and think clearly. This simple exercise can save us our hard earned money from being wasted or spent in an inefficient manner.
The implicit thing over here is to think calmly, whether it is good use of money.
Mothers lay the foundation for 3 simple and basic rules in life:
 Do I need this?
 How much of it do I need
 Is it worth the money?
Sometimes it’s best to take important money decisions the old way. Writing the outlay of money and comparing it with the benefits, on a piece of paper, can work better than you might think.                       
Keeping It Simple
We can’t even begin to tell you how important this tip is and she teaches us all this through her own example!
Simply writing down the daily expenses in her diary, saving up for something or just  being wise with money, mothers follow these tricks without help from an advisor!
 Although it may seem contrary and/or trivial, more often than not, it helps to keep finances simple. Don’t complicate your savings and investments. Don’t mix investments and insurance, invest in a business you understand are the gospels we follow as financial advisors today.
The simpler it is, the easier our lives will be and better the concerned decision will turn out to be.
Being Frugal Isn’t Always Bad
 It isn’t a bargain if you don’t need it. It’s those “bargains” that can keep you broke!
 Haven’t our parents told us that we need to realize the value of money.
 This is usually followed by how our parents worked so hard to earn the money and save it for us. An important lesson here is to appreciate the value of money.
 All of us can observe this at our homes, how our mom never bought something she doesn’t need. She doesn’t indulge in any sort of wasteful expenditure whatsoever.
She calculates and plans as to where can she get the cheapest and best quality grocery or home appliances.
 We can all learn to be frugal like her and thank her when we realize that the savings are significant. Our mom realizes that each paisa counts.
Living Within One’s Means
Mothers have always told us repeatedly that we should live within our means. But what does this really mean?
 It is not some rocket-science, but a very simple theory. To live within ones means is to spend only as much or preferably a little less than what one earns.
Sometimes we go on a spending spree and go overboard. We forget about our income and our position to buy a product or not.
Credit cards and EMIs have aided this overspending habit in a huge way. People tend to take a lot of debt and sometimes struggle to repay it all together.
While EMIs may give you instant pleasure, it also brings with it a lot of risk. Therefore, each and every person should live within one’s means and spend in a planned manner.
 The Value of Investing
 The lesson for planning the future also includes investing.
 Investing now to reap benefits later is one of the most important financial lessons that we learn. My mother always encouraged me to invest in the future.
 In my childhood, this investment was in the form of education. Not only did she preach this, but also practiced it by investing her time and money in my education.
 When I started earning, she encouraged me to save for a contingency and invest for my old age.
Be Generous
In addition to teaching me about money, my mom imparted one great general life wisdom that I’ve always kept with me; Be Generous. “If you live life with an open hand, it comes back to you.” For my entire life, I’ve watched my parents provide financial support when they could to familyand friends, no strings attached. If they had it and it wasn’t going to break them, they would give it because they knew, how much God had blessed them. My parents have always been of the mind that when you give, that much and more comes back to you.I always found that they used to Give because it brought a smile to their face and made them happy.
Tithing
My mother was also the one who taught me the importance of “Tithing”; giving away 10% of your income for charity. Since the time I remember, be it any festival or any occasion, my mother telling me, touch this or give this to the needy or the Panditji who used to visit regularly. Her favourite people to donate to, used to be the domestic help and their families, who used to get regular share of money, clothes, assistance in school fees and much more. Indeed, I continue to believe that the secret of getting what you want, is to give it first.
Whatever advice your mother gives you—whether it’s about money or anything else—take it to heart. After all, you can bet it’s going to be priceless!
Thanks mom for all you have taught me; I love you and have a great and happy Mother’s Day!
Happy Investing!
Stay Blessed Forever
 Sandeep Sahni









Note: All information provided in this blog is for educational purposes only and does not constitute any professional advice or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.


About The author

Sandeep Sahni
Sandeep is an alum of IIM Lucknow with a Post Graduate Degree (MBA class of 1988). His also an alum of Shri Ram College of Commerce, Delhi University (B.Com. Hons. Class of 1985.)
Sandeep's investing experience and study of the Financial Markets spans over 30 years. He is based in Chandigarh and has been advising more than 500 clients across the globe on Financial Planning and Wealth Management.
He has promoted “Sahayak Gurukul” which is an attempt to share thoughts and knowledge on aspects related to Personal Finance and Wealth Management. Sahayak Gurukul provides financial insights into the markets, economy and Investments. Whether you are new to the personal finance domain or a professional looking to make your money work for you, the Sahayak Gurukul blogs and workshops are curated to demystify investing, simplify complex personal finance topics and help investors make better decisions about their money.
Alongside, Sandeep conducts regular Investor Awareness Programs and workshops for Training of Mutual Fund Distributors, and workshops and seminars on Financial Planning for Corporate groups, Teachers, Doctors and Other professionals. 
Through his interactions and workshops, Sandeep works towards breaking the myths and illusions about money and finance.
He also writes a well read blog; 

He has also conducted presentations, workshops and guest lectures at Management institutes for students on Financial Planning and Wealth Creation.
He can be reached at:
+91-9888220088, 9814112988
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