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Showing posts from June, 2020

21st Century Investor

Firstly, I pray for you and your family's safety. In 20th Century India, the primary investments avenue included: Own business Real Estate Gold Fixed Deposit Money kept under the mattress In this blog post, let's have a look at how 21st Century's financially literates  look at investments: Own businesses:   Even if a substantial amount of net-worth is invested in their own businesses, they understand its risk (e.g. key-man risk) and the need for diversification. Real Estate: Unless their full-time business is real estate, they understand it is only for self-use. Gold: Even they believe gold is not an investment, but for self-consumption (jewelry). Fixed Deposits:   Investing in fixed deposits is like home quarantine of your young and bright children full of potential for years and years.   Fixed income investments are only for short term goals. Mostly retirees invest some part of net worth in fixed income due to lesser risk appetite and cash flow requirements....

Alternative to Fixed Deposits; where you don’t have to pay tax every year💰

Avenues for investments include: Public Equity (Listed Companies) Private Equity (Startups, Own business) Equity and Debt Mutual Funds Bonds Fixed Deposits Government Schemes, etc. While dealing with my own clients', I see a lot of people who have had very bad experiences in the past. Such experiences include the erosion of capital due to greed or less prudent decisions in public equity markets. These people never return to equities for a lifetime and stick to fixed-income investments. Retirees primarily invest in fixed income securities, as risk appetite comes down as age increases.  One of the avenues for Indians to save and park money has been fixed deposits. Debt funds are a good alternative to fixed deposits. Where do Debt Mutual Funds Invest? Features of Debt Funds and Fixed Deposits? The best part of debt funds: In case of fixed deposits, one has to pay tax on the interest every year. This is not the case with debt funds. Unless and until you sell the debt funds investments,...