I am getting 16% returns on my portfolio.One of my friends said that. What is wrong with this simple statement?This statement is fundamentally wrong in many aspects.One, you got 16% returns till now. You are not guaranteed to receive 16% returns continuously. This statement gives the impression of assurance that similar returns can be expected in the future, which is far from the truth.In many cases, this 16% also hides some key facts. One being that…
What could be wrong in a portfolio managed by well-known wealth management companies? I met a client last month. Two top wealth management companies managed his portfolio. He was happy with the returns. He showed me the portfolio. And here it all came crashing.Below is what was wrong with the portfolio and the possible reasons:1. Asset Allocation: 75% in equity and 25% in Debt. No allocation to Gold. An advisor who understands macroeconomics would have…
Gold has rallied 50% in the last year and at a CAGR of 29% in the last 3 years.Many clients asked if it is still a good time to buy Gold. And my answer is a strong Yes.In my opinion, Gold is a mega investment theme for the next decade.Before I share my reasons for the same, I’d like to tell a little backstory.We started allocating to Gold funds in all our clients’ portfolios from…
One of my friends recently invested 100% in equity, targeting annualized returns of 18-20% over 10 years. Is it possible?I told him straightaway that the possibility of achieving these returns is extremely low when you are investing in an expensive market. Past data indicate that any investment made in expensive markets (PE > 22x) has generated low single-digit returns at best over the next 10 years. Even if you invest in small/mid-caps, the probability falls further…
Everyone loves a rising market. The longer, the better—what everyone wishes for. This creates the wealth effect, which leads to higher consumption and spending and thus contributes to GDP growth, which feeds into higher stock prices. Under all the glitz and glory, something is becoming unfavorable.There is a bad in every good thing and a good in every bad thing. Like the circle of life, good times are followed by bad times, and bad times…
This is probably one of the best podcasts out there on personal finance & investment topics.This beautifully explains why debt/loans can cause a lethal blow to your finances. A lot of wealth & lives have been destroyed because overconfidence led people to take on more loans than they should have.As loans increase, you narrow the range of outcomes you can endure in life.If you are someone who believes that taking a loan cannot be a…
In my multiple conversations with investors during the bull-run since 2014, there was no one who said that I will not take advantage of investing in equity when the market will crash. In good times i.e. when the market valuations are usually very high, everyone agrees to the logic of buying low and selling high. But interestingly, very few implement this strategy. Instead, the majority tend to invest when markets are going higher and higher,…