The year 2011 was among the most disappointing years with the high
inflation, a depreciating rupee, low output and a failing global
economy. Below are a few takeaways from the past year
1. Suddenly many jobs are being lost: Remember slowing down, closing down are not words that happen only to somebody else! It happens to the best. Only your salary is certain, the variable salary is really variable. I now know of several people who are earning about 60% of their claimed CTC. The variable is just not happening.
Learning: When you commit to a life style, EMI, etc. Ignore a big portion of your salary. Assume it's only 50%, it helps.
2. SIP can go wrong: All SIPs started in the past 1-2 years are under water.. Equities will do what it does. Keep your cool. You have to do what you have to do!!
The returns between the period of 1979 to 2011 was at about 18% p.a. — if you add dividends reinvested the returns should be better. However no one year may have got you 18% — there have been years of -46% as well as super years like 242%. Be ready for volatility. A terrible 2008 (-40%) was followed by a fantastic 2009 (90%)….so BELIEVE in equity.
Learning: Accept that volatile assets will not give you linear returns. Have patience it is a test match, not a T 20 match.
3. Debt market is attractive ONLY in the short run: If you think SBI bonds at 9.95% p.a. is attractive, remember money should grow in REAL terms, not just NOMINAL terms. Nominal returns in SBI is 9.95%, but inflation is say 11.95% — in such a case YOUR money is not growing in real terms. It is SHRINKING; so you need to be invested in equities.
Learning: Being in debt funds (I am in debt funds too) is a good tactical move for 12-14 months, at the end of that period you will have to come back to EQUITIES.
courtesy : yahoo india
1. Suddenly many jobs are being lost: Remember slowing down, closing down are not words that happen only to somebody else! It happens to the best. Only your salary is certain, the variable salary is really variable. I now know of several people who are earning about 60% of their claimed CTC. The variable is just not happening.
Learning: When you commit to a life style, EMI, etc. Ignore a big portion of your salary. Assume it's only 50%, it helps.
2. SIP can go wrong: All SIPs started in the past 1-2 years are under water.. Equities will do what it does. Keep your cool. You have to do what you have to do!!
The returns between the period of 1979 to 2011 was at about 18% p.a. — if you add dividends reinvested the returns should be better. However no one year may have got you 18% — there have been years of -46% as well as super years like 242%. Be ready for volatility. A terrible 2008 (-40%) was followed by a fantastic 2009 (90%)….so BELIEVE in equity.
Learning: Accept that volatile assets will not give you linear returns. Have patience it is a test match, not a T 20 match.
3. Debt market is attractive ONLY in the short run: If you think SBI bonds at 9.95% p.a. is attractive, remember money should grow in REAL terms, not just NOMINAL terms. Nominal returns in SBI is 9.95%, but inflation is say 11.95% — in such a case YOUR money is not growing in real terms. It is SHRINKING; so you need to be invested in equities.
Learning: Being in debt funds (I am in debt funds too) is a good tactical move for 12-14 months, at the end of that period you will have to come back to EQUITIES.
courtesy : yahoo india
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