PowerMF Blog – Empower Yourself

Over the last year or so, if there was one Industry which saw a continuous wave (and some may choose to call it a Tsunami) of changes hitting, then it should surely be the Mutual Fund Industry.

While there were many reasons and reactions for the changes that took place, specifically from the Regulatory stand point, I believe that the crescendo was reached when the Regulator and the Industry shared the dais on the occasion of the CII Mutual Fund Summit recently.

A good account of the message that came out of the meet has been clearly spelt out by our Mr.Dhirendra Kumar, Value Research, one of the torch bearers of the Industry for decades now (See Link: http://new.valueresearchonline.com/story/h2_storyView.asp?str=14745).

As per his reading on the clash of the titans in the dais (and around), the message seems to have come out loud and clear for the Mutual Fund Industry – You need to Re-Discover yourselves.

This message is strong enough and needs to be taken seriously by the players in the industry.

Yesterday, SEBI came out with an order against one of the leading AMCs and few of its employees for Share Trading Fraud.

The fraud committed is that of ‘Front Running’ wherein the person knows the institution’s order for a stock and before the order gets executed in the market, benefits by taking personal positions on the stock and benefiting by the institutions order.

While such activities are heard to be practice by many traders, pinning the errant has always been a very difficult task.

The case under reference is one of the occassions where Regulator has been able to clearly identify the wrong done and the wrong doer.

This in my view is going to be an importnat  moment, more so by the way the wrong done is planned to be handled – by asking the wrong doer to pay the amount to the investors who have lost the money.

Hope this landmark order will be able to make the markets more efficient and investor friendly.

Draft Direct Tax Code has come out and there are a lot of areas where an Individual Tax Payer has reasons to be happy including the proposed slabs and exemption limits.

However, when it comes to Mutual Funds,  keeping up with the continuous spate of changes and concerns faced by the industry, DTC adds one more: removal of ELSS from the approved investment options for tax saving.

Currently, ELSS schemes have around Rs. 23,700 cr. under management in May 2010, up from around Rs. 11,800 cr. in May 2007. This represents around 60 lacs to 120 lacs investors using the ELSS as a tax saving route which is expected to be foregone by the industry.

Sure, this is probably not the most important issue in the minds of most Industry players only owing to the spate of other immediate issues to grapple with. But one sigh of relief the industry will probably have is that ULIPs may also be treated the same way as ELSS.

Mutual Fund as an investment vehicle is one which will enables retail investors, who do not have either knowledge or time or both for managing their investments to pool in the investments which is managed by professional fund managers. In light of the above, equity investments with its complexities and time Read the rest of this entry »

My hearty wishes for a healthy and wealthy New Year to you and your near and dear ones.

The year 2010, brings along a new decade and it is appropriate for us to look at the decade that went by and also identify the trends and changes that will not only provide us insights of what went by but also will give an understanding of what is in store.

The period 2000-2009 is an important Read the rest of this entry »

One major reason which keeps most savers out of the Equity Markets (either directly or through Mutual Funds) is the Volatility that is part & parcel of the Markets. While most people know that equities provide an opportunity for better returns that most other asset classes over a longer duration, it is the fear of volatility which keeps them out of it. The impact is clearly seen in the number of investors getting into the equity markets. It is understood that there are around 3 cr. investors in Mutual Funds and 1.5 cr. Demat account holders in the country of 120 cr. population and around 10 cr. PAN Card Holders. Read the rest of this entry »

The month of November 2009 has been one of the most important months in the evolution of PowerMF as a platform. Read the rest of this entry »

Car, Train or Aircraft, which is the best mode for travel?

I am sure, you will get different answers from different people for this question. Also, you will get different answers from the same person depending on the destination. Yes, Aircraft is probably the most efficient way of traveling, can one use it for going to meet his cousin two streets away!! no way.

The answer to this question on MF, Shares and ULIPs is no different. These are three different products to satisfy different needs of the investor. Depending on what your needs are, which only you know or you can get your financial planner to understand, you should choose your investments.

Each of these products have their features, including their strengths and shortcomings. Depending on your requirements, you should use these products.

Read the rest of this entry »

For scoring a six, you need to hit the ball in the air and the ball has to cross the boundary ropes without touching the ground en route. However, if the ball is caught by a fielder, the batsman is out. Hence, in order to get the maximum returns (6 runs) a batsman takes the risk of getting out. Even if he mistimes or misguides his shot by a fraction he will have to walk back to the pavillion.

However, if one keeps defending the balls, he gets very little opportunity to score runs. Hence, there needs to be an ideal mix of defense and risk taking for a batsman to be successful in his batting.

Equally, for a bowler to get a wicket, he needs to entice a batsman to believe that the ball is up for the hitting. For eg. a yorker is a great delivery to bowl for getting a wicket. Smallest deviation from where you want to bowl the ball, it becomes a full toss or a half volley and the ball gets whacked for a six or a four. Similarly, a spinner has to invite the batsman with a lot of air to his ball for getting a wicket, taking the risk of being hit for a six or a four.

Read the rest of this entry »

Like any building, which requires 4 pillars to stand on, personal wealth creation also requires 4 strong pillars. All financially successful people have gotten their success thanks to their understanding of these 4 pillars. They are

1.    Nothing happens without a Plan

2.    Knowledge your only weapon

3.    Risks & Return Trade Off

4.    Importance of Liquidity

Nothing happens without a Plan

Planning is the most important part of any activity. Wealth Creation and Investments are no different. The areas which need to be planned include:

a.    Income, Expenditure and Savings

b.    Investments

c.     Tax

d.    Insurance

e.    Retirement

f.      Goal Setting

The most important part of the Plan is to define your Goals in an un-ambiguous manner. There are various Financial Planners available who provide a comprehensive plan. However, it is your responsibility to articulate your goals in life and more importantly for implementation of these plans. Hence, a clear commitment to these plans as well as the Goals is a pre requisite for success in your journey towards financial independence and wealth creation.

Read the rest of this entry »