Aaditya Chhajed, CA, CFA

There are multiple investment options for Co-operative Banks and Societies. As per RBI Master Circular on Investments by Primary (Urban) Co-operative Bank and the recent amendment to the Indian Trust Act in 2017, Co-operative Societies can invest in many financial instruments. Traditionally, the funds which are in excess of the loans given are invested in fixed deposits of other co-operative banks or nationalized banks. The interest rate received on those excess funds barely matches the interest cost that the bank pays to depositors.   After the recent amendment to the Indian Trust Act in 2017, co-operative societies can invest in specified mutual funds. For simplicity, I have divided the deposits with a time horizon of 5+ years and less than 5 years.  1. Deposits with 5+ years time horizon Only deposits with 5+ years' time horizon should be invested in equity. Purely from the perspective of value addition; co-operative societies should invest some part (e.g. 10%) of depo...

Zooming Out: You should zoom out and see the big picture. If you're too close to the situation, you'll get entangled in things that don't really matter. And, they really shouldn't matter. Go too close and you'll get caught up with the noise at the signal.   While this is true for many aspects of life, let's discuss in the context of business and investing.  When you zoom out, you'll ask questions like;  Am I even in the right business? Does it even make sense to be in this business? Where is this business headed in 5, 10, 20 years from now? What need does this business serve? Will this need even be there 5, 10, 20 years from now? For example, an auto ancillary manufacturer, let's say a gearbox manufacturer may be very profitable right now; but if electric vehicles disrupt the internal combustion engine; will there be a need for gearboxes ten years from now?   And even if the need is there, how likely is it that my business will still be relevant fulfilli...

Investing anything time, effort, or money sacrifices short-term rewards for a long-term payoff.  Whether you are HNI or not, be it any type of investment, sometimes investors lose sight as to why they’re investing.  Goals-based investing offers a useful structure to map out concrete investment goals, prioritize them, build portfolios to meet them, measure progress against them, and make adjustments (if necessary) to stay on track. The benefits of setting goals extend to investing by improving investor behavior and increase the likelihood of financial success. What is goals-based investing? Goals-based investing is a framework to translate financial goals into  forecast future expenditures and  allocate money to separate portfolios  designed to meet those specific goals. An investment without a goal is like a traveler without a destination. SMART framework help establish clear goals. Prioritize goals based on necessity and time horizon: High-priority goals are th...

Reading Time: 10 minutes. Why are we so bad at separating luck and skill? Why are we so uncomfortable knowing that results can be beyond our control? Why do we create such a strong connection between results and the quality of the decisions preceding them? How can we avoid falling into the trap of the Monday morning quarterback, whether it is in analyzing someone else’s decision or in making and reviewing the decisions in our own lives? Poker vs. Chess Chess, for all its strategic complexity, isn’t a great model for decision-making in life, where most of our decisions involve hidden information and a much greater influence of luck. This creates a challenge that doesn’t exist in chess: identifying the relative contributions of the decisions we make versus luck in how things turn out. Poker, in contrast, is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time. The quality of our lives is the sum of decision quality plus luck. Von Neu...