Heads I win! Tails you lose!!


The subject says it all and that is what every investor expects.
Before that let us read a small story. This story is a little old when not much transportation was available.
A man set out on a long journey, say dream journey, to fulfill his goal and starred the journey with all preparations. The story should be read keeping in mind, that the travel is not modern day travel, but by walk. He was very happy and made quite a progress and stopped midway to rest.  His journey was also very smooth. He just turned back and looked at the path he traveled. To his surprise he saw two pairs of foot prints on the pathway. He was very surprised, as to,  who was the other person following him. He was worried and shouted as to who was following him.  A voice, answered him.  “It is me” , God  said and continued that he has been with him.  The man was very happy to know that God was with him and that he need not worry.
After the break, he set out again on his journey and this time, the journey was not very smooth. He faced lot of problems some being trivial to some being severe. He got tired of facing and overcoming the problems. He once again stopped to take rest. This time, he looked back to see the path, he traversed. This time he saw only, one pair of foot prints. He got shocked and thought God had left him and that is why he was undergoing all the problems, he had been facing. He shouted and asked “God. Where are you? ”  God answered him and said that he was very much with him.
The man then, asked, if that is so, why only one pair of footprint.  God replied, ” The foot prints you see are of mine”.  You were very tired and exhausted midway. I had to carry you on my shoulders and that is the reason why you see only one pair of foot print.”  The man realised and thanked God for being with him throughout.
Sometimes, while investing, many an investor, feel their portfolio, showing positive returns, as the market goes up and are very happy to see that growing every day. At that time, they think, it only due to the market and no effort of any body else is involved.
When the market comes down, they see their portfolio, come down or in the red, they think of the advisor and some even blame him for choosing bad stocks or funds.  They follow the headline statement.
Tails I win!  Heads you lose!!
But the investor advisor relationship has to be like the relationship as mentioned above and the advisor stays with the investor till the goals are realised. He handholds, the investor when needed, discourages emotional decision and encourages rational thinking. Have faith in your advisor, trust him.
In dynamics, the law of motion says
V = U + AT
the relations ship between the advisor and you as an investor is
We  = You  + Me too
All the advisor does, make your travel like travelling in the mumbai suburban train.  Either to board the train or alight from the train, you need to be in the right place at the right time. The crowd take you in or out of the train.  If you are at the wrong place, you will be thrown out of the train, in a destination, which was not your intended one.
Have a safe investing journey.
Do stay in touch.
varadharajan VS

Kaju, Kismiss & the Dilemma


This is about a leading company, in India making innovative products and their latest innovation was a new machine.
It was called “The Rat killing Machine”.
Inline images 2
This is a very simple machine. The rat in search of the food comes to the position as shown in the picture.
It is drawn into the position by attracting with kaju (cashew)  at one end and Kismiss (Raisins) at the other end.
It turns its head, looks at Kaju and then Kismiss and when it does three or four times, its head moves against the blade and gets killed.
This company is a established firm and good sales team and launched the above market to be a pioneer and market leader. Initially the sales was very good and over the years, there were lot fo competitors who could produce this cheaper and the company was losing share.
The sales team wanted the company to make a low cost machine so that it can increase the sales based on the price.
The company did come out with a Rat Killing machine (Economy Version)
This machine is the same as the earlier version, except that there is no Kaju and No kismiss.
The rat comes to the same position as it is used and finds that there is no Kaju and No kismiss and like in the earlier case, after three or four times the rat gets killed.
Though this works on the principle that every one falls for a bait and given options, are in a dilemma and unable to choose one of the options.
We as investors are also perennially in a dilemma
Is it Kaju or Kismiss?
Is it a bull market or a bear market
Is it Kaju or Kismiss?
Should I buy or Sell?
Is it Kaju or Kismiss?
Should I buy Debt or Equity?
Is it Kaju or Kismiss?
Should I buy equity funds or Direct Equity?
If we keep pondering over the situation, we will always be in a dilemma and never invest.
Like the rat gets killed, the value of our money will get killed by inflation.
Dont try to time the market. Rather the time in the market.
We all know that
A = P ( 1+ r/100)
We constantly worry out r the rate of return than  n the no. of years.
A small “r” with a big “n”  will earn much more than a birg “r” and a small ‘n”
Inline images 3
Be different. Think differently.  You can create wealth.
Start your investments today. Do contact me.
Varadharajan VS

Inventory & Investment – Don’t spend money. Use it!


What ever is bought with money needs to be monitored and managed. You cannot manage if you don’t monitor it effectively.

Both inventory and investment are bought with money and how they help you earn returns is measured. In inventory, the  turn over of the inventory or the rate at which the inventory is rotated is a measure. Many traders and distributors operate on a thin margin of as low as 2% and rotate the inventory multiple times with the same capital to maximise their returns.

Similarly, Return of Capital employed is a measure and this for investor means Return on Investment ( This is the sum of capital appreciation and dividend earned)

Inventory management is an important one in all organisations and also households.

Though inventory is counted as current assets, it will become a liability if not managed effectively.

We don’t buy anything because we have money.

Understanding of Inventory Management 

Let us understand how inventory is managed.

There are different control mechanism and methods in managing inventory. At least you can count 9 important ones.

The most common ones which we can look at are

ABC analysis

VED anallysis

FSND analysis

ABC analysis.

This is done based on valuations of the individual parts. Generally 20% of the parts constitue 80% of the total value of inventory and major attention is given to manage the parts of high value which are known as A. The least value items are classified as C

In the second one, VED analysis, the classification is done based on importance of the part. A part which is when not available, can halt a manufacturing process, or difficult to get, and a combination of these determine its vitality and Similary, E is essential and D deisrable.

This analysis supercedes the previous one, as it is on vitality and not on price.

The FSND focuses on the rate of consumption of the parts whether they are fast moving, slow moving or even Dead inventory.

Understanding of Portfolio management

Like wise when you do an investment, do you review your portfolio.

VED analysis.

Construct a portfolio and identify the stocks you must hold, which are vital for the portfolio.

This may vary with individuals as the investment horizon, objective and risk tolerance would vary.

 Having too many desirable stocks, compromising on vital stocks, may lead to lower portfolio return.

 This is normally done, drilling down sector wise and picking the stock that you must have in your portfolio.

For example, you may identify L&T in the capital goods sector which could be vital for you, Siemens could be an essential stock and stocks like, VA Tech vabag or carborandum universal could be desirable one.

2. FSND Analysis

 Though this cannot be adapted like inventory management, identify stocks which are not performing well and see no scope but you have in your portfolio.

 Some of you may still be holding Jayaprakash associates, Unitech, Indian overseas bank. Which or either dead or recovery would be very long. These are Dead and D in the FSND technique.

 FSN, can be us can also be linked to the ability to liquidate  the stocks at the earliest, large caps, midcaps will have a great liquidity. There are few illiquid stocks, like Benares hotels, which is a TATA group stock and trading thing. Depending on the return, liquidity and availabilty of capital

3. ABC analysis

 Unlike in inventory, this is redundant. Our primary focus would be earn return and reduce risk and reduction of risk done using diversification.

But generally investors have myth and that is stocks which are over say Rs. 1000 are costly and stocks less than 100 or even 50 are cheaper.

 Bajaj Finance moved from 4000 in April 15 and is now at 10000 though it is trading trading at 1000 after bonus and split.

Have ABC in relation to the value the stock offers and not the price.

 Therefore to sum up, use the grid below and pick your stock.


Summary & Takeaways

Know what you want to do with your investment.

Clarity of purpose  and clarity of action are

There are three types of assets

A appreciating asset which creates wealth over time

A depreciating asset, which depreciates your investment, but does not erode the wealth.

A dead asset, depreciates and becomes a liability. Know what you have, monitor and manage it

It is possible you may not know and understand the above. Have a chat with your advisor

Do contact me for any clarifications.

varadharajan VS


F A B technique in Gold investing.


Wishing you all a very happy new year.

Feature Advantage Benefit
Whenever you buy a product, you will have to understand the features they have and the advantages it brings and the benefit the user gets
All advertisements in the TV/ Media will always talk about this technique.
The widely advertised toothpaste Ads use this very effectively. Be it a paste or a brush you can see this. Let us take an example.
You see the ad where one talks about salt  in tooth paste.
Though this is not common salt, they are Sodium Flouride and Stannous flouride.
The advantages of having these salts in the tooth paste are that
It protects Gums, Prevents formation of Tartar and Protects teeth
Fresh mouth, no bad breath, clean teeth.
This FAB technique can be used in investing also.
In investing, apart from FAB, you also need to understand the risk involved in investing.
Each investing idea can be filtered through the FAB technique and checked for suitability of the investors.
Let us discuss one of the Asset , Gold.
Gold is primarily an asset class which is used as a hedge against inflation.
Secondly, this is the reference point for international trade. In the earlier days, this was the universal currency. However over the decades, US dollar has without doubt gained supremacy for international trade.
Whenever there is weakness in US dollar, Gold gains in value.
Many people buy Gold for investment, Some to flaunt their wealth and sometimes is used to show ones social status. Gold in such cases is combined with Gems and Diamonds,
Gold can be purchased in any one of the following ways
1; Gold bar
2. Gold coin
3. Gold jewellery
4. Gold Mutual funds
5. Gold ETF
6. E Gold through commodity exchange
7. Sovereign Gold bonds issued by the Government of India.
While the first three on in physical form, the others are in electronic form. Given below is a comparative FAB details of the above mode of investing in Gold.
Inline images 1
Should one invest in Gold?
Generally Indian markets and Gold have a negative correlation.  +1 on correlation indiex indicates that it is positively correlated and -1 negatively correlated. ( Which means, when sensex goes up, Gold goes down)
However in the last 8 years the correlation has been close to zero. This means both have remained close the zero correlation but in percentage terms. Gold has given a 300% returns compared to Sensex which is 120%
Also the USD and Gold have a negative correlation as seen and the correlation has come down in the last four, five years. See the chart. Blue line is Gold and the orange line is USD
Inline images 3
Inline images 2
It is good to have have Gold in one’s investment portfolio and ideal to have around 10 % of the total investment as GOLD.
As the geo political risks across the globe increases, Gold will be a hedge and it is therefore useful.
Also when India was in deep financial crisis, in 1991, We did pledge gold with IMF
Use the FAB technique and choose the option which you think suits you.
For any clarifications do contact me.
Thanks & regards

Catch this “Snake”

Just wanted to share this story.

Once there lived a businessman. But he lost lot of money in the business ventures and became bankrupt. He was under pressure from his lenders and was not able to bear the pressure or pay up. He prayed hard to God for money so that his problems could be solved. This did  not happen but he continued praying.

He decided to commit suicide and one day he bought  a bottle of poison after deciding, that was the best way to die, that night. He however decided to sleep that night one last time and die the next day morning as it would not make any difference.While he slept that night he  had a dream.

God appeared In his dream and told him that he wanted to help him. He asked him what he wanted. The merchant told God  he wanted  Gold and money so that he can clear his loans and start a new life. God told the merchant that next day morning when he wakes up, he should go to the backyard of his house,where a small garden was there. He will see a snake coming. All he has to do is to catch the snake. Once he does his problems would be solved. Stating this God disappeared.

The merchant woke up the next day and remembered the dream and what God had told him. He wasn’t sure. But decided to go to the backyard. After some wait he saw a snake coming from one corner. As things were happening as per dream now he had to go and catch it.

He was still not sure of the dream and secondly he was scared to go near the snake. Time was ticking. He was in a dilemma but the snake was moving from one corner to another. Still nothing happened and time as running out.

The snake by now had crossed the garden and slowly started entering a hole near a tree . Still the merchant was scared and unsure. The snake was on its last leg and had almost entered the hole.

Now the merchant mustered courage and decided to test what God had told him and he rushed to the hole near the tree. As he neared the hole the 6 feet long snake had entered completely except the last few inches of the tail. The merchant put his hand and caught the snake’s tail.

Guess what happened??

The inches of the snake’s tail turned into Gold. He was surprised and very unhappy. He thought,if only, he had caught the whole snake he would have got more Gold which could have rid him of all problems.

Now, what has this to do with our investing?

Most of us, while investing, we behave like the merchant. We want the best but we are scared. I remember this quote

All investors want to do today what they should have done yesterday” – Larry Summers

Some the lessons we can infer from the above story

a. There is a risk to every reward. This does not mean that high risk will always yield high reward.

b. Even if God, says something, we don’t have faith. Therefore it is human not to believe or trust the advisor who gives you options.

c. We always want to enter the investment at the end of the cycle, when we should not be entering and blame our luck.

d. Don’t time the market. Time in the market is very important.

e. More importantly act. Start early to get the benefit of time invested, or the power of compounding.

f. Have a financial goal.

g. Review at least once in a year.

If you follow the above guidelines, you can also be a “Midas, with the Golden Touch”

Please do contact me for any assistance to build your portfolio


varadharajan vs


Demonetization – An investor’s view point.

Greetings of the season. It is 10 days since the announcement of demonetization of Rs 500 and Rs 1000 notes was announced by our PM. Life has changed for all of us in the last 10 days and we get to see, read and hear so many information on the subject which are both for and against demonetization.
However, a major decision, like this would have been made after careful thought and at this stage, there is no looking back on this. We have been reading about the effect of this and who stands to gain or lose on this.
I am not going to broach on this aspect. However, I thought, what this decision, offers to us, as investors. I enclose with this a one pager, where I have tried to capture the effect of this into four buckets. Basically have done a SWOT analysis. Strength and weakness can be read as positives and negative effect of the decision. Please read this and do contact me for any clarification.
Most Important.  Don’t panic. Stay calm. Educate yourself and take an informed decision.
Now how you are likely to be affected as in investor.
a.  FD rates will come down. Some banks have already cut the fixed deposit rates. This is mainly due to the inflow of approximately 2 lac crores in the banking systems till yesterday. This reduces the income for people who are dependent are interest income.
These people can consider moving to debt funds, which can give around 2 to 3% more than the bank FD. These are not exposed to equity markets and are relatively safer.
b. You can see considerable drop in the post office savings rate, which is adjusted every quarter. You can see upto 0.5% drop in PPF, NSC, KVP rates. For investors, who park their funds, in PPF for future, can consider ELSS funds, which give the same tax benefit, higher returns and lower lock in.
For your information, in the last three decades, the FD rates on an average has been as follows.
1981 to 1990————- 10.5%
1991 to 2000—————11.525% ( Crisis in 1991, 1997,2000)
2001 to 2010 —————6.6% as the rates touched a low in 2004 to 2007
2011 till date —————7.26% and is likely to come down thanks to inflation and demonetization.
c.For investors, who are willing to take minimal risk, MIPs could offer a good entry point now and in the next few months, whereby, the market rise in the next two to three years could be rewarding.
Please note that the India Growth Story is intact but this is a correction.
d. For equity investors in both direct equity and mutual funds, this gives a great opportunity to invest
However before you choose your instrument for investments, please go through my mail on Investment ladder, ascertain your risk capacity and risk tolerance and invest accordingly.
As always, I am available to help you choose the investments. Do contact me.
VS Varadharajan

Need regular tax efficient cash flows from your investments – Read on

Many of us especially the retired, seek, regular income from the savings one has accumulated over the years of hard work. Even if not retired, but working or earning decent income, it is always a regular cash flow which keeps your kitty growing and also increasing your confidence levels
One of the known and easy ways of doing this is to invest in a Fixed deposit and opt for monthly payout of interest. The problem with this is that
a.  The interest received is taxable
b. In a reducing investment cycle, the cash flow reduces on reinvestment as the interests earned keep coming down
c. There is a lag in case the interest rate picks up, as the benefit of this also delayed.
d. While there is safety of the investments, the invested amount does not grow.
There are options for other investments which can give not only regular cash flows, the cash flows can be tax efficient and can appreciate also marginally
I have considered three options for investments, which when invested can provide the three above mentioned objectives.
1. Investing in MIP mutual funds, which invest 70 to 80% in debt and balance in equity. The equity portion gives appreciation to the capital.
2. Investing in Balanced funds which invest 65% in equity and 35% in debt and these are volatile in the short term but will help give cash flow and appreciation of capital in the long run.
3. Mixing 50% in option 1 and 2 mentioned can also be considered.
The enclosed excel sheet gives the details of working and the summary is given below.
Assumptions while calculating the cash flow.
a. An investment amount of Rs 10 lakhs is assumed.
A ten year time frame has been assumed from the date of investment on 1st April 2007 till October 1, 2016.
b. The year has been chosen as 2007 as there was big market crash in 2008 and hence it would affect the investments, unlike FD.
c. The reason for choosing this that, we may encounter similar situations in future also.
d.  For academic exercise, have chosen, Birla MIP wealth Fund and Birla Balanced 95 fund.  However a combination of other funds can also be used for investing. This is for understanding the concept.
e. A cash flow of 1 % per month ie 10 k per month and 2% ie 20 k per month are worked out. A person desirous of having higher cash flows can understand that.
f. In order to have a best utilisation and tax efficiency of the cash flows, it is assumed that the first cash flow will start after completion of 3 years,
g. Income tax rates and indexation benefits  are assumed as per current IT rules and similarly long term capital gains on equities are as of today. These are subject to change.
h. The interest rate on FD has been reducing over the years. The rates have been assumed as below
first three year 13.2%
Next three years till 2013 as 11.6% and after 2013
it is assumed as 9%
At the current rates, it would be around 8.1% per annum.
i. This is just a concept and illustration and one should understand their risk profile and risk capacity before arriving at any decisions.
j. Investing in balanced fund the entire corpus gives you good returns over the long term. But one can consider a combination of MIP and balanced.
k. You can do contact me for any clarification on this subject.
Varadharajan VS

Investment Ladder – Use REF LIST to climb it.


It is always a difficult decision to make, whenever you want to invest your money. Many a times, we are influenced, in our decision making, by our friends, well wishers and relatives. Sometimes, the investments are emotional and spontaneous.
I thought of putting a structure so that, one can use this as a guideline before making an investment.
I have written earlier about the REF LIST but it is worth while repeating this.
R –  stands for Risk involved in the investment. Risk means getting not what you expect.  For example if you expect a 10% and get 8% even then the instrument carries Risk. Mostly we are not worried about the reduction in returns, but alarms us when the return is negative. In the above example if your investment instead of generating a positve 10%, the capital is down by 2% , it is a negative risk.
In risk – you must know the risk, willing to take the risk and must have the capcity to bear the risk.
Just see the picture below with the ascending risk levels.
see attachment investment-ladder
Inline images 1
Risk and Volatility
There are few instruments which give assured stable returns.  Like FDs, NCDs, Government securities.
Any assured income which is paid at the specified rate is deemed as interested and taxed  as nominal income. It is added to your total income.
Other returns may not be same, it can vary. The degree of variation is measured as a volatility.
Risk, in equities is there in the short term and generally there is no risk, if invested over a long period of time, say, 7 years and above.
News about any organisation may be increase or decrease the risk and the returns in the short term could be volatile.
E – stands for Exit options. For all investmennts, you must know when you want to exit. If you don’t know this, you may be making a mistake and could lose the capital. If you are investing for a duration of one or two months, you should not be investing in an equity fund. As any volatility in the markets in the two months, could reduce your capital.
Also you must understand if this is closed ended fund or an open ended fund. You cannot exit a closed ended fund or redeem it unlike an open ended fund, as the name implies, it can be redeemed any time.
Next thing you must keep  in mind is the penalty or exit load, which you have to pay, in case you redeem before the maturity period or any other period as specified by the instrument.
F- Stands for flexibility.  This is a facility for one to add or reduce investment amount to the initial amount invested. If one invests one lakh, he may want to withdraw say only 10 thousand for an emergency and not the full amount and want to put it back.
Also this gives facility for parking unexpected surplus funds like, Bonus, incentives etc to the investments.
L –   Liquidty is the time frame you will get credit of funds from the time you redeem or sell your investments. You can close your FDs and get the money credited the same day. In liquid funds, it happens the next day, known as T+ 1 and most of the other funds it is T + 3.
Real estate is very illiquid as you cannot sell it that easily and the get the money. While you can pledge gold easily and take loan, you cannot sell it easily unless you sacrifice on the price.
Closed ended mutual funds can be sold through stock exchange. But they suffer from two important factors, liquidity – ie very poor volumes of trade and more importantly the price.
I – stands for income or the returns we get out of the investments. Though it is said that the higher the risk, higher the returns, it may vary. Your knowledge about variability of returns is important.
IN the picture above, the risk, generally correlates with the income or return positively. It means the higher the risk, the higher the returns.
All of us want the highest returns possible with zero risk and immediately.
S – Safety is denoted with S and normally it is more, if the risk level is low. In the picture above, FD is green in color, because it scores high on safety whereas equity investments are less safe as they are risky in the short term.
T –  Tax efficiency of the income. Some returns are taxable, some returns are treated differently and one can get tax effcient return. Given below is an example where debt funds score over FD. This is just ot make one unerstand indexation and not for any thing else

Inline images 1

Understand the various investment options available.
Know the investment ladder.
I have mentioned to the extent possible about each instrument using REF LIST
In case you don’t understand this mail, no problem, pick up the phone and call me.
Varadharajan VS

Bell curves -& your Portfolio. It is appraisal time!


It is appraisal time!. You heard it right and it is the annual appraisal time for your portfolio.
But for those who do not know what is a Bell curve, let us understand it first.
Let us consider 50 students in a class and measure their height. The data looks like this
Inline images 1
And if you plot the distribution on varying heights and the no of students,  using histograms and draw a curve, the curve will look like this
Inline images 2
This curve is known as Normal Distribution curve or simply Bell curve as it resembles the shape of a bell.
You will notice that the majority of the class in the middle range with in the orange color band and there are few people, who are shorter than the average of the class and some are taller than the average of the class. These are marked in yellow in the image.
In a distribution like this,  around 5 to 10% fall in the yellow band and they are known as outlier.
Similarly the portfolio you have will have stocks which give very good returns, which is on the right side of the image and there may be few stocks which are in the left yellow band and they may be giving negative return. These are the ones which pull down the overall return of the portfolio.
Appraisal system.
Many companies use this bell curve to fit their employees based on their performance. It is not necessary that the pattern may follow a bell curve like the above. But then, they force fit the performance and fit the employees into a bell curve.
Why do the do that?
a. the organisations want to reduce the average wage hike of the all the employees as a universe.
b. They want to reward the out performers very well and they may get wage hike in excess of 50 to 75% or may be more.
c. They identify the second best performers and say pay around 20 to 30%
d. The average performers get around 10 to 15% and
e. the under performers are the one on the left side yellow area, either get no increment or asked to leave the organisation.
The average hike in wages would be (0.15*75 +0.20*25+0.55*10)  which is 21.75%
The force fitting is hurting the individuals and slowly the companies are coming out of this system.
What has this to do with your portfolio.
Your portfolio of stocks may or may not follow a normal distribution like the above.
You cannot force fit the portfolio as the performance is not in your hands.
However you need to do an appraisal of your portfolio and identify the performers and non performers.
You must constantly move your portfolio  from the blue range to the green range. see image below
Inline images 1
Move your portfolio to the greener curve and this enhances your returns on the portfolio. A skewness to right is good for the portfolio and selection of good stocks will help you move right.
Do remember that keep aside your emotions. Remember
Opinions Confuse
Facts convince. 
Things to do can be summarised as below
a.  Take a look at your portfolio.
b. Find out portfolio returns and individual stock returns.
c. Try to map the distribution curve.
d. Unlike a Bell curve appraisal you cannot force fit the returns and churn the portfoio to improve the returns
e. Keep moving the greener pastures.
g. Do this once a year.
varadharajan VS

Noise – Sound – Music – Investing


  • The origin of sound is Vibration.
  • The audible vibration is known as sound. We can hear only those vibrations, which are above a specific decibel.
  • The sound we hear, if it is unwanted or unpleasant it is known as Noise
  • A pleasant sound, which is structured rhythmic is music to the ears.
  • Ear , the sensor is the channel for hearing but it is the mind which Synthesizes the sound and analyses the same and decides whether it is noise or Music.
  • Even Music at high decibels and at unwanted times can be a nuisance and is termed  Noise pollution. We don’t use the word ,Sound pollution.
  •  In our day to day life, we constantly hear all these, Noise, sound & Music and We always want to hear Music. The sound of Music is pleasant.
Sound is an invisible form of energy.
Most animals have the ability to sense it.
Along with sight and smell and the skin’s ability to sense temperature, our sense of hearing tells us what’s happening outside our bodies.
It can tell us what’s happening far away and out of sight—and it’s a powerful form of communication.
Think about a lion roaring or someone crying for help.
Like wise, around us, we have the media and gadgets with us and around us. The newspaper ( print Media), TV, Social Media like FB, twitter, instagram, Orkut, Linked in and whatssup all throw various information to us. Everyone voices their opinion and confuses the individual, ie. you.
For example-  a headline in the newspaper, will talk about a particular topic and relate this with the future economic activity and advise people to invest or divest in an instrument.
Unless we have an insight or ability to see through the information or headline, it is possible that we can end up taking a wrong decision.
See the below headline in 2003.  It was painting a picture of gloorm.  Guess what after that the market has given 16.27% CAGR ( Cumulative annual growth rate.
newspaper 1
Now see the second instance.  the headlines read thus
It was boom time and every one was bullish and there was euphoria. What happened next.
See the pin up
Sensex give a return of only 2.63% after this headline
Investing is all about thinking outside the headline just like the sound you hear far away
newspaper 2
Therefor it is very simple in investing.
What you see is not what you get.
What you don’t see is what you don’t get
Hear, see and read the information, understand.
Eliminate Noise and convert the sound to Music.
Good investing is Sound of Music
Enclosed is the list of news paper highlights and the market scenario thereafter. Thanks to IDFC for collating this and making it presentable.
Happy investing.
Please do contact in case you need to invest or any help in money management
varadharajan vs

Unknown Greek & Latin & known Mutual funds


Most of us are familiar with Mutual funds as one of the vehicles for investment and a simple tool which any common man can use to create wealth. There more than 3000 schemes of mutual fund available for investment and hence choosing one becomes very difficult.

Also Mutual funds offer investment as a lump sum investment or through SIP. There are others schemes like SWP systematic withdrawal plans and a transfer plan known as STP.

But when it comes to choosing a fund, for you to invest, it will appear as if you need know some Greek. There are various terminologies like alpha beta rho sigma etc which are some measures which help us understand the performance of the funds. I am not teaching you Greek but there are at least two alphabets you must familiarise your self with.

Alpha this is a measure to find out the incremental differential a fund has delivered, compared to its bench mark. If  fund has delivered  8.2% return over one year against its benchmark of 7% we can say the alpha is 8.2- 7= 1.2

Simplest way to understand alpha is the extra height Ronaldo gained to head the goal against Wales. which is the height of 2.5 feet which is indicated in the figure below.

Inline images 1

The second parameter is sigma or the standard deviation. This measures the extent the real returns varies to expected returns. The lower the sigma the better the prospects of getting expected returns.
Why sigma and not average. Take this example. A shooter aims to hit the bulls eye. First shot is 10 m to the right and second one 10m to the left of the target. The average is 0 hance it appears he was on target.

Whereas if you measure the sigma which is the square root of variance (0-10)*2 +( 0+10)*2 is square root of 200 which is 14.1

if the deviation is say only 2 metres on either side then sigma is 2.8125 the second shooter is close to the target than the first one.

How do you understand this. Let us compare four funds, HDFC equity fund, HDFC top 200 fund, Birla front line equity fund and Franklin Blue chip fund.

Inline images 1

If you see in the above excel sheet, the std deviations of both the HDFC funds has been increasing with the bench mark index and hence it is leading to lower returns. This can also be seen with the increase in standard deviation in the recent years and the saving grace has been its performance over the earlier years.

The highlighted figures in green are for the benchmark index and the yellow ones pertain to HDFC funds.

My message is to have an understanding while investing.

Before you invest understand why some funds are good. Are they consistent?  how the risk level is?

If you want know other Greek terms for Beta gamma delta rho etcCread this article clicking the. Link below


The easiest way you can do is to check with your financial advisor.

Some latin before we close.

Caveat emptor.  Which means buyer beware like the slogan mutual funds are subject to market risk

Ex aequo et bono
according to the right and good” or “from equity and conscience”) is a phrase derived from Latin that is used as a legal term of art. In the context of arbitration, it refers to the power of arbitrators to dispense with consideration of the law but consider solely what they consider to be fair and equitable in the case at hand.

Every financial advisor does suggest funds according to the right an good.

Please do contact me for any clarifications.
Please do contact me for any further clarifications

Investment Funnel


Greetings. All of us want our hard earned money to work for us and get us the desired growth so that the objective of the investment is achieved. While we try to do this, just understand how our mind woks and how money works for us.
1. Income and Savings.  –Savings funnel  Y
While we have an income, the amount we are able to save varies from individual to individual and that depends on your expneses. While income generally is from one souce, one has to plan for three types of outflow.
a. Regular monthly expenses for food, shelter and basic necessity.
b. Some savings to create an Emergency fund
c. Some investment to create wealth for a planned and or pre determined goals.
Many of us find it difficult to meet the first one and even saving a 5% is an arduous task
Assuming we are able to save 5%  the income and savings funnel would like the one below
Inline images 1
2. Expectation Funnel – Inverted Y
While one is able to invest only 5% of his earnings the expectations are that it must be 100x returns.
Though the time line is not clear, the earlier it happens, one feels elated about that.
In order to get this, he looks for opportunities to invest in instruments which can give such returns.
The expectation funnel looks like this.
Inline images 2
3. The working funnel – Horizontal Y
While we are free to expect anything, one must understand, how money works.
Generally money grows with time and compounds with time.
Money works when you invest, like the illustration below.

Inline images 4

Now the question that comes is that, are there investment opportunities  which give 100x returns.
Yes Shares do give such great returns but comes with a great risk. Also choosing the right share is a challenge.
Mutual funds are other instruments where one can invest. They are less risky, as they are well diversified. Do we have any funds which deliver such returns.
This is just an example there are similar funds which may be available for investment and getting huge returns over a time frame.
Look at the Reliance growth fund, which has delivered over 83 times returns.  IN the first 10 years , it was flat and it diverged in the next 10 years.
Inline images 5
1. It does not matter how much you are able to save out of your income, as long as you save. If you are not savings, you need to really do a budgeting exercise,
2. What ever you save, you must invest.
3. You need to give money the time to work and you can get good results over a period of time.
Do start investing now.   The word Invest  has two part IN & VEST – you have to put the money in and give it a Vesting period for it to work and produce result.
Happy investing. and as usual I am available to help you out in this and do contact me
varadharajan VS

Weekly bank nifty options Play as T20 instead of ODI


Are you the one trading heavily into options? If no then skip this article as it does not make sense to you.

If you trade in options, may be you can read this.

NSE introduces weekly expiry of bank nifty options from JUne 2016

As you know, option premiums is the sum of intrinsic value of the underlying plus the time value of money.

The longer the time to expiration, for a given value of underlying, the premium will be higher. This the premise on which you must read and understand what the change to weekly options can do for you.

With the weekly expirations, the time value of money has drastically come down for a new contract from 28 to 35 days depending on the expiry period or when the last Thursday falls in a month. With the weekly options the time to expiration is 7 days or 5 trading sessions.

Therefore the probability of making or losing money in premium due to time value was higher earlier. Now, because of the premium reduction, due to weekly options, you can consider trading and benefit out of this. However care should be exercised as there is risk of volatility and hence risk of losing the premium paid.

Also the time of buying and selling the options do matter.  You can consider this option.

One of the widely traded index option is the bank nifty option. and normal day the fluctuation can be 0.25% to 0.5% and  many days it is around 1%.  Hence a 1% variation in one day can give you opportunity to trade .

Here is what you do. Let us assume the bank nifty spot is 17500. On the first day of the contract ie. on Friday, you can use a strangle option and buy a put option for a strike price of 17200 and a call option for a strike price of 17800. you can stretch the stike prices so that the premium you pay is managed well. It is possible that you can buy both options with a total premium of 60.

When the bank nifty opens on Monday or Tuesday the effect of 1 to 2% in either direction can give you good premium for one of the options and based on the directions, you can possibly make a decent money . Let us take last Friday, 17th June 2016, 18200 call option of bank nifty was available for 40 and later came down to 22 and 17300 put option was available for 30 and went up to 35. If you had bought them you could have paid Rs 70 though it is higher, as it is difficult to judge the movements on both sides. It is therefore good to buy both these simultaneously.

ALSO Note that both these options are out of the money options and hence they are available cheaper.

Therefore exercise care.

Today when the market opened the put option went to 110 and the call option ended with 12 and you could have got at least 110 from the sale of put of option, even if you don’t sell the call option there by making 110- 40-30 which is Rs 40 and with a lot size of 30 it is 1200. Assuming the brokerage though on the higher side could be 436 leaving with a profit of 764 on an invest of 2100 which is around 30% . I have tried and watched this for the last 3 weeks and there is a possibility of a money play here.

However, take care of the directions of change and movement of the market & the brokerage. Since the time to  expiration is very short, you may end up losing the whole money.

The purpose of writing this is to make people aware that there are good opportunities, if you are an option trader and weekly bank nifty has changed the game to T 20 from ODI.


For any clarifications please feel free to contact me.












What you don’t see is what you get!

I am just posting this article which was written on August 30, 2015.

It would be nice if you read this with my other post titled ” Dip! Dip!! Dip!!!

Hi everyone.

I write this to you after a week of heavy turmoil and action in the markets Globally and in India.  Needless to mention that the markets globally tanked 5 to 8% on the so called ” Black Monday”. the 24th August 2015.

This only led to markets rising and falling again to attain some semblance at the end of the week, though most of the markets ending August in Red.

The Indian markets have been so volatile that the a movement of BSE index 300 to 500 is common these days.

Many of you are investors and have invested for long time wealth creation. The thought that comes to every one’s mind is,

a. Have I chosen the right investment vehicle

b. Is my timing of investments right.

c. What should I do? Stay invested, Add more or redeem everything.

But let us understand Risk  & Volatility.

Risk has to be viewed with a time frame. A ‘risk’ in the short term need not be risk in the long term

If you see historic data, the markets world over especially the equity markets have been rising in a time frame of 10 years /20 years.  IN the long run, the investments only grow and  there is little risk.

On the other hand, what we witness is volatility.  This is a short term phenomena and is more on technical. These variations are wide, large and but of short duration. What we are witnessing is short term volatility.

More risk is there when the market is volatile and as mentioned it is in the short term.

Don’t mix Volatility and Risk and if you do, you will exit the market at the wrong time and miss an opportunity to create wealth

There are four reasons why you should ignore volatility and stay invested

a. Inflation in India is very low and is sustained below 5 % and hence favourable. This compares with the deflation prevalent in many other countries and hence advantageous.

b. Being a consumption led country, the global earthquakes of China, Greece are withstood effectively.

c. With fairly strong macros of Fiscal Deficit,, Current account deficit ( on account of crude and commodity prices), and high reserves, currency wars by countries devaluing there currencies like Yuan, are being absorbed.

d. Though not visible and seen, there are activities taken by the government which will yield results in the next two to three years.

While investing, people follow the principle, WYSIWYG ( What you see is what you get)

For a smart investor it is WYDSIWYG ( What you don’s see is what you get)

Be a smart investor.

Take a look at the stocks I have circulated earlier and some of them are available at attractive prices.

Do contact me for any clarification.




varadharajan VS


From the Movie – 36th Chamber of Shaolin – Lessons on investment


In 1978 the move ” 36th chamber of shoalin” was released and it was a great hit all over the world and in India too.  I am sure many of you would have seen that movie and for the younger generation, if they have not seen, please do watch it.
I am not getting into the story of the movie but the training sessions the hero undergoes to master the skill.
Some of the training sessions are highlighted below for your reference and usage.
a. Wrist training.
This is a training about lifting a small weight but tied to long stick and because the of length of the stick the lifting becomes difficult and force required is Length of the stick x weight. For the same weight, as the length increases the force required to lift also increases. (Mechanical Advantage – Physics)
Analogy in investment
SIP  –  The small investment of money which is like the weight of the hammer gets compounded over time and the longer the time the greater the return.
Inline images 1
B. Training for your arms.
Please watch this link before you read further.
This training is to strengthen the arms and training is to take the water up the ramp and pour it.  You will get hurt if you bend your arms as the knives attached will hurt you. Falling down is also dangerous.
Analogy in investment.
While you focus on the goal of reaching your target, you need to hold your nerves. There will be testing times, when you will have the weight of Noise of the market & media, which will give you their own versions. If not held you will hurt only yourself. This is to train your ability to hold your nerves in testing times and stay focused
c. Training for the eyes.
In This movie there is a training for the eye movement. You are supposed to move your eyes without moving your head. In case you move your head along with the eyes, you will get hurt with the knives.
Analogy in investment
You will come across many instances of the market, inflation, interest rate and share prices move up down and side ways. Move your eyes only and keep watching. Moving your money without understanding may harm you.
Analyse the situation before moving.
d. There are plenty of other training which will be useful Please read the link below.
Finally you will need an advisor like the master who hones your skills  and steers you through your goals.
Do get in touch with me for your needs and enjoy the link
And the take home– the ten life lessons from the film
Enjoy the film and your investing as well.

Use SIP to fund your Car Replacement


Most of us have a car of our own and it is necessary to replace the car over a period of time. Initially the maintenance cost of the car is very negligible but over the years, especially after the 4th year, you need to spend considerable amount in maintenance of the car.
However the maintenance cost will accelerate if you do more kilometers.  For example a set of tyre replacement becomes necessary after say 40 k kilo meter. The earlier you run up the distance, the earlier your maintenance cost goes up
Depending on the distance one does, replacement of car needs to be planned. If one were to do 500  -700 km a month ie 6000 per annum, a replacement can be planned in about 5 to 7 years. This is suggested for personal use and not for vehicles which are put to commercial use. The method and yardstick are very different.
Also the moment you buy your car it depcriates in value. The resale value comes down faster than the depreciation.
Now with the NGT ( New Green Tribunal) banning vehicles beyond 10 years, after 5 years the resale value will drastically come down. You may not even find buyers for the car.
Therefore one needs to plan funds for buying the car. Let us assume, in the example given above, that we need to replace after 40 k, at 6000 km per annum, we replace the car after 7 years.
If you had bought a Hyundai I 20 in 2008, you would have paid 4.8 lacs.  Normally with a 15% depreciation using a straight line method, in 7 years the book value becomes zero.
15% of 4.8 las is 72k  per annum. or 6 k per month.

Today’s ex show room price of I 20 is 5.65 lacs

If you had started a SIP in Sundaram Select Mid cap fund, for 5 k per month or 60k per annum over a 7 year, you would have invested 4.2 lacs. Guess what? You could have earned anywhere between 6 .5 lacs to 10 lacs depending upon the year of starting the SIP and this would have helped you not only replace the car without any financial difficulty,  but also helped you upgrade your car to the next level. See table below.
Inline images 1
There are some cars which have become costly many times. For example the cost of Toyota Innova which was 8 lacs in 2005 is 26 lacs today.
See the trend of prices by clicking on this

If you had started a SIP for 6250 per month for 10 years at 75 k per month the value will be today  19, 58, 773 today.  in 10 years time.  ( It is assumed that it is invested in Sundaram select Midcap fund)

There are many more funds which have given very good returns and I just chose this fund for illustration.
Please note that I have chosen the period of SIP so that it ends in the calendar year, as people prefer to buy a new model on new year or thereafter considering that year of make plays a significant role in resale value.
There many ways where you can use SIPs and other options to reach your Goals.
Do contact me for any assistance or help
Thanks & regards
varadharajan VS

Elections & Mutual Funds


I am sure last week all Media was only covering election news and while I was going through the news, I found lot of similarities between elections and  Investing through mutual funds.
I have tried to capture the same in the excel file enclosed.
This comes with the caveat that investing in Mutual funds are subject to market Risk.
There is no suggestions or recommendations and but the information is only for understanding.
This will also tell the process one normally goes through and of course the process can be improved
elections 1
elections 2

DIP! DIP!! DIP!!! – Dip & Stick to it.


Couple of decades back, when DIP tea bags were marketed, I am sure many would recall the jingle

” Dip dip dip. Dip it a little longer, If you want it stronger, dip dip dip ”

Now read below to see how dips can be used effectively.

We all have heard the saying that ” Cash is King”. If you have cash,you can always get the best deal. The deal will be the best, if you can bargain and get the best price or If you can pick up at the best price that is thrown up.

This is very much possible especially when you want to buy the share of a company, which you wanted to be a part of your portfolio.

Stock market is not the perfect place and that is why you see variations in the price every second and every day. If the stock is fairly priced, there wont be any trade. Because the price is not fairly priced, you end up buying either at a low price to its fair value or pay a higher price to its fair value. But it is difficult to determine the fair value.

Because of the variations, the market offers opportunities and sometimes the stock is available at price below its fair value. If you really want to make good money, you need to wait for it.

Especially in the last one year, we had enough such opportunities. Some big events which gave these opportunities were

a. The market crash on 24th August 2o15 on china market crash and global sell off.

b. The day union budget for India was presented on 29th February, 2016,

c. There were some other opportunities which were not generic ( as it is called systemic) but specific to a particular sector or company which is termed as unsystemic. Example Sun Pharma on USFDA inspection dropped in July /August. Likewise Lupin also dropped to 1324

However no one knows these events before it happens. There fore one should

  1. always keep some cash, in their portfolio to utilise such opportunities to buy the stocks you want. It is suggested and my opinion is that 20% of your portfolio should always be in cash.
  2. Watch for the stock you want to buy and pick it up at the price you think it is fair.

I have checked up the performances of the stock which are highly liquid and in the Nifty 50  in the last one year.

a. The high point of the stock in the last one year.

b. The low point of the stock during the year.

c. The price as on 11th May 2016 and the returns one would have got if he had bought the stocks the lowest price.

If one is averse to playing the stocks, you could have invested in the mutual funds route also and there could have been opportunities to make decent returns.

The table below gives you the low, high and the latest prices of some of the stocks and mutual funds and the return one could have made in the short term

Of course, there is a 15% short term capital gain and in case of mutual funds, there is an exit load which may be applicable. IN spite of this for a person, who buys his time to pick stock, Money comes knocking.

It is important to keep

Keep Cash. Wait for that Dip. & Buy the stock or fund you want. Deposit the money in your kitty.

ABCD – A Buy on Cash on DIPS

DCBA –  Deposit Cash in Bank Account.

You don’t need great knowledge but cash in hand &  patience. to make money


For any clarification or help, please feel free to contact me.





SIP in stocks – Apollo hospitals an example – in continuation to my earlier post


I am sure you must have gone through my post –  titled
Coke, Pizzas, Pollution & stress make Hospitals an Investment option – If you have not, please read it before you scroll down.
In that I had suggested to consider investing in Apollo hospitals and also suggested a SIP route. I enclose with this a small illustration, how one would have accumulated reasonable quantity. of shares of Apollo hospitals.
If one had bought 5 share of Apollo Hospitals on the 1st of every month from 1st March 2011 till 1st February, 2016 one could have accumulated 300 shares by now.
The cost of purchase of these shares is Rs 2 71 530 and this does not include transaction charges like brogerage etc.
The value of these shares as on 1st March was 4,49,100 when the share price was 1497.
This  company has been paying dividends every year and one would have got Rs 5791 as dividend in proportion to the shares held at the time of dividend payout.
The total gain in this proces is 67%.
Inline images 1
Just like a mutual fund, you can buy shares regularly and accumulate.
Apollo is in health care sector and we all know that this business will only keep increasing as people want to live longer.
As people will to live longer, you stay invested for a longer period and become wealthier.
The excel sheet working is encloed.
To get started with buying a share, you must have a demat account and I can help you open one  & get that started. Do contact me.

How to make money while you buy medicines regularly.


Most of us buy medicines regularly from the pharmacy close to our homes and the quantum of purchase is higher, if we have a sick person or aged parents, who by age take medicines for various ailments.
Now we have an option to save some money and it could work out to as high as 20%.  This is how it works.
Medicines from the pharmacy nearby has the following advantages.
a. you can order medicines over phone.
b. Door delivery of medicines.
c. Some people also offer credit in the sense that you pay the bill once a month, like I do.
d. Flexibility with return of medicines, in case of change by the doctor.
Let us assume that one spends Rs 2000 per month on medicines every month and is purchased on cash and door delivered.
For a period of 5 years, the total expenses on Medicines work out to RS Rs. 1,20,000
Many of you are aware that Medplus offers the same facility to buy medicines online and offers discount as below
a. 10% upto Rs 1000 and 15% if the bill is above 1000.
b. Door delivery options available, if you upload the prescription or show on delivery.
c. You can place order on your mobile anywhere on the go or using a computer or Ipad.
Scenario 1
In our example the purchase per month is 2000 and hence you get a discount of 15% and hence you pay only 1700. This for a period of 5 years works out to 1,02,00.
A savings of 18000 or 15%.
Scenario 2
The savings you make of Rs 300 everyday, let us assume, that it is invested in a SIP in a debt fund. ( I have considered a Monthly Income Plan) For a period of 5 years from 1 April 11 to Mach 2016,
The total invested amount is 18,000 and the current value is 23,074. The debt fund has given a return of 10.19% CAGR.
You will now see that your return is not 15% but 19.22%
Scenario 3
Instead of paying cash, let us assume that one pays by credit card.
a. The first installment of Rs 1700, which is not paid is invested in a FD for 5 years, at 7.5% per annum compounding quarterly.
This will give a return of 764
b. The second installment is used to pay the credit card bill of the 1st month and hence there is no delay, no extra interest or charges.
c. IN the process, you transact for 5 years, 1700 per month which is 1,02,000.
Many credit card companies offer you a reward of 35 paise per 100 spent and you will earn a cash reward of 357.
d. The SIP grows to 23,074 in the previous scenario. Therefore the total savings is
23,074 +764 +357=24,195
Now the savings works out to 20.165% or one percentage point higher.
a. One needs to be extremely careful with managing credit card in scenario 3.
b. Default on payment might lead to higher interest charges which will offset the savings.
c. Past performance of MIP may or may not be achieved consistently in future
d. Return of medicines to Medplus is a disadvantage.
e. More importantly, this will be valid as long as Medplus offers discount.
If you are disciplined you can make money in this method.  Exercise care and your discretion on availing this offer.
For any clarifications, please feel free to contact me

The story of two Investors


There were two disciples (Shishya) To  a Guru ji (Master).  They were curious and in a hurry to get their problems resolved. So they approached him to guide them to get their grievances addressed.

The Guru ji told both of them to go to the nearby Peepal  tree and circle the tree 108 times and come back and report to him. As directed both of them went there and saw lot of people circling the tree which was an auspicious one. They all did pooja to the tree with coconut camphor fruits etc  and after that, were  circling the tree. Some were circling for few times, some for a few hours and some longer in the day

The first one saw everyone circling clockwise and thought that the Guru ji had more or less given the same instruction to everyone. He thought that if everyone is doing the same, then he cannot get anything different and decided to circle the tree anti clockwise. After completing about 60 times he found something under his feet and to his surprise it was a 50 rupee note. He looked around and saw no one was noticing him and took the money and put in his pocket. He stopped circling further and went back to Guru ji

The second person followed the instructions of his Guru ji and circled the tree Clockwise 108 times. When he had done around 50 circles he hit a stone and injured his leg. But with pain, he was determined to complete the instructions and he did so before meeting the Guru ji.

Now both of them shared their experienced and the first one was very happy and more so he did only half but got  50 rupee while the other one got only hurt in the process.

To the first one the Guru Ji said that he would have got more money had he completed 108 circles and by not doing he lost that opportunity. Also the 50 he got was his one money which was the balance of RS 100 he used for buying pooja items.  He had missed  an opportunity and lost this moeny through his behaviour and attitude

As for the second one, he went through hardship, but could not find any instant gratification but he has been immensely benefited as he would discover this soon.(he has accumulated benefits and he is not aware of this). He was saved in the process of circling as otherwise he would have faced severe hardship.

Consider the two disciples as investors and each of them invest in SIP for 108 months say 9 years.

Many people do not have the patience and think they are smart and book profits. Like the first Shishya they lose a great opportunity to create wealth
The second person has gone through testing to.especially during the period of investing with market crash and reaps the reward for Maintaining discipline and patience the characteristics required for an investor.

Given below is the performance of  some funds on the last 9 years from April 1 2007 to April 2016.

This period has been considered to take into effect the global crisis and market crash of 2008.  Most of the large cap / diversified funds have given 12 % CAGR on an average and given below are some of the out performers.

You will also note that the tax saving schme of Birla, the effective return is 20.73% considering that you invest only 700 and not 1000 as you get 30% tax savings.

Inline images 1

Remember this.

A Trader counts profits in Rs. Say 2000 or 5000

An Investor counts profits in percentage (%)  25 % or 75% 

A wealth creator counts profits in multiples like 2x 5x or 10x. 

Decide who you are and invest to your style. 

The Guru ji is your advisor and you Decide which type of investor you want to be

Thanks & regards


ckar.vsv@gmail.comimage (2)

Inertia & Investing


I thought of writing about this and this is based on my experience and observation.

Let us understand Inertia

Various meanings of Inertia

1. the state of being inert; disinclination to move or act

2. (General Physics)physics

a. the tendency of a body to preserve its state of rest or uniform motion unless acted upon by an external force
b. an analogous property of other physical quantities that resist change: thermal inertia
3. a tendency to do nothing or to remain unchanged.
Primarily it is 1. To maintain status quo without doing anything. 2. Delaying 3. To act only when influenced externally.
Many people come with a good intention of investing and creating wealth to achieve their various goals.  They discuss in detail and are charged up so much they decide to invest immediately.  They go back and then the inertia acts.
The reason could be various
1. The goals are not serious.
2. Maybe laziness to start and complete the formalities required.
3. lack of understanding and confidence in getting it started.
How they react
1. They are influenced by their peers. Friends. colleagues and very rarely relatives.
2. They hear success stories of their peers and follow them blindly
3. One of the important reasons is that I” have time and I can start later.”
What is the effect of inertia in Investing?
a. The early you start, you get to make more money. Even if you increase your contribution more. later, the corpus could be lower.
Read this article and know how delayed investing could be costly for you
delayed investing
b. Every one is confident of living more than 70 years and how many of them plan for their requirements in case they live longer
c. Earlier it was 20 – 40 -10 and now it is 25-25-25.
Earlier you could land in a job at 20, work for 40 years and live may be 10 years post retirement.
Now Many people study till 25 and work only till 50, another 25 years but have to survive for the next 25 years.
You require more qualifications for employment, you become unemployable after 50 except in exceptional cases and longevity in life means  a Boon and a Bane.  Bane if you have not planned & Boon if you have done your home work well.
So what are you waiting for. Over come the inertia. Take that interest and start investing at the earliest. It is a T25 game now. Play it well and be successful.
I am available to help you plan and build a portfolio.  Do contact me.
ckar.vsv@gmail. com

Rate cut by RBI and Sensex


As widely expected, RBi cut the repo rates ( interest rates) from 6.75% to 6.5% and with this the total reduction in the last 15 months starting January 2015 is 150 basis points or 1.5%
However the market has behaved slightly different to the rate cut by a decline in sensex of 516 points on 2nd April 2016.
Just wanted to share how the sensex has moved for each of the rate cuts since last January which is below
Inline images 1
Not all rate cuts have been received positively by the market
Market is expecting beyond the rate cut.
If you do a correlation and regression analysis based on the set of data available you will see that the correlation coefficient is – 0.74 which means the market is correlated inversely with respect to the rate cut.
The market goes down with the rate cut!
What are the reasons for this?
a. There is pick up in urban consumption but the consumption is not so good in rural areas
b. The rural economy is dependent on Monsoon and with two consecutive years of failure the demand has slowed down.
c. The expectations that the results of the quarter ending March 16 for various companies is expected to be muted or not very good.
d. Worried global economy and slow growth projected.
While there are many other reasons, the above predominant reasons, are having a negative sentiment and leading to a negative correlations.
What we as investors should know and be doing?
There are signs that the growth is picking up Read by clicking on this link
Are we at the inflection point?  Read this.
These things only are indications that good things are yet to come and may be around the corner. Stay invested and
One of the easy ways is to start a SIP.
Keep this quote always in mind
Investors want to do today, what they should have done yesterday – Larry summers
We all have felt like this.
To start your SIP today, do contact me

Coke, Pizzas, Pollution & stress make Hospitals an Investment option


Greetings on the new financial year. On this new financial year starting, we can look at a new sector which is normally overlooked.
Hospitals in India.
The spending of government on health care is not raising higher and is way below the developed countries. In developed countries, the allocation is around 10% of GDP and in India this year it is just 1.3% which is less than 40 k crores.
Some of the factors which will see growth in revenues in Health care are:
a. The medical tourism in India is likely to touch $8 billion or around 5500 crores by 2020
b. The life span of the individuals in increased and has gone up by 8 years in the last 35 years from 65 to 73 years.
this can be considered as boon or a Bane. A bane for people who are sick and need to spend more on health care.
c. There are lot of lifestyle diseases which are now affecting the youngsters including depression
d. Addiction to drugs, tobacco, alcohol are only adding to the problems.
e. There is so much of pollution around us, in water, air, food we eat which does affect our body.
f. New viruses which keep surprising everyone like Zika, Ebola etc
g. You also have the medical inflation around 12% for the last 5 years, This means you treatment cost will go up 10 times in the next 20 years.
95% of the people die due to some illness and undergo treatment.
Therefore, there is strong case for the revenue of the hospitals to grow.
DO we know how much it costs to build a hospital?
The current estimated  cost to build a hospital is 40 to 50 lacs per bed.  This means it requires 100 crores to build a hospital of 200 beds. If we calculate the interest the pay back period will be more than 10 years, depending upon, how much the hospitals charge. 
This is big entry barrier for setting up  a hospital. Though there are small hospitals who cater like kirana stores, we must focus on big hospitals as investors. 
Now which are the hospitals which are listed in India 
Inline images 1
Of this we see nationally there are four with good market cap and of the four two are recent issues.
You can consider Apollo Hospitals and Fortis. But understand the performance, Management of these stocks before investing.
This is new sector with a high growth prospectus and will be everlasting.
Also read the survey on Best HOspitals.
See the out performance of Apollo hosptials vs Fortis.
Please note the first two hospitals AIIMS and CMC vellore are not listed.
Inline images 2
I will be glad to help build your portfolio.
Watch out for this space where you will see how a SIP in Apollo in the 5 years would have made a difference to your portfolio

Thanks & regards


You don’t need a Health Insurance – if and only if ———-


I have been writing about the various aspects of health insurance which briefs about
a.  The medical inflation and the amount one needs to consider for coverage
b. Your cash flow and the possible recovery in case of a claim
c. How it is different from Life insurance
d. I had earlier mentinoed about the features you must consider while taking a health insurance policy.
Now there are few people, who consider not taking a health insurance policy. Therefore I thought of writing under what conditions, you need not take a health insurance.
1.   If you are rich, you don’t need a health insurance.
After all , health insurance is to cover your financial losses. If you are rich enough to pay for the medical expenses that may arise for your family, you don’t need a health insurance.  Industrialist like Birlas, Amabani’s don;t need a health insurance.
How do you check that?
If you can afford 5 crores and your net worth is not pinched then you can be rest assured that you don’t need a health insurance
2. If you are covered under schemes like CGHS, you need not take health insurance.
CGHS is a scheme of the central government which provides health care for central government employees even after retirement. If you are covered under this you can opt not to take health insurance.
However please keep in mind that you will have to undergo treatment only in designated hospitals and you cannot choose the hospitals for treatment.
3. If you are working in a company, with no retirement, and if the company takes care of all your expenses for medical treatment.
You can be director on board
4. If you are among the 5% of the people who die unnaturally in India
There are approximately 730 people who die for every one lakh people and this works out to approximately 90 lacs death in a year.
Of this only 5 lacs ( approximately ) die due to unnatural deaths.
1.28 lacs due to suicide
1.8 lacs due to road accidents
19 710 due to fire accidents
3,650 in prisons
others in Rail, Air and stampedes etc
Most of these unnatural deaths are instantaneous and hence no hospitalisation is involved.
If you are not covered in any of the above four categories, you must seriously consider taking a health insurance policy which will ensure
a. Quality of treatement
b. Minimise financial losses
c. Reduce your liabilities due to less or no borrowings.
It is better to borrow and pay the premium than to borrow for the treatment which is very costly and may not be affordable.
As usual I am there to help you choose the right policy and cover for you and your family

Medical Inflation – What you should know


Many of you may have a good health insurance.  For those who have and for those who don’t have, I would like the share the following information.
We all know that the average inflation is around 8% and sometimes it is higher and in the last one year or so, it is lower than 8 and is around 6%
While the inflation is at these levels, we still feel the pinch when it comes to funding the education of our children or medical inflation. I enclose with this a chart on medical inflation for the last five years.
The average medical inflation for the last five years is around 12.5% to 13%.  What does this mean to you?
Inline images 1
Let us assume that a heart bypass surgery cost 3 lacs today. At 12.5% inflation year on year, this will cost you 30 lacs in 20 years.
Even if the inflation is 10% it will cost you 20 lacs.
If you are 40 years of age and have a coverage of 5 lacs, this may be grossly inadequate when you really need it after 60, in case you need it.
If adequate cover is not taken, at 30 L medical cost, even if your policy gets 5 lacs bonus and you can cover 10 lacs, you have to find sources for 20 lacs and lose your savings and sell your assets.
Have the right medical insurance Policy
Have right amount of coverage
Have the right benefits in the policy.
As usual, I am there to help you find one.
Varadharajan VS

Cash flow – Health insurance.


Many people are not clear about the concept of Insurance.  They consider the payment of premium as a wasteful exercise and drains their financial resources.
Even educated people and successful entrepreneurs also question, why one should continue  health insurance when there has been no claim made say in the last few years.
I would like to highlight a few points here, which help people understand the importance of having a health insuranace.
a.  Insurance is a concept which helps reduces one’s financial losses. It does not help you profit from it.
b. This means one should  not expect to get return on the premiums paid or return of the premiums paid.
c. The premium is based on the probability of the incident happening and hence the higher the probability of the occurence, the premium will be higher.
d. One should not decide on any insurance policy based on the premium paid. It is like deciding to buy a house, based on registration charges
e. Insurance is a concept where losses  of one are shared by all the policy holders. Therefore the question of profit does not arise.
Now having said this, let us understand the cash flow situation. Let us consider two scenarios one with a family and as single holder.
1.  Mr. X taking the health insurance policy as an individual
2. Mr. X is taking the health insurance as a family floater with spouse and two children.
3. Sum assured is 5 lacs
4. Age of the oldest member of the family is 40.
The policy that is considered is a simple policy which has,
a. no room rent limits
b. No sub limits on the diseases.
c. No claim bonus is available
d. Life long renewability
Cash out flow for the next 25 years.
scenario one as Individual Rs 3,55 lacs
Scenario two as family floater Rs. 6.23 lacs.
One hospitalisation in the next 25 years, could easily recover the payouts.
Inline images 1
Advantages are
1.  The effective pay out is only 2.55 and 4.45 acs assuming that he is in the 30% tax category.
2. It is also assumed that the limit may be increased beyond the current 25 K at least after 10 years.
3. One need not compromise on the quality of treatment as they can go to good hospital.
4. Peace of MInd.
5. You do not have to sell your asssets or lose your savings.
As you will see over the years, it would only benefit the policy holder and hence, without any delay have an adequate cover and ensure that your hard earned money stays with you.
Before your choose a policy, check with me.
Vardharajan VS

Nice story I read. You will like it too

I read this just now and thought if sharing it with you hot hot.

Indrani wife of Lord Indra had a pet parrot which was nearing its end. However Indrani was not wanting it to die and asked Indra to save the parrot from Death. Indra thought of Brahma the creator and requests to save the parrot. Brahma says my job is to create and protecting is not my job. It is taken care by Lord Vishnu.
They both meet Vishnu and seek his help. But Lord Vishnu says that though his role is to protect the parrot is at the fag end of its life and Siva takes care of destroying life and we shall go to him.

Siva on hearing the details says this job is delegated to Yama and he only can save the parrot and all the four Indra Brahma Vishnu Siva meet Yama. On seeing his bosses Yama is shivering and gets to know the purpose of their visit.

He then explains the process he follows which is foolproof and well documented.  And the process is as below. This process  is approved by SEBI AMFI RBI and exchanges.

Every life’s fate is decided and when he should act is also decided.
The event of occurrence is written in a label and is hanging in a room
That room has the labels of every life
When the incidence happens automatically the label falls down.
All he has to do is pick up the label and act
But he says that there is one way they can save the parrot.
That is go Into the room and take the label of the parrot and change the way the want.
All of them agree and all of them enter the room

As they enter the room they see a label falling down.
Yama picks up the label and to every one’s surprise he notices that it is of the parrot and hence the parrot dies.

Now knowing the parrot has died they were anxious to know what was written on the label.

It was written

The moment Indra Brahma Vishnu Siva &Yama enter this room the parrot will die and it so happened.

This is precisely happening in the market today
When FII are bullish and investing more
When fund houses are bullish on The markets and come with more NFOs that too with closed ended schemes
When the advisors / distributors go all out to sell and increase their AUM and Payout
When Media is Gung  Ho of the market and have more analyst talk the same on their shows
When. More IPOs come and gets over subscribed and listing  gains are huge
And finally line Yama the retail investors enter the room (market) that is the time the market collapses like the parrot.

When the market collapses the retail investor loses the money … the parrot.

Sometimes you feel you are better of not entering the room you could have saved the parrot.

I saw this analogy and thought of sharing

varadharajan VS


Michael Phelps, Usain Bolt & your portfolio


I am sure you are familiar with Michael Phelps – One of the best swimmers and Usain Bolt – the fastest man on earth today.
Did you ever consider linking the features of your portfolio of investments to some thing these great athletes have and do in common
If you don’t know, read on.
Athletes like Phelps and Bolt train very hard to to run a race which lasts few seconds and the race is over even before you close your eyes.
Food intake.
They generally have 7 meals a day
Consume 12000 calories a day
It generally has 60% carbs ( carbo hydrates ) 30% proteins and 10% Fat
They train hard every day at least 6 to 8 hours.
The spend 15 calories a min they train and
When the run the race they spend as much 100 to 150 calories a minute. Ten times the amount the burn while the train.
The invest their time, accumulate calories and spend or burn them when necessary.
see the ratio of food intake 60 :30:10
Now review your portfolio
It is generally recommended that you have
60% in Equity 30% in Debt and 10% in commodities like gold. 
However this could vary with age, risk tolerance etc.
You need to invest your money and wait for the right time to use it when required.
You should be able to plan the exit with your need based on goal.
If you dont get the money at the right time, it is not of use.
Portfolio construction is important and time consuming and boring as well.
Review your portfolio and I am available to help you build a portfolio based on your need.
You sure can become a Usain Bolt – at least on your finances.
Good luck
Please do contact me for any clarifications and assistance
varadharajan vs

Health Insurance Vs Life Insurance.


There are many life insurance policies which not only offer life cover, but also provide basic health cover in some cases, In some cases, they offer critical illness.
The reverse is not there as health insurance policies do not offer life cover.
Many people have asked me what is the difference and what one should have.
I have tried to capture some of the differences between a standard health insurance policy and a standard life insurance policy.
Since these two are having different objectives, it is essential that a family have a good health insurance policy in addition to the life insurance insurance policy for the bread winner.
In case you need any additional information or clarification, please feel free to contact me.
Inline images 1
In case you need any further information or clarifications, please feel free to contact me.
varadharajan VS

Pollution –Control –Regulations –Opportunities- Stocks to watch


This mail is a little longer. Have the patience to read. Or jump to opportunities.

I thought of touching this topic of Pollution which made heal lines for almost a fortnight in the last week of 2015 & first week of 2016.
I refer to the NGT ( national green tribunal) order banning registration of diesel vehicles over 2litres capacity.
This was also followed up with the trial of Odd Even scheme in a measure to control pollution.
The air pollution is a serious issue and it is affecting the lives of all citizens leading to various diseases including cancer, silicosis etc.
Click on this to read more on air pollution.
The regulator and the government and juidiciary are taking efforts and actions to improve the quality of air we breathe. Some ot the actions planned.
a. To take off the road, vehicles which are more than 15 years old.
b. Stop registering  higher capacity vehicles especially in Diesel, which are one of the causes for pollution.
c. Government, both the state and central governments, to take off the road, vehicles which are more than 5 years old.
d. Speed up the advanced Euro 4 verison of the fuel, which is emanate less poisonous or hazardous gases from the exhaust.
e. REduce the Carbon black content in tyres which cause pollution.
Given below are the approximate figures of vehicles which will  be afftected
Inline images 1
1. Implement ODD EVEN schemes which will forcibly reduce the vehicles on road daily.
2. Remove older vehicles.
3. Incentives for manufacturers, refiners, users to know and adhere on the regulations.
4. Provide alternate fuels in good supply to avoid shortage.
Other causes for Pollution
a.  Power plants which use Coal extensively
b. Refrigerants especially in refrigerators and air conditioners.
c. Disposal of waste by burning tyre and plastics.
d, Carbon black in Tyres.
If these were to be implemented there will great opportunities that will be Available to investors.  I list below few of them.
1. With the ban of old vehicles there will be replacement of cars taking place and hence the sale of new cars would increase.
Companies that would benefit would be Maruti , Honda, Hyundai . Mahindra  only Maruti and Mahindra are listed.
2. With the ban of heavy vehicles like buses and trucks, the sale of heavy vehicles will increase.
Tata motors, Ashok leyland & Eichers.
 All three are listed. However companies like Eicher Volvo. Mercedes could be new entrants.
3. With the commercial vehicle sales improving, ancillary sales will also pick up.
4. However Tyre companies will face challenge from import of tyres from China
5. This will also encourage CNG buses and vehicles and hence GAs distribution companies like Indraprastha GAs, Gujarat Gas and GSPL will stand to benefit.
6. Vehicles run on alternate fuels like battery solar are very nascent and we need to keep watch on this area of development.
7. This may also lead to aggregators growing there business and if listed, can be an opportunity.  Like Uber /ola etc.
Stocks to focus on buying
a. Maruti
b. Ashok Leyland
c. Tata Motors
d. Wabco
e. Bosch
f. Ramakrishna forgings
g. Mayur Uniquoters
Gujarat GAs
Indraprastha GAs
There will be many more beneficiaries
If interested to know more, please do contact me
varadharajan vs

Consider this company – Hexaware Technologies


Hexaware Profit Jumps 30% to Rs 112 cr in Jul-Sept

Sometime back I had forwarded this mail.  This company Hexaware technologies has delivered a good set of quarterly earnings and hence this mail, again for you to consider investing in this company.  I enclose the article which came in ET yesterday in connection with this.
IN case you need any clarification, please feel free to contact me.

Thanks & regards



Sovereign Gold Bond – SGB


Recently the Prime Minister launched three schemes related to GOLD and they are as follows.
a. Sovereign Gold Coin
b. Sovereign Gold Bond scheme and
c. Gold monetisation Scheme
Let us try to understand the Sovereign Gold Bond scheme. (SGB)
a. This is ideal for those, who want to allocate some % of investments in Gold.
b. One can have around 5- 10% of their assets in Gold.
c. SGB facilitates this on a paperless mode and on a convenient mode.
d. One can currently invest a minimum of 2 gm and a maximum of 500gm.
e. KYC norms apply.
f. If you buy 10 gm at 2684, ie the price on application, the total investment comes to 26840
g. You earn an interest of 2.75% per annum on 26840 ie.  Rs 738. However this interest is taxable. Even if you are on a high tax slab, you still earn 2% tax free ie 536.
Now the question is Should one invest or buy these bonds.
a.  You can consider investing in this bonds with the following assumptions and conditions.
a.  The average return of Gold in the last 20 years has been 8.5% per annum and compounded annually.
b. This is a debt scheme and capital gains apply. However over a long period of tenure, the return can be assumed to be tax free due to indexation.
c. Now that you are getting an additional interest of 2.75% making the annualised return as 11.25% and even for high slab tax payers this works out to 10.5%
d. In addition to this, you save around 0.5%, charges one may pay for the lockers. It is assumed that one currently pays Rs 3000 per annum for a locker of 5×3 and this is likely to increase every year.
e. In addition, you can save on insurance premium etc.
One can technically get a double digit return, which is likely to be higher than the FD returns.
It is unlikely that we will be seeing higher FD interest regime if the policy makers  continue on the same path as of now.
However, It is possible that Gold may remain flat or may trade lower depending upon various factors and one needs to be appraised of this.
Please note that if Gold were to appreciate over 8% annually in the next 8 years it will be trading above 5000 per gram.
If interested do contact me.

Consider this company – Hexaware Technologies.


If you are building a portfolio, you can consider this company Hexaware Technologies, which is a mid cap IT and BPO company located in Navi Mumbai.
Established in 1990
This is a debt free company with an equity of 60 crores and reserves of  977 crores with a netwoth of 1037 crores and the book value is Rs 34.
The company declared a bonus is Feb 2011 and since then the stock has risen approximately 5 times in the last four years.
This company has a ROCE ( return on capital employed ) at 33 and is trading at a PE of 23 and on par with industry PE
This is one of the companies which is expected to announce good margins this quarter. Read article in ET today.
This is also one of the 26 stocks which I have been recommending. For your information.
Please do contact me if you need any clarifications.

Planning to buy a Car?

Hi every one. I had sent this mail more than a year back and thought of sending this again.

What has changed in the last one year.

  1. Aggregator  like OLA, UBER have established themselves and we can now option to hire car for a point to point drop.
  1. More vehicles on the road and hence more traffic and chaos.
  1. More pollution and more mental stress.
  1. Mr. Anand Mahindra’s Speech during the launch of the new vehicle, prompted me to refresh this mail.

Read this again and decide before buying the car.

Simple Guideline you can use.   This is generic and may or may not apply to every one.

  1. Monthly distance travelled ———————— Option sugested
  1. Less than 400km                                 —-    Use Ola / Uber or any other as applicable.
  1.  400- 700 Km                                        —   Self driven , Petrol Vehicle  /  hire Cab

More than 700km ————————————Chauffeur driven diesel vehicle. / Hire cab

You can also consider Cab services for  2 and 3 and also for out station trips.

Please note that this is for people who want to have cost control.  This does not apply to people who are rich or who can afford the expenses. 

Are you planning to buy a car in the near future.   Just go through this mail and make an informed decision.

Alternative to buying a car is hiring one.  I have made a comparison of buying vs hiring

I have given the workings below

I have made the working for a particular car  as an example and can be used for other cars as well .

I have chosen, the new Honda Mobilio with a very good mileage of 24 kmpl.  I have assumed this theoretical mileage in my calculation, even though in practice, the mileage would be less than this

When we buy a car, we incur,

  1. Cost of capital
  2. Registration charges and these two are one time
  3. Insurance charges year on year, though it may come down due to no claim bonuses . It is assumed that you don’t have an accident.
  4. You engage a driver and use it so that, you are rid of tension and use thetime to commuting work productively.
  5. The driver charges are assumed to increase 10% year on year
  6. It is also assumed that the petrol prices remain the same for the next three years.
  7. Depreciation at 10% using straight line method is calculated
  8. That there are two scenarios.  One, it is bought and used only in a personal capacity. Two bought for the organization and used for the organization and you claim,  tax benefits.

While working out on the alternative of hiring a car, the following assumption are made

  1. The current rate of Innova @ RS 16 per km is assumed. Since it wont be point to point, I have added another 50% for waiting and other parameters so that it becomes a meaningful comparison.
  2. The charges of hiring a car, increases @ 10%  per km every year.
  3. Since it is a hired car, there is no insurance charges, maintenance charges, depreciation benefits etc.

It is also further assumed that

  1. In the alternative option of hiring, the cost of capital equivalent to the cost of the car, is invested in a fixed deposit at 9% per annum interest rate.
  2. This is positive cash flow and is set off against the expenses

If the car is used for 3 years and disposed off,  the total cash out flow is 6.38 lacs

Disadvantages of hiring a car:

  1. You need to sometimes wait for the car to come. Not if you hire from Anil Agarwal.
  2. You have to plan  a little bit.
  3. You cannot indulge in any activity at the time and moment you want.
  4. The driver could be a problem for you and spoil your party.

Advantages of hiring a car

  1. You could get to travel in new cars and literally in different cars every day.
  2. No dent, no scratches etc

Guidelines for making a choice.

  1. If you are not driving in your car, for more than one hour a day,
  2. If you don’t use the car for more than 500 km a month

Then the question is when should I buy a car?

You can buy a car, when you have

  1. When you have too much money and just not worried about this.
  2. If you want to make a style statement
  3. If you feel your image in the eyes of the society, friends etc., is dimished
  4. You are a lover of cars and enjoy using them.

Summary –

Automobile is a depreciating asset and invest in this class of asset carefully

If I have missed out anything, give me your feedback, so that I can correct this.



Hiriing a car
Honda Mobilio
model E-i-VTEC NA
Price 680000 NA
Rto & Ins 102000 NA
total cost 782000 NA
Mileage 24 kmpl NA
Monthly run in KM 750
Driver Salary in Rs. Per month 8000
owning a car hiring a car
3 years
Total km in a year 9000 9000 9000 27000 int @9% on capital 70380 70380 70380 140760
petrol consumption 375 375 375 1125 Charges paid to taxi
cost of petrol / lit 75 75 75 225 at Rs 24 / km 216000 237600 261360 477360
Fuel cost 28125 28125 28125 84375
Driver  salary 96000 105600 116160 317760
Depreciation @10% 78200 78200 78200 234600
Maintenace Yr 1 5000 7500 7500 20000
insurance 19000 17000 36000
total expenses in 1 year 207325 238425 246985 692735 total expenses 145620 167220 190980 336600
Disposal of car after 3 years.
sale price of car 500000
Net cash out flow 974735 336600

Be on Top of the wave – ride the oscillations – Surf it – SIP it.


As you watch the waves, you see them oscillate up and down. If you  had noticed the movement of the waves, some of them reach the shore and some don’t

If you are on TOP of the wave, you will ride the wave and go through the oscillations but sure you will reach the shore.

Not if you peep in and go into the wave and you will be sucked in.

While investing, with a Goal, which is the shore, you will go through lot of volatility of the markets. One of the ways to reach your Goal is riding the oscillations and not getting sucked into it.

The Best way to do this is by SIP.   Systematic INvestment plans, help you ride the oscillations and they are meant for it and buy more when the markets are low and buy less when the markets are high. Meant for all seasons be it Calm or Storm.

What you should do?

Continue the SIPs you are investing in and do not break or stop it.

If you don’t have a SIP start one.

SIPs should be at least for a period of 5 years.

You can even buy direct stocks ( shares of individual companies) in systematic mode.

Just do it.

It is not the markets which make you rich. It is how you react to the ups and downs decides it.

For details do contact me.

If interested follow me on twitter @RAJAN_VSV

Varadharajan VS



Tax Free Bonds – An Alternative to FD – Who should buy this?


In the next few months, it is going to rain Tax Free bonds to the tune of 40000 crores.   Know what is in it for you–

a.  What are tax free bonds?

Tax free bonds are debt instruments issues by Public Sector Enterprises , who are authorised to issue bonds to customers to raise capital for their expenses / working capital?

b. What is the duration of these bonds?

These come with duration of 10, 15 and 20 years.  That is if you buy a bond with a maturity of 20 years, you will get your capital after 20 years.

c. What is the rate of interest?

These come with interest rates as desired by the companies and  it is expected to be in the range of 7.25 to 7.35% per annum.

d. What is the credit risk? or risk to the capital?

These are bonds issued by public sector enterprises and have crisil rating of AAA which means they are very stable. These are backed by the government of  India as the Government is the majority stake holder in these companies.

e. Who can apply?

Any resident individual or HUF and corporates can apply.

f. What is the minimum amount?

The minimum amount would be Rs 5000. Normally these bond come with a face value of RS 1000 each and this can vary based on the issue.

g This should be bought in physical form or Demat form?

One has the option to buy in any form they desire to buy. However there is a difference one should know.

In physical form, an investor will continue to get the interest annually. However this cannot be sold in between. Capital will be returned on Maturity based on duration.

h.  Can I surrender this or sell this before Maturity?

This cannot be surrendered before maturity. However if one wants to sell before maturity, this can be sold in the BSE (Bombay Stock Exchange) trading platform, through an authorised broker.

IN order to do this, you must have a demat account.

i. How will the interest be paid?

The interest will be paid to the bank account opted by the customer in the application through electronic transfer.

j. Is this a good time to buy these bonds? Who should buy these bonds.

This is an ideal investment vehicle for investors, who want safety and assured returns without loss of capital.  Many of these investors invest in FDs in bank.

With the interest rate coming down as the RBI is reducing the interest rates, there is a reinvestment risk.

Reinvestment risk, is that when you reinvest the FDs you do not get the same interest as the previous period but lower than that. This is called reinvestment risk

The tax free bonds have the same rate of interest and hence it has no capital risk or reinvestment risk.

Especially retired persons, who seek, regular cash flows with least risk can opt for this.

Also others as a diversification in asset allocation can have this in their portfolio.

k. What will be the rate of these bonds if I were to sell this in between maturity say two or three years later?

The bonds will be traded on the stock exchange and the bond prices will vary from the face value. Depending upon the interest rate outlook, the bond prices may be higher or lower.

For example, the bonds issued in 2013 are trading at a premium of 20% ie. a 1000 face value bond is now available at 1200. So an investor who has bought this two years back, would have got 2×8.5% plus 20% if he sells it today.

l. Is there capital gains tax, if sold later?

In the example given above, on 20% a 10% capital gains is charges if sold after one year. ie you pay 2% tax. However if you sell before one year, the entire gains is added to your income and taxed as per your income slab.

g. What is the scope for appreciation or capital gains in the short term?

As long as the interest rates are downward biased the bond prices will be higher. with the next one to two years, we are expecting more rate cuts there is a high probability of capital gains.

However if the interest rates were to raise, it is possible that the bond prices may be sold even below face value of RS 1000.


It is recommended for the customer cited above that this could be a good option and a very good alternative to FD at the least for the next 2 to 3 years.

For details do contact me



Volatility & Risk – What you don’t see is what you don’t get

Hi everyone.

I write this to you after a week of heavy turmoil and action in the markets Globally and in India.  Needless to mention that the markets globally tanked 5 to 8% on the so called ” Black Monday”. the 24th August 2015.

This only led to markets rising and falling again to attain some semblance at the end of the week, though most of the markets ending August in Red.

The Indian markets have been so volatile that the a movement of BSE index 300 to 500 is common these days.

Many of you are investors and have invested for long time wealth creation. The thought that comes to every one’s mind is,

a. Have I chosen the right investment vehicle

b. Is my timing of investments right.

c. What should I do? Stay invested, Add more or redeem everything.

But let us understand Risk  & Volatility.

Risk has to be viewed with a time frame. A ‘risk’ in the short term need not be risk in the long term

If you see historic data, the markets world over especially the equity markets have been rising in a time frame of 10 years /20 years.  IN the long run, the investments only grow and  there is little risk.

On the other hand, what we witness is volatility.  This is a short term phenomena and is more on technical. These variations are wide, large and but of short duration. What we are witnessing is short term volatility.

More risk is there when the market is volatile and as mentioned it is in the short term.

Don’t mix Volatility and Risk and if you do, you will exit the market at the wrong time and miss an opportunity to create wealth

There are four reasons why you should ignore volatility and stay invested

a. Inflation in India is very low and is sustained below 5 % and hence favourable. This compares with the deflation prevalent in many other countries and hence advantageous.

b. Being a consumption led country, the global earthquakes of China, Greece are withstood effectively.

c. With fairly strong macros of Fiscal Deficit,, Current account deficit ( on account of crude and commodity prices), and high reserves, currency wars by countries devaluing there currencies like Yuan, are being absorbed.

d. Though not visible and seen, there are activities taken by the government which will yield results in the next two to three years.

While investing, people follow the principle, WYSIWYG ( What you see is what you get)

For a smar investor it is WYDSIWYDG ( What you don’s see is what you don’t get)

Be a smart investor.

Take a look at the stocks I have circulated earlier and some of them are available at attractive prices.

Do contact me for any clarification.

An update on the markets and way forward


The Indian stock markets are behaving exactly the way markets do and the sensex  is now around 27 811 after going down to 26425 which was around 12% down after hitting an all time high of 30,000. There are lot of things happening around us, both economically and politically. In this situation, what should one be doing.  I would like to highlight the fear factors which are looming at large.
a. The fear of interest rate hike by US authorities (FED) is a Domicile’s sword and markets are reacting to every news around this. It is expected that the markets would come down if the FED increases the rates, on FIIs move their capital invested in emerging markets, including India.
b. Greece is another worry as default on payments is staring at them and the talks between the lenders and the Government is inconclusive. There is a remote possibility of Greece exit. This is another fear in the market which may bring the downfall of the market especially in India.
c. The People’s Bank of China has reduced the interest rates of lending to 4.85% ( by 25 basis points and the deposit rates to 2% as the economy is slumping to its lowest growth in 7 years.  This move is to attract more capital and increase consumption in the country.
d. Though RBI has reduced the interest rates thrice this year so far, the translation has not been satisfactory and the bank credit growth is yet to take off. Also the cost of deposit is a big challenge to the banks, as they have now post office instruments giving better interest rates than banks. As a result, cost of funds is increasing to the banks.
e. Though Monsoon has played well so far in this month, its travel in the next month is anticipated to note the pick up of demand in rural India.
f. RBI Governor, has been cautioning the world around the monetary policies adopted by central banks world over and a fear of a depression like the 1930s.  This is a deterrent to a positive sentiment
g. The expectations of a future rate cuts this are doubtful and is largely dependent on the inflation trajectory and Monsoon spread.
h. The expectations of Modi’s government has met a reality bump in the eyes of the investors and general public
i. The ability of the government to pass important bills is raising concerns and especially the GST bill and Land Acquisition bill, in the Rajya sabha is a concern.
j. The recent political storms involving Sushma, Vasundra Raje, LK ADvani, RAj Purohit has landed BJP in big trouble and the ensuing Monsoon session is expected to stormy and is sure to put the BJP on the back foot. This will be making the progress of the Monsoon session stormy and the passage of the bills a questionable one.
k. The recent reports published by RBI indicates that the NPAs ( Non performng assets, bad loans) are not like to come down, but will be current levels and will raise higher for Public sector banks.  These bad loans do not account for the restructured load and technically the bad loans are higher.
Is this is all negative? Should one stay away from the market?
There are more positives to the list cited above and they are
a.  The IIP ( index for industrial production is up and indicates that manufacturing is slowly increasing.  A positive news for the economy and reduction in unemployment.
b. The advance tax paid by the companies  SBI, Relaince and host of private banks is more for quarter ended June 15.  This is an indication, that the profitability is improving
c. The direct tax collections is up in the first two months of this fiscal and is a good news.  This is will be a good news for fiscal deficit management where the target this year is 3.9% of GDP
d. The Monsoon has been above normal so far and has advanced to the north and keeping its date which is very good news.
e. RBI after making the last interest rate cut, had indicated that the future cuts depends on the government action to Monsoon shortfall, if any, the trajectory of inflation. However the REpo rate is comfortably above inflation more than 1 to 1.5% and hence there is scope of further reduction at least 25 basis points this fiscal. This has been supported by Research Agencies like Barclays and CLSA
d. The fear of Greece exit is unlikely to affect the Indian economy as the trade with the country is negligible and also the impact of Greece as a Global economy is unlikely to affect globally. ALso it is to be noted in the age of high inflation in Greece, there is hardly any demand currently. Only thing that can happen is good for global if Greece recovers and the demand is unlikely to Go down much from the current levels.
e, RBI has been building a reasonable buffer of Forex and is at an all time high of over 360 billion. This has been consciously done to absorb the shock of hike in FED interest fall out.
f. Though NPAs are a big concern, this is a reality and hence to choose right stocks is an important one at this point of time.
g. The Government is now increasing its spending as per the announcements. Railways pumping more money. Many NHAI projects ( Road projects) are being cleared. Even LIC is supporting governments initiatives in this regard.
h. The government is going ahead with its Divestment strategy and is likely to reach the target.
i. The price of Crude is under control and is unlikely to cross 70 US dollars and hence to that extent inflation is expected to be under control.
j. The worry on inflation could be due to Monsoon shortfall. Please remember that in Feb- March 2015, when the crops where affected due to unseasonal rains, the Government managed the supply side very well and contained the inflation very well. Otherwise one upward spiral could have happened on inflation much earlier.
k. The political storm involving BJP leaders is bound to make noise and I am sure, the Government would over come this.
l. Most importantly, the reecent survey shows that India is a favoured destination for investment and all the recent investor meets have suggested investors are bullish on India with a time horizon of 3 to 5 years.
Also note that every fall has ensured that the markets have risen up and surpassed the previous highs. The Fall in 2008 from 21000 to 8000 has only made it to rise up again and cross 30k.
What you should do?
Identify good potential stocks.
Accumulate at every dip.
Have a time horizon of 3 to 5 years.
with the tightening on nooze around black money, the real estate is in trouble.
With Government allowing trusts and EPFOs to invest in stock markets
The market is bound to go up.  Stay invested and reap rich dividends.
I enclose with this list to stocks, which you may consider.
For any clarifications, please feel free to contact me

Are you obsessed with Gold?

Gold, as all of us know, the most preferred purchase everyone makes at the first given opportunity. We have many reasons to buy Gold and in my opinion it can be grouped in any one of the four.

G —– Growth of your money , savings & investment in value over a period of time.
This also gives your Glamour and a status in the society. At least it is perceived so.

O. — Own it. More than that possess it. Ornament- Use it an ornament and wear it. Flaunt it.

L — Leverage with Loans. At times of emergency right from the poor to the rich, this is an asset class one gets loan against securitisation of this asset easily. NO additional security is required.

D. Dispose this when you don’t need this asset and encash this.

There would be very few families who do not own GOLD, In our eagerness and enthusiasm we make emotional decisions and purchases of GOLD and Not a rational one.

Pause for a moment.

If you had purchased Gold in 2010, the rate of Gold in INR per gram was 1780 and today it is 2484 and Congratulate yourself. You have got a return of 40% in 5 years which is an absolute return and If you had bought this 10 years back, when it was around 600, you have got yourself a 300% return.

There are many Jewellery companies and Trading companies which deal in precious metals more importantly Gold. To name a few

. Ganesh Jewellery

Titan Industries

Tribhovandas Bhimji Zaveri or TBZ as it is popularly know.

Rajesh Exports.   These are listed in the stock exchanges for over five years. Other companies like Thangamayil Jewellery, PC Jewellers etc have recently listed in the stock exchanges.

If only one had changed their obsession from Gold to companies which are selling jewellery or trading, one would have made more money.

Look at this,

Titan – From 4 Jan 2005 when it was trading at 9.80 today it is trading at 353 and you have got 3800% ie 38 times return

You have got 350% return in the last five years from jan 2010 when it was 76.

Similarly Rajesh exports has gone from 10 to 242 in the last 10 years and 92 to 242– 170% return

Thangamayil Jewellery from 62 to 195 in five years.

From the above if you had bought companies of jewellers or traders in precious metals, you have gained much more than buying GOLD.

These shares,

Grow in value

You own the company to the extent of shares you have

You can get loan against shares

Dispose and get the payment in three working days.

Think of options and better ways to create wealth. Do send in your views and do contact me.



Are you investing in Fixed Deposits and renewing every year? There is an alternative and tax efficient too.

. Are you the one who is looking for safe havens and not the ones to take risk and lose capital.

The first option that comes to your mind is FD. There not so good news for investors in FD.

The Biggest PSU Bank SBI has reduced the interest rates in FDs recently and this has been followed by banks such as Punjab National Bank and others are following soon.

Why this is happening?

  • RBI has redefined liquidity and banks are now borrowing through term repo rates and the interest on this  is coming down.
  • The credit growth is not taking off. Companies are borrowing outside the banking system through commercial papers which are cheaper.
  • RBI is expected to reduce interest rates as the inflation is softening and this reduction may take place early 2015.
  • There is reinvestment risk, which means when you reinvest the FD or renew the FD, you are likely to get interest lower than what you are getting currently.

If you are the one who is renewing the FDs every year and staying invested in FDs at least for a period of 3 years, read on.

You are likely to get 6- 26% extra tax free return over FD returns.  See the summary table below  

There are options available which protect capital and can give you better tax efficient returns,


The market ie the sensex is at around 26 k and going by the valuation it is around 20 times PE and is much lower than the high valuations we had in 2007.

The prospects for the markets to go by in valuations are high due to the following reasons.

  1. The currently the earning of the sensex companies are at  1585 and is expected to grow at 15% CAGR and is projected at 1800 for FY 17.
  2. This being the case, at current valuations, market could be at least 20% higher and when the valuations catch up, we could see the market at higher value
  3. Also the inflation has peaked and is showing signs of slowing down.
  4. The GDP is projected to improve
  5. With the fiscal consolidation taking place, the interest rates are likely to come down.
  6. This will do good for debt funds, which has moderate duration which can benefit out of the lower yield curve.

Therefore considering the time frame and the requirement,

  1. The lumpsum can be invested in Debt funds, Like dual advantage funds, MIPs etc for which a minimum investment period of 3 years is recommended.
  2. This period is required a. to get indexation benefit and get better tax efficient return b. There is no exit load applicable beyond the 3 year period.
  3. These vehicles invest in both, debt and equity, debt being 75-80% and equity component being 20-25%.
  4. By doing this, generally capital is protected and there is a probability of getting higher returns.
  5. With the market outlook looking positive and debt market expected to do well with anticipated interest rate reduction,  the probability of getting higher returns are quite high.

I give below the year on year return if one had invested in reliane MIP, a debt fund.

Year of investment                         1 yr return           2 yr                         3 yr                         4 yr                              5 fyr

Oct 2009                                               11,615%               12,8%                    25.73                     41,54                 57.98

Oct 2010                                                1.06                     12.65                     19.22                     33.05

Oct 2011                                               2.2                        17.96                     40.55

Oct 2012                                               4.8                          25.64

Oct 2013                                               19

As you will see the return vary for a one year period but is farily stable for a 3 yearperiod and no capital loss has happen

The 5 years return on Rs 10000,  if invested in 2009 is 15,798 (57.98%) and . Using the indexation, which is adjusting the cost of purchase, 161.24 and hene no tax is applicable. If you had invested in FD at 9% interest, you would got, 13,150.

Consider three year return.s

2009 – The amount of Rs 10000 becomes, 12,573 and the cost using indexation is 12,216 and you pay tax on Rs 357 @ 20% . which is Rs 72. Total tax free return is 12,500. Compare this with 11,890

2010 –  11,920 Vs 11890

2011 –  14,055 is the return and cost is 11900 and you pay tax of 430 and net return is 13,625.


tax free return
3yr 4 yr 5 yr
2009 12,501 11,890 6.11 14,154 12,520 16.34 15,798 13,150 26.48
2010 11,920 11,890 0.3 13,305 12,520 7.85
2011 13,625 11,890 17.35


If you are renewing FDs year on year, you can consider these types of fund, which for a period of more than three years can offer capital protection and can offer good return in comparison to FDs in the long run.

Please do contact me for choosing the right vehicle for investment.




Don’t read in between lines. This is what many people tell us so that one understands things clearly.

Are you an Investor?   Then it is important that you read in between the lines in the news paper.

The headlines tell the story and the facts most of the time. How you  Read, understand & take actions is very important.

I give below some of the headlines which appeared in Economic times in the last two days.

What do these point to?

  1. Government’s  borrowing is coming down, which means, control on fiscal deficit.
  2. Fuel subsidies are almost done and  will help consolidate fiscal deficit. Also Thanks to the reducing crude prices
  3. Inflation stabilizing and hence a possible reduction in interest rates expected early 2015.
  4. Consumption picking up as sales of commercial vehicles is just turning around positively.  A first sign of economic recovery
  5. Recruitment, vehicle sales, air travel etc is picking up.
  6. Upgraded GDP forecasts by IMF, World bank etc.
  7. Dollar / Rupee fairly stable and  India will be an exception among emerging markets with respect to dollar appreciation impact.
  8. PRICE of GOLD, Silver & Real Estate are moderately lower and pick up these physical assets likely to be delayed.
  9. Though the sensex is around 26000 to 27000, the market is not expensive and at the current PE valuations, they are still at least 30-40 % cheaper compared to 2007.

Therefore this augurs well for Investment.

Are you scared of Stock Markets –  Don’t worry, invest in Debt funds and you will get a much better yield with tax effectiveness compared to FD or NCDs

Are you willing to take slight risk and willing to wait for three years.  Then invest in Capital protection funds, MIPs and Dual Advantage funds.

Are you willing to give a little extra exposure to markets, then start SIP and you will get a positive, inflation adjusted real returns.

I also enclose the links of these headlines and if you are interested.

Don’t get worried and Don’t get confused, In my opinion, both Equity and Debt present good days ahead.

‘Ache Din Aane Wale Hain’

In case of you need help in identifying the exact vehicle for investments please do contact me




Gilts, IRF Vols Soar as HNIs Buy India’s Futures Story – Economic times 9/10/2014


MFs Hike Exit Load in Prep for Bull Ride – Economic times 9/10/2014


For FMCG Cos, Good Days Seen Ahead – Economic times 9/10/2014


Is the Indian Consumer Back? – Economic times 9/10/2014


She hasn’t yet in force. But she is looking for cues, as these four critical pockets of consumer sentiment show. Faster growth, more job creation, higher increments and lower interest rates can pave the way for a full-blown return, and the possibility of that in the foreseeable future is real



FII Frenzy Abates, But India Still Stands out in EM Pack – Economic times 9/10/2014

Biswajit Baruah


Though flows eased a bit in September, India a top draw on hopes of better prospects –


Oct 08 2014 : The Economic Times (Bangalore)

Ten Years Later, Indian Hiring Cos Catch VC Eye Again



Oct 08 2014 : The Economic Times (Bangalore)

ET Analysis – Sovereign, Pension Funds Find Value in Blue Chip Companies





Gold – KFJ scheme

Now about the KFJ bond of gold scheme
Highlights of the scheme
Min investments  – 8 gms.
Min period –   12 months to 60 months.
Price per gm of gold varies with period of investing. Todays rate for 1 gm of gold for 12 month bond period is 2554 and for 60 months it is 1799.
You can terminate the scheme earlier than the lock in period. However the price would be different from the what you paid.
Let us say you pay 1799 per gram for a 5 year bond and terminate after 2 years. After 2 years if the price of gold is 3000, you will have to pay the price of 3000. However if you stay invested you can get the at the committed rate of 1799.
You can get in jewellery, coins or cash
IF jewellery, wastage and making charges will be as applicable and  if you want cash at the end of the term, you will get at a discount of 4% ie. you will get only 96% in cash.
If in the event the gold prices were to come down, you dont have a choice. Will it come down??? Will it go UP???
What goes up has to come down.  Also there is no credit rating on companies like this.
THere is no balance sheet available. We do not know what are the assets and liabilities of this company.
Assuming investors buy 100 kg of gold in this bond scheme and 1 lac grams and if the gold prices were to go to 5000 per gm, will KFJ be in a position to return gold worth, 50 crore to the investors. Will there balance sheet permit.
Think it over.
There is No such thing as free lunch.