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CAGR Insights – 5 May 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index5-May-2328-Apr-23Change
Nifty 5018,06718,0650.01%
Nifty 50015,27715,2190.38%
Nifty Midcap 50 9,0358,9620.81%
Nifty Smallcap 1009,7339,6720.63%

Chart Ki Baat

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Gyaan Ki Baat.

Diversification is a risk management strategy that involves holding your money across an array of different investments to reduce your risk exposure.

Investing the majority of your corpus in the same industry or asset class increases portfolio risk. Diversification doesn’t just mean holding a bunch of different stocks, it works best when positions in your portfolio are uncorrelated meaning that their correlation coefficient is close to zero. All this means that the stock prices need to move at least somewhat independently of one another.

Such diversification can be achieved by allocation of funds across asset classes and within classes, and also geographically by investing in both domestic and foreign markets. This way, even if a particular industry or sector underperforms, it has a controlled or limited effect on your portfolio. Whereas other investments with positive performance will likely offset these negative returns.

Here’s the list of curated readings for you this week:

Personal Finance

  • EPFO extends deadline to apply for higher pension till June 26 – Retirement fund body EPFO on Tuesday extended the deadline to apply for higher pension till June 26. Read here.
  • Who will bear the extra cost of Higher pensions by EPFO? – It has been decided to draw a 1.16 percent additional contribution from within the overall 12 percent of the contribution of the employers into the provident fundRead here.
  • Shruti shares her experience of a visit to the LIC office in Chembur, Mumbai. Two things happened when I went there. Read the 2 part series here.
  • The tragedy called SEBI’s RIA regulations- RIAs are concerned that their communication with existing clients might be hit because of the new regulation on advertisements. Apart from this, industry sources tell CNBC-TV18 that Sebi is also planning on formulating a centralised investment account for RIAs to collect money from investors. Read here.

Investing

  • 3 chart updates on the Markets – Sharp rally in Indian markets in April, as FIIs make a comeback. Read here.
  • How to analyze Steel Industry? – Valuepickr Forum  – Presentation covering commodities/steel cycle decision-making aspect. Read here
  • India’s High Corporate Tax Rate is Holding Back Corporate Capex – Not only does India’s high corporate tax disincentivize capex (as explained by steel case study outlined above), but it also puts India at a competitive disadvantage to China. Read here
  • Will forcing PSUs to pay dividends make them more valuable? – Stocks that have “Gujarat” in their name are hugely up the next day (April 26). Simply because oh, some news has come, and it sounds good.. Read here
  • How Interest Rates & Inflation Impact Stock Market Valuations – This trend makes sense intuitively. The higher the inflation rate, the lower the valuation averages. The relationship between interest rates and valuations is not quite as clearcut. Read here

Economy

  • Fed raises rates, opens door to pause in tightening cycle – The Federal Reserve moved its management of the post-pandemic economic recovery into a new phase on Wednesday with what may be the last in a historic series of interest rate hikes and heightened attention to credit and other economic risks. Read here
  • India state govt’s FY24 borrowings seen lower due to off-balance sheet debt – sources– Lower market borrowing by state governments was one factor that helped keep federal government bond yields in check in 2022-2023.Read more here.
  • JPM buys First Republic bank – The US banking behemoth said in a statement it will take $173 billion of loans and about $30 billion of securities of First Republic Bank including $92 billion of deposits. However, it will not assume the bank’s corporate debt or preferred stock.Read here

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 20 Jan 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index20-Jan-2313-Jan-23Change (%)
Nifty 5018,02717,9560.4
Nifty 50015,34715,3460.0
Nifty Midcap 508,7558,7470.1
Nifty Smallcap 1009,5699,675-1.1

Gyaan of the week

Thematic funds are classified as equity mutual funds which means 80% of asset allocation has to be in equities or equity-related instruments. These funds invest in a specific theme or sector which might have growth potential based on certain macroeconomic factors. For example, the fund invests in companies from specific sectors like technology, energy, etc.

These funds can be high-risk high-return funds if the fund manager is able to capitalize on the growth opportunities present in a particular sector which leads to outperformance. Traditionally, the idea of mutual funds is to diversify the portfolio but by investing in a thematic mutual fund the investor risk gets concentrated in a particular sector/theme. Therefore, it is recommended to have a long-time horizon so that the theme has a higher probability of being played out.

Here’s the list of curated readings for you this week:

Personal Finance

  • Zerodha founder talks about need to allow NRIs to open demat account online – Allowing NRIs to open demat accounts online is the low-hanging fruit to attract money to India. The process today is physical and cumbersome. Read here.
  • How much Income do you need to be rich in USA? – If you’re interested in understanding how your income compares to others in the U.S. (and whether that makes you rich), then you’ve come to the right place. Read here.
  • Pocket Guide for Kids on Personal Finance – Get here.

Investing

  • Raamdeo Agrawal says “One should take interest in large unpopular sectors” – Markets reward consistent performers and punishes volatile stocks.  Watch here
  • Indian IT companies are benefiting from vendor consolidation – “We are seeing an uptick in vendor consolidation,” TCS CEO Gopinathan told analysts in a conference. “We are continuing to gain market share as a result of deepening client relationships and higher win rates” Wipro’s CEO Thierry Delaporte said in a statement on January 1.  Read here.
  • The GoMechanic Saga – The fine print isn’t out yet. But apparently, the folks at GoMechanic inflated their revenues. Amit Bhasin, the co-founder of GoMechanic, actually confessed to the crime on LinkedIn!!! Read here.
  • India’s decade – India is the stand-out performer among emerging equity markets and is expected to outpace all major economies in terms of growth. Read here.

Economy

  • Has RBI ever raised rates when Repo was above CPI inflation? – Historically (in the last two decades), there have been four episodes when repo in tightening cycle intersected CPI inflation on the way. Read here.
  • Big capex push to continue in FY24, says Barclays’ Bajoria – As a proportion of the total spending, capital expenditure is likely to increase from the current 17% to about 20% in the coming financial year, Bajoria said. Read here.
  • All loans to state governments are not safe – The Punjab government has defaulted on repayment of an instalment of Rs 600 crore against a loan that the previous Congress dispensation led by Capt Amarinder Singh had taken to roll out farm loan waiver. Read here.

CAGR Speak

  • Indian Ultra HNIs definitely understand compounding. As per a recent study by Knight Frank, Indian ultra HNIs prefer equities and have more than 1/3rd of their investment in equities. Read the linkedin post here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you’d like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.


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5 Tips To Customise The Perfect SIP Plan For You-


There are so many different options and ways in which you can catapult your journey towards financial freedom if you make the decision to wisely invest your money. We often find that taking the first step towards our goals is the most bewildering as there are so many financial products available in the market. If you are a beginner, then a SIP is perfect for you! A Systematic Investment Plan allows you to save and invest your money regularly, it does not have to be a huge amount, which is why it allows beginners to start their journey towards financial freedom. You can choose to start a SIP on a monthly, weekly, or yearly basis depending on your needs.  Here’s what you can do to make the most out of your SIP investment! 

  1. Make sure that the mutual fund or the SIP plan that you choose, has been around the market for at least 5 years. Do not jump to invest in the trendiest plans or the most touted funds- instead, research and collate your needs and capacity to your investment. A great way to do this is to analyse the returns of a fund over a considerable amount of time and then make the calculated decision of whether you need to invest in this or not. Make sure that the fund house that you choose to invest in is recognizable and is registered by SEBI. 
  1. A high volatile fund might attract you to invest a chunk of your money in it, but make sure that you first analyze the current financial market before you hop on to trends. A great way to do that is to track the stock market and analyze the volatility of the market before you invest in high volatile stock / fund. See their past trends and returns, if they have a consistent track record, investing might be a good option. Stay away from risks like low liquidity by actually doing the homework and not falling prey to trends as they can become quite costly. 
  1. The total corpus should be expansive. If you are new to investing, look for funds with a corpus size of 500 – 1000 crores. 
  1. Try investing in tax-saving schemes like an Equity Linked Savings Scheme (ELSS). These schemes are not only a lucrative way to get back high returns on an investment but also help tax deduction up to Rs 1.5 Lakh a year. ELSS can also be used as a Growth Fund which can be used as a long-term wealth creation platform, where you can realize the full value of the investment when you choose to redeem it. ELSS linked schemes are great for young and old investors alike who are starting out their investment journey, and looking for a higher rate of tax deductions. 
  1. Diversify your portfolio. We always like to stick to our comfort zone and invest in stocks that are only doing well for the current time period, ignoring the other stable stocks, which go a long way to protect us from the volatility of the market. The returns of the major asset categories like stocks, bonds, and cash move differently at all times, as the forces of the market can help one category do better and hinder the growth of another. By diversifying your portfolio you can reduce the risk of losing money and make sure that the overall investment stays stable. 

Don’t be afraid of venturing out and taking a step towards securing your financial future. The plethora of financial advice and investment plans can confuse any first-time investor, which is why we recommend that you choose a financial roadmap that is unique to your own needs and goals and make sure that you are consistent and stick to it! Deciding to take the first step is half the job done! 

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5 Tips To Optimize Your First Salary

When we first earn our hard-earned salary, our emotions often get the best of us, and we end up spending so much that we’re left with almost nothing, too soon. What’s worse, it might end up as a bad habit and will hurt us in the long run. Relying on well-known baristas every day for coffee, ordering food online might satisfy your urges, but only for a few hours. We know what it’s like to be swayed by our wants so easily, which is why we are sharing these 5 financial tips: 

1. Start Saving Up For Your Retirement- Although you might think that your retirement has ages to come, consider saving up for it NOW. If your company adds a percentage to your retirement savings, then you are lucky, but if they don’t create your own which automatically deducts the amount as soon as your salary comes in. Treat it like you are paying a bill, but the most fun part is- that you are only paying YOURSELF! 

2. Hire a Professional- Creating our own financial goals might be easy, but getting there is difficult, as we need to map very complex financial routes that might be beyond our own bandwidth. That’s where professionals like CAGRfunds come in.  They assess the health of your finances and assign plans or investments that help you get to your goals. Start small with an annual financial check and then build up a relationship! 

3. Accelerate Debt Repayments- Try to pay off your debts as soon as possible. They may be your student loans, credit cards, or any type of personal loan you might have taken. It’s simple- start off with the loans which accrue a high interest, in most cases, they are credit card loans or student loans. Like the retirement option, try automated payments towards these loans so it feels like a monthly bill, so you don’t have to depend on the last moment to scramble over your finances.

4. Invest in a PPF or an ELSS- Under section 80C of the Income Tax Act of 1961, Equity Linked Savings Scheme or ELSS is a tax saving investment wherein by investing in it, you can claim a rebate of up to 1,50,000 and save almost 50,000 a year in taxes! It is the only kind of mutual fund that is eligible for tax benefits under section 80c.   A PPF or a Public Provident Fund is a government-supported retirement saving scheme to help generate small-scale savings towards retirement. It is also a tax-saving investment that helps you build your retirement fund while saving you some money from getting taxed. 

5. Create an Emergency Fund- The pandemic has taught everyone about the dangers of uncertainty and the chaos that it may bring. Any unforeseen circumstance might befall you causing you to incur heavy expenditure. Again, automating your payments towards your emergency funds, and treating it like a bill, helps you to make creating funds easier. 

We hope these 5 easy tips help you forge a path towards your financial goals! Happy saving and investing!