Category Archives: General

PenguWIN turns 6

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Greetings from PenguWIN, PenguWIN 6th Anniversary

                                           Today, we are 6 years old. Our sincere thanks to each one of you, for your patronage. Trust we are well set for a long innings. Initially, when I decided to move from corporate employment to entrepreneurship (whatever small business that we do), while there was a lot of support from friends and well-wishers, there was some scepticism from family members. It was a call between doing what you might not like the best vs what you love to do but may not be successful in monetary terms. Since I had a flair for Personal Finance from my management school days, I ensured that we (wife & daughter including) were covered for atleast 10 years based on my Networth at that point in time.  Hence, I decided to take the plunge to start PenguWIN.

While it may sound easy to do something that you really like, entrepreneurship has its own set of challenges, especially when you are a first-generation entrepreneur. Anyway, I am happy with my decision and honestly, never in these 6 years did I think of going back to corporate employment.

The Covid 19 pandemic has affected the economies of the entire world during the first half of this calendar year. The medical fraternity is still grappling with unknowns, how to find a cure and a vaccine. I hope they will counter this challenge and come out successfully in the shortest possible time.

Every company in India is struggling to sustain its business and contraction in our economy is unavoidable, given the complexity of problems that they face. The top 10 business groups of India including Reliance, Tata, Adani, Birla reported profit before tax loss of Rs.19,340/- crores in Jan-Mar 2020 quarter (Q4 FY19-20) compared to profit before tax gain of Rs. 48,500/- crores in Jan-Mar 2019 quarter (Q4 FY18-19).

The Indian equity markets have been on a roller-coaster ride in CY 2020. 

Sensex went all the way up to 42,000+ and then nose-dived to around 26,000 (38% fall in about 6 weeks) on Covid-19 fears. Now we are back to around 36,000 level as of yesterday, the 3rd July 2020. Again, no investor or analyst could predict the market. While common sense tells us that when the economy is struggling, market is expected to go down, though the extent might not be predictable. But how did the market go back to 36,000 level from 26,000 when the Covid 19 is doing more damage than initially envisaged.?

One thing that has made a difference during this period is the heightened awareness about Life and Health insurance – Individual spending on life and health insurance has gone up 25% year on year. Interest and enquiries on long term life and health insurance are hitting the roof. Please ensure that you and your family have adequate coverage of Life, Health and Critical illness insurance.

Whenever there is uncertainty and stress in the economy, gold is expected to do well. While too high an allocation of gold and in jewellery form is not a good idea, a small exposure (upto 10% of networth) to gold as a hedge is a good diversification strategy. Sovereign Gold Bonds, issued by Government of India is the best option as it can be held in Demat (no issue of safety as in physical gold) and also provides 2.5% interest rate. There are 6 issues during this year and issue 4 starts on 6th Jul, Monday. The details are provided in the table below. The price mentioned is for 1 gm of 24K pure gold and offline price. You get a discount of Rs.50 i.e. if you apply online through demat, the July 6th issue price would be Rs. 4,802/gm.

On a different note, the Covid spread and consequences is alarming (I know atleast a dozen doctors and healthcare specialists who are directly facing the Covid patients). So, please be extra cautious.

Feel free to reach out to us for any of your personal finance requirements and please do refer your friends and family.

There is only one boss: the customer. And he can fire anybody in the company, from the chairman on down. Simply by spending his money somewhere else. - Sam Walton.

<Blog # PenguWIN 1077 – PenguWIN turns 6>

Markets on Fire Sale

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Greetings from PenguWIN

A fire sale is a sale of assets at heavily discounted prices. Here, I am referring to the sale of stocks in the market as though all businesses are closing down. Initial reports from the World Health Organization said that the death rate is between 3 to 4%, the rate being higher for 60+. Older people and those with respiratory problems, heart disease or diabetes are at greater risk. There are other sources from websites to news channels quoting death rates as low as 1%. Immunity among healthy young people seems to be high.

The impact of this Corona Virus pandemic seems to be accentuated by today’s social media like never before, with people overreacting by buying too much retail household stuff, thereby creating shortage and panic.

I am sure many of you who have invested in equity funds would be going through anxiety. However, this is a black swan event that no one can predict. We have had such events in the past including the Dotcom bubble, Ketan Parekh scam, 2008 financial crisis and every time the market has bounced back sharply and reached greater heights. These events have occurred in the past and will continue to occur in the future too. It’s just that we will not be able to predict when and the magnitude of it.

My request to you is that you stay away from monitoring the portfolio during tough times like these. The dip in your portfolios is ephemeral and will not affect your long-term goals unless you have invested money required in the near term in Equity Funds. Another blunder that people commit is to panic and sell their funds. If you have the conviction, this is the best time to be greedy and invest more (rather than sell and incur a loss). Personally, I have done this in the past and doing it now too. This does not work for all investors, especially people who have never faced a crash like this.

If you have any specific questions on your portfolio, please write to me or call me and I will be glad to assist. Both humanity and markets have withstood a lot of calamities and have seen that problems are temporary and progress is permanent

<Blog # PenguWIN 1074 – Markets on Fire Sale>

Stay the course, Equities will deliver

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Greetings from PenguWIN:

PenguWIN wishes you a wonderful Vinayagar Chaturthi !!!

Greetings

There is a sense of negativity in the market with investors doubting whether Indian Equities as an asset class has lost its mojo. Returns from lumpsum investments done 3 years ago, SIPs that are 4 to 5 years old are close to zero or even negative.

Will Indian Equities Deliver? The answer is a resounding “Yes”, Stay the course and Equities will deliver. As long as businesses thrive and make profits (Automobile sector woes are a passing phenomenon), you can be rest assured that equity investments will be able to deliver higher returns than any other asset class as picturised below.

Instead of being verbose I have attached charts based on actual data that will help increase your confidence level and conviction in equity. I have picked funds that have a minimum of 10 years history and not the best performers (to make the charts look better)

Highlights

  • 10 Jan 2008 was the all-time high reached by Sensex – 21206. Investment done at this point as Lumpsum is depicted. On 27 Oct 2008 Sensex reached a low of 7697. i.e. 64% down from high on 10 Jan 2008
  • Lumpsum investment of 1 Lakh on 4 Jul 2014 and 10,000/- SIP per month starting Jul 2014
  • Advancing the SIP start date (10K per month) from Jan 2013 instead of Jul 2014.

“When there’s nothing clever to do, it’s a mistake to try to be clever.” Howard Mark

<Blog # PenguWIN 1070 – Stay the course, Equities will deliver>