Thursday, May 5, 2022

 Start that Emergency Fund...make a beginning!

One of the most famous adages about savings goes, ‘A penny saved is a penny earned’.

While emphasizing the importance of saving, what this saying means is that setting aside money from your existing funds is as good as earning it.

There are several reasons why one needs to save. Its merits include -- being prepared for emergencies, fulfilling your financial and material goals, and eventually building wealth over the long term.

Financial goals would typically include, but not be limited to, buying a house, securing funds for children’s education and marriage, funds for retirement, a dream car, vacations and adequate health care etc.

While saving is the primary step to all of these, one also needs to define their goals, how much money each of these goals would require, choose the relevant instruments and allocate funds accordingly.

Goals could be short-term or long-term in nature, but foremost is that one needs to build and maintain an emergency corpus.

What exactly is this corpus, and how does one work towards it?

As its name suggests, an emergency corpus is meant to come in handy in emergencies and should be strictly kept separate from regular savings or funds earmarked for specific goals.

These funds could ideally be about three-six months of your living expenses and can be invested or kept in an instrument where it is easily accessible. For instance, many investors prefer  these funds to be parked in a liquid fund or a savings account.

An unexpected medical expense is something you could dip into your emergency funds for. A loss of a job or any other unforeseen crisis is also something for which your emergency corpus could come in handy.

The need for money is inevitable for tackling these situations at most times, and not having the funds at that time may lead to one borrowing the funds at unfavorable rates, which is another burden to deal with.

Wednesday, March 30, 2022

 Zhou Daxin’s latest novel, “The Sky Gets Dark Slowly”. It is a sensitive exploration of old age and the complex, hidden emotional worlds of the elderly in a rapidly ageing population.

In it he writes, “…Many elderly speak as though they know everything, but of old age they are in fact as ignorant as children. Many elderly are in fact, completely unprepared for what they are to face when it comes to getting old and the road that lay ahead of them.

“In the time between a person turning 60 years old, as they begin to age, right until all the lights go out and the sky gets dark, there are some situations to keep in mind, so that you will be prepared for what is to come, and you will not panic.

ONE. The people by your side will only continue to grow smaller in number. People in your parents’ and grandmothers’ generation have largely all left, whilst many of your peers will increasingly find it harder to look after themselves, and the younger generations will all be busy with their own lives. Even your wife or husband may depart earlier than you, or that you would expect, and what might then come are days of emptiness. You will have to learn how to live alone, and to enjoy and embrace solitude.

TWO. Society will care less and less for you. No matter how glorious your previous career was or how famous you were, ageing will always transform you into a regular old man and old lady. The spotlight no longer shines on you, and you have to learn to contend with standing quietly in one corner, to appreciate the hubbub and views that come after you, and you must overcome the urge to be envious or grumble.

THREE. The road ahead will be rocky and full of precarity. Fractures, cardio-vascular blockages, brain atrophy, cancer…these are all possible guests that could pay you a visit any time, and you would not be able to turn them away. You will have to live with illness and ailments, to view them as friends, even; do not fantasize about stable, quiet days without any trouble in your body. Maintaining a positive mentality and getting appropriate, adequate exercise is your duty, and you have to encourage yourself to keep at it consistently. 

FOUR. Prepare for bed-bound life, a return to the infant state. Our mothers brought us into this world on a bed, and after a journey of twists and turns and a life of struggle, we return to our starting point – the bed –and to the state of having to be looked after by others. The only difference being, where we once had our mothers to care for us, when we prepare to leave, we may not have our kin to look after us. Even if we have kin, their care may  never be close to that of your mother’s; you will more likely than not, be cared for by nursing staff who bear zero relation to you, wearing smiles on their face all whilst carrying weariness and boredom in their hearts. Lay still and don’t be difficult; remember to be grateful.

FIVE. There will be many swindlers and scammers along the way. Many of them know that the elderly have lots of savings, and will endlessly be thinking of ways to cheat them of their money through scam phone calls, text messages, mail, food and product samples, get-rich-quick schemes, products for longevity or enlightenment… basically, all they want is to get all the money. Beware, and be careful, hold your money close to you. A fool and his money are soon parted, so spend your pennies wisely.

Before the sky gets dark, the last stretches of life’s journey will gradually get dimmer and dimmer, naturally it will be harder to see the path ahead that you are treading towards, and it will be harder to keep going forward. As such, upon turning 60, it would do us all well to see life for what it is, to cherish what we have, to enjoy  life whilst we can, and to not take on society’s troubles or your children’s and grandchildren’s affairs for yourself. Stay humble, don’t act superior on account of your own age and talk down to others – this will hurt yourself as much as it will hurt others. As we get older, all the better should we be able to understand what respect is and what it counts for. In these later days of your lives, you have to understand what it means, to let go of your attachments, to mentally prepare yourself. The way of nature is the way of life; go with its flow, and live with equanimity.

For all of us, a nice read, very beautiful, very true!

Hardly the day started and … it is already six o’clock in the evening.

Barely arrived on Monday and it’s already Friday.

… and the month is almost over.

… and the year is almost up.

… and already 50 or 60 or 70 years of our lives have passed.

… and we realize that it is too late to go back…

So…Let’s try to take full advantage of the time we have left …

Let’s not stop looking for activities that we like…

Let’s put color in our grayness…

Let’s smile at the little things in life that put balm in our hearts.

And yet, we must continue to enjoy serenely the time that remains.

Let’s try to eliminate the ‘after’…

I do it after…

I will say after…

I will think about it after…

We leave everything for ‘later’ as if ‘after’ was ours.

Because what we do not understand is that:

after, the coffee cools…

after, priorities change…

after, the charm is broken…

after, health passes…

after, the children grow up…

after, the parents get older…

after, the promises are forgotten…

after, the day becomes the night…

after, life ends…

And all that ‘after’, we find it’s often too late…

So… leave nothing for ‘later’…

Because in always waiting for later, we can lose the best moments,

the best experiences,

the best friends,

the best family…

The day is today…The moment is now…

We are no longer at the age where we can afford to postpone until tomorrow what needs to be done right away.

So let’s see if you’ll have time to read this message and then share it.

Or maybe you’ll leave it for…’later’…

And you will not share it “ever’ ’’

Even share with those who are not yet ‘seniors’.

May you be well and happy…

Russia plays hard ball..US Recession in the offing?

 Kitco News) Russia's central bank resumed its gold purchases from local banks on Monday, but it set a fixed price on the precious metal.

Starting this week, the Russian central bank will pay a fixed price of 5,000 roubles ($52) per gram between March 28 and June 30, the bank said on Friday. This is below the current market value of around $68.

The central bank added that the resumption in buying will ensure supply and uninterrupted production of local gold.

Two weeks ago, Russia's central bank announced that it was halting its official gold purchases from local banks due to a surge in demand from regular consumers. This is because Russians went on a gold buying spree in March to protect their savings as the ruble collapsed. Major banks in Russia reported a rush of consumers investing in bullion and coins.

Sberbank, Russia's largest financial institution, reported that demand for gold and palladium has quadrupled in the last few weeks. Meanwhile, Russia's Ministry of Finance also referred to gold as an "ideal alternative" to the U.S. dollar.Setting fixed price for gold reminds some analysts of what the U.S. did during the “gold standard” years. The period between 1879 and 1914 is known as the classical gold standard era, during which one ounce of gold would represent $21. Then in the 1930s, the U.S. banned gold ownership and raised the value of the dollar in gold from $20.67 to $35 per ounce.

That price remained fixed until 1971 when Richard Nixon put a halt on the U.S. dollar's convertibility into gold, which meant that other countries could no longer redeem dollars for gold. In 1973 the gold standard was scrapped.

"I am reminded of what the U.S. did in the middle of the Great Depression. For the next 40 years, gold's price was pegged to the U.S. dollar at $35. There is a precedent for this. It leads me to believe that Russia's intention would be for the value of the ruble to be linked directly to the value of gold," Gainesville Coins precious metals expert Everett Millman told Kitco News. "Setting a fixed price for rubles per gram of gold seems to be the intention. That's pretty important when it comes to how Russia could seek funding and manage its central bank financing outside of the U.S. dollar system."

Gold is one of the most logical international currencies to use when you are trying to get around sanctions, Millman added.

Sanctions against Russian gold- Last week, the U.S. Treasury banned all gold transactions with Russia's central bank.

"U.S. persons are prohibited from engaging in any transaction -- including gold-related transactions -- involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation or the Ministry of Finance of the Russian Federation," the Treasury said on its website.These types of sanctions could be effective to an extent, said Millman. "It can have a significant impact if for no other reason than to force other partners to shy away from doing transactions with Russia in gold. At the same time, knowing that the global gold market can be rather opaque, it would be much more difficult to enforce that type of restriction or regulation," he explained.

In response to escalating sanctions from the West for Russia’s invasion of Ukraine, Moscow said that "unfriendly" countries could be required to pay for Russian gas in rubles or gold, according to the chair of Russia's Duma Committee on energy."If they want to buy, let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us; this is the national currency," Pavel Zavalny said at a news conference on Thursday.

Russia is also considering accepting Bitcoin for its oil and gas exports and being more flexible in general regarding payment options with "friendly" countries.

"We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan … With Turkey, it will be lira and rubles," Zavalny said. "You can also trade bitcoins."


This coincides with the fact that the US yield curve, especially between the 2Y and 5Y tenure is getting inverted which has indicated onset of recession in their economy in the past.

Monday, March 28, 2022

Win With SIP ... especially with summer round the corner!

 

 Systematic Investment

Plan (SIP)

A SIP is nothing but a method of investing in mutual funds.

It involves investing a fixed amount of money at regular intervals in the selected mutual fund scheme.

Its core premise is that it ensures money is invested in a consistent and regular manner in mutual fund/s of investors’ choice.

Investors can set up one or several SIPs across different schemes, directed at different goals as per their convenience, affordability and preferred frequency.

Why opt for SIPs?

Choosing the SIP mode of investing offers several benefits to investors, such as:


  •  Slow & Steady Wins the Race


    When market is at a low or making new highs, investors either get wary and exit the market or rejoice with the booming market. SIP investing keeps you steady on your financial roadmap by ensuring investments are made consistently towards your goals.


  •  Removes the Need to Time the Market


    Through an SIP, an investor invests smaller amounts across several dates instead of investing a big amount on a single date. So, for the same investment amount he gets more units when the market is falling, and get fewer units when market goes up, ultimately averaging out the cost of his investment. This helps him navigate market volatility without the need to time the market.

  • • Multiple SIPs for Multiple goals


    Investors can have different goals at different points of their life – be it smaller goals such as buying a car or funding a holiday or larger, more critical goals like retirement. In fact, you may even have separate goals for each of your family members. SIP can be used to achieve these multiple goals. Investors can set up different SIPs in different funds to suit different goals.

  • • A Small Gateway to a Huge Universe


    SIP enables investors to invest across different asset classes like equity, debt, gold etc. with small investment amounts. SIP can be started with monthly investments of as low as INR 500.


  • SIP can easily be considered a small package that packs a big punch in our long term goals. And with dedicated SIP for every goal, we can all aim for a fulfilling and enriched life as every dream comes alive and we can #WINWITHSIP

Monday, December 20, 2021

 

Buy on Dips....

While it is prudent to brace for some more short-term weakness, the key question is whether investors should run away amid the softness or invest more amid correction. Investors should use this opportunity to buy on decline and the reasons are not hard to find.

Unlike the past when FIIs used to rule the bourses, the long-term journey of Indian markets will ride on domestic liquidity. India’s changing demographics with a young population having no social security benefits coupled with negative real interest rates, augur well for domestic inflows to equities. The record number of new demat account openings and the soaring monthly contribution to SIP (systematic investment plan) stand testimony to the same. This domestic liquidity should provide downside support to equities.

On the other hand, earnings, which is the ultimate driver of equities irrespective of myriad noises, is looking stronger than ever before. The revival from Covid’s deadly second wave has been sharp and swift in India. Growth is looking up and the impact of Covid has been positive for organised players who have pushed efficiency to the hilt and managed their houses well despite extreme gross margin pressure due to a rise in raw material prices.

Do not expect any major negative earnings impact on Nifty in the next couple of years, as the two heavyweight sectors, namely financials and technology look to be in fine fettle. Riding on recovery and better asset quality, we expect financials to manage the marginal pressure on interest margins. The unprecedented demand for digitisation and the gradual easing of talent shortage augur well for technology earnings, and the currency depreciation could be a feather in the cap. The diversified heavyweight conglomerate Reliance Industries should continue to benefit from recovery in all its businesses. With very little weight of cyclicals, we rule out  meaningful downgrade to Nifty earnings.

 

 Courtesy : Finshots

Food for thought...I thought you might want to ponder over...

What is the Inflation data really telling us?

What is the Inflation data really telling us? | Finshots Daily Newsletter

Last week, everybody had a chance to look at India’s Wholesale Price Index for November and lo and behold, it was at a 30-year high! So in today’s Finshots, we explain inflation and see what the numbers are really telling us.


Economy

The Story

To understand inflation in India, we need to go over a couple of things. First, there’s the Wholesale Price Index (WPI). It measures how prices are changing at the wholesale level — when goods are traded in bulk between businesses. Then, there’s the Consumer Price Index (CPI). It tells us about the change in prices of goods and services that we consume on a daily basis.

In other words, WPI affects businesses and CPI affects consumers. And while there is an obvious interplay between the two, they offer distinct insights. Take for instance India’s WPI figure at the moment. It stands at a whopping 14.2% — meaning prices have increased by a staggering 14% in November 2021, compared to the same period last year. In fact, we haven’t seen such highs since 1991!

And while some people would brush this off as an aberration, that assessment isn’t entirely accurate either. WPI has been heading upwards for a while now while CPI is still hovering at a modest 4.9%. Sure, the CPI figure isn’t something to boast of either, but it’s still not rising exponentially like the wholesale price index. Which means we need to look at this and ask — “Why the divergence?”

Well, truth be told, there’s still a lot of debate on why this is happening. Typically, whenever WPI and CPI diverge, everyone points to how the indices are constructed. Let’s take food for instance. 50% of the CPI is attributable to food prices alone. However, in the WPI index, food contributes only 15% to the final figure. The largest weights are assigned to “manufactured products”. This includes a lot of things that businesses use — like textiles, chemicals, cement, metals, etc.

So, a quick reading of the numbers will tell you that it’s the raw materials doing all the damage. And one popular theory explaining this figure goes something like this — Businesses are recovering faster from the pandemic. So, they’re demanding raw materials to produce more goods. And more demand inevitably leads to higher prices. But there have been disruptions in the supply chain as well. And when these disruptions don’t ease quickly, prices start climbing some more.

However, if businesses in India are experiencing high prices, why aren’t they passing it along to consumers? Why aren’t we feeling the pinch?

Well for starters, we are feeling the pinch. FMCG companies have slowly been hiking prices. Paint companies are revising their pricing structure. And cooking oil is on a tear. However, they haven’t been able to pass on all of their costs because they’re still tentative about demand. If people are still holding on to their purse strings, they have little incentive to hike prices. If they go against the grain and hike prices nonetheless, it may affect their business some more.

But make no mistake, companies can’t keep absorbing costs forever. Even on the services side (classified under miscellaneous), prices are rising. Telecom companies have hiked prices by 25% after a long hiatus. Recreation and amusement inflation is also at its highest since 2012. And restaurants are also taking a good hard look at their prices.

However, these don’t reflect all that well in the CPI, because as we noted, food and beverages dominate that index. If you remove food & beverages, as well as fuel, and measure the variation in prices elsewhere (called core CPI) — then you’ll see that figure is at a 5-month high — at 6.08%. So prices are rising across the board. It’s just that we have to be a little bit careful in drawing our conclusion from CPI and WPI index at such a time.

And here’s hoping that WPI inflation eases up in 2022. Because if it doesn’t it is likely that we will feel the pinch much harder soon enough.

Tuesday, September 14, 2021

The Sky Gets Dark Slowly

 Zhou Daxin’s latest novel, “The Sky Gets Dark Slowly”. It is a sensitive exploration of old age and the complex, hidden emotional worlds of the elderly in a rapidly ageing population.

In it he writes, “…Many elderly speak as though they know everything, but of old age they are in fact as ignorant as children. Many elderly are in fact, completely unprepared for what they are to face when it comes to getting old and the road that lay ahead of them.

“In the time between a person turning 60 years old, as they begin to age, right until all the lights go out and the sky gets dark, there are some situations to keep in mind, so that you will be prepared for what is to come, and you will not panic.

ONE. The people by your side will only continue to grow smaller in number. People in your parents’ and grandmothers’ generation have largely all left, whilst many of your peers will increasingly find it harder to look after themselves, and the younger generations will all be busy with their own lives. Even your wife or husband may depart earlier than you, or that you would expect, and what might then come are days of emptiness. You will have to learn how to live alone, and to enjoy and embrace solitude.

TWO. Society will care less and less for you. No matter how glorious your previous career was or how famous you were, ageing will always transform you into a regular old man and old lady. The spotlight no longer shines on you, and you have to learn to contend with standing quietly in one corner, to appreciate the hubbub and views that come after you, and you must overcome the urge to be envious or grumble.

THREE. The road ahead will be rocky and full of precarity. Fractures, cardio-vascular blockages, brain atrophy, cancer…these are all possible guests that could pay you a visit any time, and you would not be able to turn them away. You will have to live with illness and ailments, to view them as friends, even; do not fantasize about stable, quiet days without any trouble in your body. Maintaining a positive mentality and getting appropriate, adequate exercise is your duty, and you have to encourage yourself to keep at it consistently. 

FOUR. Prepare for bed-bound life, a return to the infant state. Our mothers brought us into this world on a bed, and after a journey of twists and turns and a life of struggle, we return to our starting point – the bed –and to the state of having to be looked after by others. The only difference being, where we once had our mothers to care for us, when we prepare to leave, we may not have our kin to look after us. Even if we have kin, their care may  never be close to that of your mother’s; you will more likely than not, be cared for by nursing staff who bear zero relation to you, wearing smiles on their face all whilst carrying weariness and boredom in their hearts. Lay still and don’t be difficult; remember to be grateful.

FIVE. There will be many swindlers and scammers along the way. Many of them know that the elderly have lots of savings, and will endlessly be thinking of ways to cheat them of their money through scam phone calls, text messages, mail, food and product samples, get-rich-quick schemes, products for longevity or enlightenment… basically, all they want is to get all the money. Beware, and be careful, hold your money close to you. A fool and his money are soon parted, so spend your pennies wisely.

Before the sky gets dark, the last stretches of life’s journey will gradually get dimmer and dimmer, naturally it will be harder to see the path ahead that you are treading towards, and it will be harder to keep going forward. As such, upon turning 60, it would do us all well to see life for what it is, to cherish what we have, to enjoy  life whilst we can, and to not take on society’s troubles or your children’s and grandchildren’s affairs for yourself. Stay humble, don’t act superior on account of your own age and talk down to others – this will hurt yourself as much as it will hurt others. As we get older, all the better should we be able to understand what respect is and what it counts for. In these later days of your lives, you have to understand what it means, to let go of your attachments, to mentally prepare yourself. The way of nature is the way of life; go with its flow, and live with equanimity.

For all of us, a nice read, very beautiful, very true!

Hardly the day started and … it is already six o’clock in the evening.

Barely arrived on Monday and it’s already Friday.

… and the month is almost over.

… and the year is almost up.

… and already 50 or 60 or 70 years of our lives have passed.

… and we realize that it is too late to go back…

So…Let’s try to take full advantage of the time we have left …

Let’s not stop looking for activities that we like…

Let’s put color in our grayness…

Let’s smile at the little things in life that put balm in our hearts.

And yet, we must continue to enjoy serenely the time that remains.

Let’s try to eliminate the ‘after’…

I do it after…

I will say after…

I will think about it after…

We leave everything for ‘later’ as if ‘after’ was ours.

Because what we do not understand is that:

after, the coffee cools…

after, priorities change…

after, the charm is broken…

after, health passes…

after, the children grow up…

after, the parents get older…

after, the promises are forgotten…

after, the day becomes the night…

after, life ends…

And all that ‘after’, we find it’s often too late…

So… leave nothing for ‘later’…

Because in always waiting for later, we can lose the best moments,

the best experiences,

the best friends,

the best family…

The day is today…The moment is now…

We are no longer at the age where we can afford to postpone until tomorrow what needs to be done right away.

So let’s see if you’ll have time to read this message and then share it.

Or maybe you’ll leave it for…’later’…

And you will not share it “ever’ ’’

Even share with those who are not yet ‘seniors’.

May you be well and happy…