Posted on

Is trading in stock markets your answer to create wealth?

Trading stock markets

I grew up watching the black screen with constantly changing green and blue tickers. For a little while, I even used to handle my father’s clients who used to call every 15 minutes with a new “Buy” or “Sell” order to be placed. I was a kid just out of school then, with very little idea of what stock markets were. But, it was thrilling! I remember telling my father – I want to make money like this for myself one day.

But as I got deeper into the industry of financial planning and wealth creation, I realized a lot of things about trading in stock markets. And all of these are applicable to almost all of the traders.

  1. Most of the stocks are bought to be sold on the same day
  2. Most of the buyers have no idea of what business the company is in
  3. All of those who are buying a stock believe (or hope) that the stock price will go up and vice versa
  4. Sometimes, such buyers think that they know why the stock will go up
  5. The quantum of buying on any particular day is equal to the quantum of selling (which means that while the buyers are convinced about the price going up, the sellers are of a diametrically opposite view)
  6. Every day at 9 o clock, analysts tell us the stocks which will be doing well for reasons X,Y and Z
  7. Every day at 6 o clock, no one really asks those analysts if they really did well.
  8. In most cases, the probability of the recommendations doing well or not well is pretty much the same as a tarot card reader’s prediction

So you get the drift of what I mean.

Let us look at a simple scenario. Say for example Mr. A believes that the price of Stock X is likely to go up by 10% today and hence he buys at Rs. 100. X indeed rises to Rs. 110 and Mr. A sells it off to Mr. B who also buys it with a belief that the price will rise further. X further rises to Rs. 118 and Mr. B sells it off to Mr. C. Obviously, Mr. C also wants to make money and believes that the upward movement will continue. He therefore sells it off to Mr. D at Rs. 128. This continues till that moment when the cycle breaks. The last man standing ends up making a loss. In this cycle, there is a high probability that none of the players have any idea why the price is behaving the way it is. But what they do know is that there is a bigger fool who will pay a price in anticipation of the price rising further.

And that is trading for you, my friend. It of course is one of the most thrilling activity to indulge in. But so is poker. Therefore, one of the economists, Paul Samuelson once said –

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Long story cut short – Trading is a risky activity and is under no circumstances a medium of creating wealth. Yes, a lot of people have made money with trading. But will you be one amongst them is the question you need to ask yourself.

And for those who were thinking of taking that leap – Money is hard earned. Care for it the way you would care for your child.

Posted on

Why you need to reallocate your portfolio in volatile markets?

Portfolio Asset Reallocation

How often have we come across the terms risk profiling and portfolio asset allocation? Okay, before you stop reading any further, let us ask you another question.

Do you have that one person in your family who is a self – proclaimed doctor? That uncle who has no academic background of medicine yet has prescriptions for almost every disease that you can think of?

Well, investing in India is a little like that. Most of us google the mutual funds which have given the highest return in the last 1-3 years. At best, we look at the number of yellow stars beside the fund name. And that is all it takes to start our SIPs. But, just like every Bollywood movie, there is always a “but” before every happy ending. And in your investment journey, this but is about the two terms we mentioned at the top.

So, if you they felt unfamiliar to you, well you definitely need to read on.

We are all unique individuals. Every person earns a different amount of money and has a different structure of expenditure. Some of us want to buy a house early and some intend to defer for another 10 years. Some have to think about educating two kids and some have to think about educating themselves more. So basically, we all have very different and very unique financial objectives.

Therefore the objective of investing is not to be able to select the best funds but to be able to fulfill your financial objectives. You might have selected the mid cap fund which gave over 40% returns last year but if you are planning to fund your wedding next year and the stock markets choose to take some rest, well, you might as well be doomed.

And this is exactly what risk profiling and asset allocation helps you identify. At CAGRfunds, we help each of our investors to first establish their risk profile. This means how much risk you should take, how much you are willing to take, how much you require and how much you can actually take. Subsequently, we mutually establish your ideal asset allocation which simply means where you should be investing your money and in what split.

Stock markets change every day. And so do your investments. But your ideal allocation helps you achieve your objectives. However, it is possible that market volatility over short periods and trend movements over long periods can alter your actual allocation significantly. And there comes the need of adjusting your portfolio back to its ideal allocation (which can also change over time).

While a lot of us have started equity SIPs, we find very few manage their investments periodically with the discipline that is warranted of them. For some the task is too complex and for some, they simply do not have the time. Therefore, at CAGRfunds, our algorithms now evaluate every single portfolio to identify the need for any re-allocation adjustments. This is an extremely important analysis for any investment that you make. Simply because this ensures that you are prepared to fulfill your financial objective.

Still not convinced? Call us on +91 97693 56440 and we will be happy to get candid on how this makes sense for you!

Posted on

What we ought to learn from our mothers!

Mother's Day

The last time I went back home, I noticed something I had never noticed so far. My mother who happens to be a quintessential homemaker was scribbling something on what looked like a pocket diary.

I have always been a curious kid. So after she was done, I asked her to explain her earnest efforts. In a very matter of fact tone, she said, “mahine ka hisaab”.

Sounds familiar, doesn’t it? For all these years when we were growing up as kids, our mothers have done exceedingly well on managing the domestic spends. Sadly, we don’t have any report cards to showcase their innate ability to budget, spend and save – all at the same time.

In my personal experience, most of the households where the women is a homemaker, the concept of “petty cash” is common. These days where both partners are working, having a joint bank account is usual. Back then, the earning husband used to give a lump-sum monthly sum to his wife which he aptly termed as “ghar kharch”. But to the wife who in most cases had no other regular flow of income, that was her bit of monthly salary. And while she had the responsibility of ensuring that the home operations run comfortably, she also had this target number in mind which she wanted to save every month.

That saving would usually be a very small amount (for the husbands knew their maths well!). Also, almost all of it was always stored in cash (and hence was not growing in value) But that little number every month was adding up to her dream corpus. Every month, bit by bit, she got closer to fulfilling her dreams.

That evening as I saw my mother doing her monthly calculations, I walked back in time. In a flash, I re-visualized all of those moments when she victoriously saved more than she intended to. Or those occasions when she spent a small part of those savings to buy me a new dress. Not to mention the recurrent bargaining sessions with the kirana store bhaiya to save a little extra that month.

While we talk a lot about the sacrifices our mothers make for us, I think we completely miss to appreciate this excellent acumen that they inherently possess. And this acumen isn’t really about being a woman. A lot of women of my age are unable to control their urge to spend. They shop just a month before the sale is about to start because they dread the crowded malls during the sale days. They also shop when the sale starts because oh, who doesn’t shop during the sale? And wait, what about the new arrivals just after the sale got over? There you go, the pleasure of saving by not spending is just so middle class!

So this mother’s day, I don’t want to tell my mom how well she has brought me up. Or how I love her for all the sacrifices she has made. This mother’s day, I will try and learn a little more of the art to budget right, spend light and save bright!

A very happy mother’s day maa!

About the author:

Shruti is a financial planning enthusiast and spends substantial amount of her free time in helping out her friends and relatives sorting out their finances. Currently working with Mahindra & Mahindra, we are happy to on-board her as one of our guest writers. She is an MBA from MDI Gurgaon and a CFA (CFA Institute, USA). 

Posted on

Now get rich at less than the cost of one dinner every month!

Start investing in mutual funds with only Rs 500

As part of our Investor Education Initiatives at Corporates, we speak to a lot of employees. And one of the first questions that we ask is – How much money do you think you need to start investing every month?

And amusing as it may sound, the answer varies from a few thousands to a few lacs. Thanks to the TV commercials by AMFI on “Mutual Funds Sahi Hai”, some people now know the truth. All you need to start investing every month is Rs. 500. Yes, that is less than the cost of 1 dinner, 1 new dress or 2 movies!

Unlike big ticket investments like purchasing a house or gold, mutual funds are accessible to all kinds of investors. The initial investment amount for an SIP has been kept as low as Rs. 500 for a lot of funds just to democratize investing. So, it was never about the amount. A lot of us do not start investing only because either we are not aware or we tell ourselves – “Next week pakka!”

And just in case you want to know what the impact of starting to invest early is, read our other article here.

But now that you are aware of both the amount and benefits of early investing, visit us and drop in your details. We will reach out to you within 24 working hours to help you get started on your journey of getting rich!

Alternatively, feel free to reach out to us on +91 97693 56440 or email is on contact@cagrfunds.com to know how you can get started with your monthly SIPs.