Tuesday, December 11, 2018

Are You Procrastinating Important Financial Decisions?


Here is the Cambridge definition of the word ‘Procrastination’ – To keep delaying something that must be done, often because it is unpleasant or boring. The definition highlights two important aspects – 1. The thing which is being procrastinated is important 2. The thing which is being procrastinated can be boring. Let’s dwell upon financial procrastination. Now the investment decisions can be boring for someone; however, they can be interesting for some other. However; I am sure you would agree that the Financial Decisions are necessarily important for all of us. The fact is; in the list of things which are highly procrastinated; Investment decisions would be among top few.
Which investment decisions are procrastinated:
The investment ‘decision’ or the ‘act’ that are neglected can be seemingly trivial or at times they can be substantially important. Whether the decision/act is important or trivial, the reason given for not deciding or not acting is definitely trivial. Here is a list of tasks / decision avoided or procrastinated. The list is representative
1. Tracking monthly expenses
2. Important investment decisions such as investing for Retirement planning
3. Postponing monthly recurring investments such as SIP
4. Avoiding preparing a ‘Will’
5. Procrastinating a Financial Plan or implementation of a Financial Plan
6. Postponement in buying Risk Cover (Health, Life etc)
7. Organizing the important financial documents
8. Repayment of dues on credit card
What can be the cost of procrastination:
Often, the cost of financial procrastination can be calculated in absolute money terms. However, sometimes it is beyond that. The losses due to avoidance of timely financial decisions can be wastage of time, mental harassment, laggard in achieving social status etc. Here is a list of some specific losses –
• Imagine you haven’t bought a Health Insurance and a family member is hospitalized due to some medical emergency. You would rather liquidate your investments and pay the hospital bills. This can eat out your savings of last 3-4 years and you may have to start saving all over again.
• Delay in regular savings can have a large impact on your assets in the long term. Here is an example of a delay in starting a SIP. Suppose you start a SIP of Rs 10000 per month, the rate of interest is 12% and the investment period is 20 years – the total amount accumulated at the end of 20 years will be 98,33,075. However, in case you delay this SIP by 8 months then the with all equations remaining same the amount accumulated will be Rs 90,10,450. This means the delay of just 8 months in starting a SIP of Rs 10000 can cost you approx. Rs 8 Lakhs.
• Not buying Term Insurance or not making a ‘Will’ can have a lot of mental trauma in case the bread earner dies. The family can be in huge financial crises. Not making a ‘Will’ can have an impact of asset distribution to the legal heirs.
• Not getting the Financial Planning done in time can have a substantial impact on the amount required at the time of the goals like education of children or your retirement.
• Simple things not keeping the important documents well organized can cause a lot of time loss.
• You may get in the vicious cycle of exorbitant interest payment in case you do not pay the Credit Card dues in time
This is what you can do to avoid procrastination in financial decisions or the Financial tasks:
• Sometimes procrastination is a habit. Sometimes it is because the decision or the tasks are not attractive enough to be performed immediately. You have to constantly train yourself that the boring decision and tasks are good in the long run. So you have to complete the boring tasks first and then the exciting ones.
• Most of the times the times required of taking these important financial decisions or completing the financial tasks is very small. However, the time spent just on thinking about completing the tasks can be substantially high. Constantly instruct yourself that by spending a small time (in taking an important financial decision or in completing the important financial task) you will get benefited in a big way.
• Celebrate after taking the financial decision or after completing the financial decisions
• Don’t wait for taking any financial decision or completing the task. Instruct yourself the deadline is ‘now’, else you will incur huge losses
• Prepare a Checklist of Important Financial Decisions and Important Financial Tasks. Share this list with your spouse. Both of you together should accomplishment of each task in the list.
Financial Planning is nothing but changing the way of living. By taking a small step you can pave a way towards a bright tomorrow. Do write your feedback in the comments below.

Tuesday, December 4, 2018

What is Family Office?


It is said that you need to experience certain things to understand them thoroughly. Any office is one such place where certain things are inevitable. With an office comes discipline, skills of the staff working there, equipment in an office, office ambiance, processes etc. An office works efficiently by having all the above things in place. Results of any activity are profound with the help of all the above parameters.
Our personal lives (usually) have no scope for an Office to be a part of it to handle the matters related to the family. Decisions relating to family matters are supposed to be taken by family members together. These decisions can be about the marriage of a family member, about an important thing to be purchased, about the major decisions in business, about court matters, or it can be about money and investments, or there can be some more to this list. All these major decisions are taken by the members of the family by discussing the topic with each other thoroughly.
As we are progressing, with the advent of technology, the day to day living is becoming easy. We have all modern amenities ready to serve us. But with this progressive life, has some curse with it. Most of us are not finding enough time for personal and family activities from our daily professional routine. The family members are not able to get together to discuss important family issues.
If a family or the member of that family has free time for the family matters, they lack the expertise to decide and execute important decisions. Though the internet has made all the information readily available to us, it is very difficult to separate right and wrong information. There is a lot of misleading information available on the web. So, this information may not always be useful to take the right decision. A family is not expected to be a disciplined entity like an Office. You can’t expect family members to deal professionally with each other. It also means that family members may not be able to professionally decide on family matters without being emotional about the task at hand. This probably requires someone else who is not emotionally attached to the task at hand and who is skilled enough in the matter. This brings us to one point – there may be the need of one such entity which can take care of the family matters, decisions that are professional, unbiased, without any emotions into it and involving the skills.
Here is the solution. Those families which are finding it difficult to manage their Personal Finance and related activities can look forward to a Family Office to- plan, manage and execute all such important practical tasks.
The tasks liked Financial Planning, Wealth Management, Succession planning, Insurance planning, Accounting, Debt (loan) Management are interrelated. But if the Family Office is not in place, the family has to deal with a different office (and different person) for each of the above services. It is obvious that any family would not find it convenient in dealing with all these offices separately. So basically, Family Office is an entity that provides together, the services of an Investment Advisor, Financial Planner, Accountant, Lawyer, Insurance Advisor etc.
Though the concept of Family office is relatively new in India, it is being offered in many cities, especially in Metros. However, most of these family offices serve only to Ultra HNI Families. These Family Offices working for Ultra HNI families focus prominently on Investment part of it. They usually advise families on non-traditional investment alternatives such as Private Equity, Start-Up funding, Alternate Investment Funds and so on.
When a Family Office service is provided to more than one family it is called as Multi-Family Office. If a Family Office provides service only to one (Very Wealthy) Family it is called as Single-Family Office. Single Family Office needs is affordable only to a few who’s who in the country. In some cases of Ultra HNI Families; the family themselves manage the Family Office. They recruit skilled staff for managing their Family Office.
The point is; does only Ultra HNI and HNI clients need these services which are provided by a Family Office. Or Higher middle Class and Middle Class may also need these services? The fact is; every family small or big; HNI or middle-class, needs these services. The issues is not many such service providers (Family Offices) are available today. Especially Tier 2 cities are missing these services big time.

Monday, December 3, 2018

Simple Financial Plan could change Portfolio from 4.44 L to 82 L in 3 years

About 3 years back, a well-established architect friend of mine has been avoiding getting his financial plan done at least for the last 2 years. During this period, he saw me working on plans of many of clients. Being a friend I did not want to mix friendship and profession, hence I never insisted him on getting the plan done; however, I never missed an opportunity to dwell upon the importance of planning to him and his family. Finally, the D day has come and golden words came from his mouth. During a cup of tea my friend announced ‘I want to do my financial Planning.’
He being a friend of mine, I had a fair idea of his finances. Still, we together decided to go ahead with the process as led down by my firm. So, we entered into an agreement and signed the Letter of Engagement. I handed him the Financial Planning Questionnaire. He and his wife, who by qualification was a Chartered Accountant, though not practicing. Both of them completed the questionnaire religiously and handed back to me.
When we started working on it, following were major observations-
o He had erratic Cash Flow. No discipline here.
o HIs monthly income was strong, but not put to use and properly accounted
o Most assets were in Real Estate and Chit Funds.
o He had numerous Insurance Policies, most of them were Endowment and Moneyback
o He had no Loans
o Approximately 37 Lac rupees of his consultancy fees outstanding in the market
o His Stocks and Mutual Fund portfolio of Rs 4.44 Lakhs
These were the issues identified by us-
o My friend was in dier need of developing the money discipline
o His Asset Allocation was skewed
o No planning for future goals, leave aside Retirement corpus
o His was protected with an insufficient amount
o His liquidity situation was a concern
His strong points were –
o He had a strong incoming Cash Flow and Surplus
o Conservative approach towards lifestyle expenses
o Willingness to change the habits
One important thing which we have noticed is that he mostly used to work for builders. There were instances when builders offered him a Flat/s in their schemes against his fees. The cost of flats was higher than the fees he was supposed to receive. Now, this friend of mine had outstanding to be paid to the builders.
Moreover, he had a large amount of fees to be recovered from his clients and this trend was sharply growing.
For us this was a clear case of money indiscipline. We have chalked out of definite ‘plan of action’ to change his basic habits. His wife being an accountant, things went quite smoothly.
Broadly this is what we wanted to change-
  •  Stop his shopping of real estate
  •  Cultivate a habit of recovering his professional fees as per the terms and not adjusting this fee against any other means
  •  Clear the dues outstanding to be paid for the flats he has already booked. This was adjusted against the fees outstanding in the market.
  •  Start investing the surplus income in appropriate Mutual Funds for his life goals
  •  Chalked out corpus requirement for his retirement funds and provide for it
  •  Work on his insurance needs and streamline his existing insurance policies
It’s been 3 years since we have worked on his Financial Plan. When we started his liquid investment portfolio was worth Rs 4.44 L. We could create an Investment portfolio consisting of 70% Mutual Fund (70% allocation to all type of Mutual Funds put together) + Stocks (10% allocation) + other (20% allocation)- Real Estate excluded. The portfolio sized to Rs 82 Lakhs without accounting for the growth in the portfolio. We had could generate total 82 lakhs now channelized to the right Assets and each investment properly assigned to a goal. He is insured properly. Most importantly he has peace of mind. He is now nicely placed in terms of his liquidity. He has started earning better returns on his investments. We kept of reviewing his financial plan and his investment portfolio for life changes during this period. This has paid off well.
Ironically, now my architect friend no more wants to invest in real estate.

Wednesday, March 7, 2018

Nifty breaks Head & Shoulder Neckline

After long I am writing on Nifty. There is a reason to do so - Nifty breaks medium term up-trend.
Nifty breaks below trend line as well as Head & Shoulder neckline.
As you can see in the daily chart below, the breakdown has come about with good volumes. Bears have a clear edge over bulls.
What can be done now-
Nifty is approaching the next support between 10100-10040. So it would not be wise to short at this moment. One can expect a bounce from the support. If the bounce comes about, Nifty can move up to its resistance near 10300-10350.

With this movement, we can assume that Nifty is in medium-term downtrend.
The same is also confirmed by the cycle change from 'higher top higher bottom' to a new cycle of 'lower top lower bottom'. The new cycle of lower top lower bottom is expected to continue for some time now.
If Nifty breaks below 10040, next major support is near 9750.

For more on medium-term safe investing using Technical Charts visit
www.bonvista.in



Chart curtsy- Sharekhan Trade Tiger

Wednesday, February 14, 2018

Bharti Airtel - Long Triangle breakout

Bharti Airtel- Long Analysis

Bharti Airtel is a second giant experiencing a similar breakout after a triangle consolidation for pretty long period. The earlier breakout was by Reliance Industries around a year back. I had written a post during the breakout phase on Dec 27, 2016, in Reliance Industries. Reliance Industries doubled since then. Below is the link of that post-
Reliance Industries Ascending Triangle

First picture below is a Quarterly Candlestick chart. I love using Monthly and quarterly charts. They give a clear picture at a larger scale. Once we get this helicopter view, we understand what is happening and what can be expected in the times to come.
You can see below that the stock has formed a long triangle beginning in Jan 2007 and since then was trading in the consolidation till Sep 2017. Since the period is too long and the chart we are considering here is a quarterly chart, the low and high of the consolidation too is large. The base of this consolidation is around 260 and the top is around 500.
The triangle went narrow during the quarter ended Sep 17. Finally the stock broke out of the consolidation in Oct 17. You can see on the chart when the quarter in ended Dec 17 formed, a huge green candle supported by increased volumes.
I have also produced a Line Chart below to understand the picture more clearly.

Current markets pressures have brought the stock back to its breakout levels of around 425, where the stock is currently trading.




The stock after breaking out has corrected to test the level of breakout, as it usually happens in most breakout examples. This is an entry opportunity.
I have produced a weekly chart below which is showing the origin of breakout and how it is currently trading near the same level after a fall of around 20%. This fall brought the stock back to its support near 424 which also the origin of the breakout.
We have experienced that this is an opportunity to accumulate the stock. 
This zone is between 424 to low of around 380. If the stock fails to sustain above 380, we may consider failure of the pattern. Remember that the patterns can fail, not usually though.

The stock has a potential to move from this level and the gains can be handsome. Though we can not predict the targets we believe that the stock can achieve first possible level of 530 and then 650 and then 840. 


Chart Credits: Sharekhan Trade Tiger


Disclaimer: The contents produced here are purely for educational purpose. They should not be construed as buy/sell recommendations. I am not a SEBI registered Analyst or Investment Advisor. Readers are advised to consult their Investment advisor before taking any decisions based on above write-up. 

Friday, January 12, 2018

Learnings of 2017 - 'Musts' being an Equity Investor

  • Believe in your 'theory'
  • Do simple things, simple analysis
  • Do 'short term trading', if you have qualities of a 'Sky Diver'
  • Method of analysis is last thing, first is approach
  • Choose your investing time frame
  • You are different than others, so is your investing style
  • If you rely on someone else's analysis, do so wholeheartedly
  • Reduce the sources of information


  • Invest in business, if you are a long term investor
  • Trade on price, if you are a relatively short term (may be up to one year) trader
  • Fundamental analysis is good, but very few understands it
  • Technical analysis is good, but very few can implement it
  • If you are not making money in markets, take a break, learn
  • If you are loosing money in markets, take a larger break, learn
  • If you are new, don't start with intraday / Options / Futures
  • It takes time to learn making money in markets, period can be upto 5 years
  • Stay away from free tips
  • Do not try to cross check one's recommendations with some one else, if you believe act, else leave 

Tuesday, January 9, 2018

Update - Intellect Design Arena - Change in Trend

We had analysed Intellect on 6th November 17. The change in trend has nicely panned out so far. The stock has moved from 147 then to 183 so far. Keep watching for further updates.
Below is the article reproduced for your reference.

Intellect Design Arena - Change in trend

Intellect Design Arena (INTELLECT)
Short Analysis-
The stock has been correcting since last about 10 months. The quantum of the fall is about 65% from its top. The stock has good support near level of 97-110. This support was created when the stock had given a breakout in July 2015.
In Aug 17 the stock reached back to the same level of around 97-100. You can see the trend line marked on daily and weekly chart. This trend line was acting as resistance and was not allowing the stock to move beyond. During the week ended 15 Sep 17 the stock broken out this resistance. That was first symptom that the stock can change its trend from down to up. During last week (Ended on 3 Nov 17) you can see increase in volumes and bullish candles formation on chart.
Expect the stock to continue this uptrend. 


Daily Time Frame

Sunday, January 7, 2018

Sudarshan Chemical - Flag Breakout

Sudarshan Chemical-
This stock has seen run up from 134 to 454 during June 16 to Sep 16. This phase has formed pole of the Flag pattern. After this run up the stock went into consolidation between Sep 16 till Dec 17. This phase has formed Flag portion of the Flag pattern. You can seen on the monthly Candle chart below the Flag marked on the chart.
On 4th Jan 18 the stock has broken out of the Flag consolidation. On monthly chart the the stock is seen forming a nice bookish pattern showing a breakout of of Flag pattern. Only catch here is that the monthly candle is yet not finished as its the candle of Jan 18 and Jan 18 will be over only on 31st Jan.
The pattern gives us a target of 660. Lets hope that the stock reaches this level. Time period expected for stock to reach this level is 5-6 months.