ETF vs Mutual Funds

ETF vs Mutual Funds

Nowadays, Mutual Funds are the favorite one among most of the people. Bank Interest rates are ticking down and the India Inflation rate also around 3 - 4 %. Many of us, keen to invest in mutual funds with a simple knowledge or as plain (Not known). Last week, one of the reader requested an answer in Quora.com , Is it the time to invest in mutual funds and how the mutual funds differ from ETF (Exchange Traded Fund). I had posted my answer on reply. So, that's why i am looking here to share the related information in my blog about ETF and mutual funds.

Generally, Mutual funds categorized as Two:

• Debt Funds

• Equity Funds

Debt funds are good, if you are looking like as a Bank FD (Fixed Deposit) or RD (Recurring). It gives a solid returns more than the Bank deposits. Indexation Benefit also available on LTCG (Long term Capital Gains), if you hold more than 3 years.

Similarly, Equity funds have a LTCG benefit, if you hold on your investment more than one year. Recently, BSE (Bombay Stock Exchange) is making a case for reinstating of long term capital gains on equity investments. (See here:  Remove long-term capital gains tax exemption: BSE )
Popularly, Equity funds are very helpful for the long term and gives a better return, stick with your financial goals.

( image courtesy: Daria Shevtsova@pexels.com )

However apart from mutual funds, ETF is also a fashionable word for the new comers on investing. ETF is nothing but, an exchange traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism. ETF are also based on market index (Sensex, Nifty), Sector wise, Gold etf, and few more.

ETF vs Mutual Funds - How it differ ?

You should understand this,

• Exchange Traded Funds (ETF) will trade throughout the day (Trading) like shares, but mutual funds trade only at the end of the day at its NAV (Net asset value).

• ETF have a charge of trading or broking commision, while buy or sell. on the other hand, mutual fund comes with the charge of Expense ratio on your investment.

• Most ETFs track to a particular index and therefore have lower operating expense than actively invested mutual funds.
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Kindly, share your views or comments with a smile :)

Rich Investing - www.richinvesting.blogspot.com

My Portfolio - Stocks - Updated on Nov - 2017

My Portfolio - Stocks - Updated on Nov - 2017

I am preferring to buy the stocks through Value Investing (Fundamental Analysis).

Here-now, i wish to report my portfolio - Stocks which is updated on November, 2017

 























You can notify that, my investment goes in different sector like Banks, Pharmaceuticals, IT - Technology, Automobiles. I have been heavily invested in Technology about 40 percent with the shares - HCL and Infosys (Infy) and the lowest in Paints with Berger Paints - 1.75 % I am also looking to invest in Energy, but not now with the current valuation.

Result Session:

• As on November 30, 2017 - My Portfolio (Stocks) returns with 10.22 %  (2017-18)

• Past three years (Financial) returns are: 10.43 % (2015-16), 12.51 % (2016-17), 10.22 % (2017-18).

• Currently, 8 of 10 stocks are Advanced (Profit) and 2 stocks are declined (Loss).

• On my stock portfolio, NALCO performed with the highest returns of  (106 % ) on my investment and the lowest with TATA MOTORS (-12 %) loss.

• I believe that Tata motors are at good valuation and will make profit on a long term investing.

Kindly share your views / comments with a smile :)

Rich Investing - www.richinvesting.blogspot.com

My Investment portfolio - updated as on Oct - 2017

My Investment portfolio - updated as on Oct - 2017

I am believing the Investment Portfolio objectives is the crucial thing not only for the wealth creation, but also gives the detailed knowledge on Investment opportunity.



Here is my Investment Portfolio ( Updated as on October 31, 2017)

I am also believes that my realty side depends on my father's asset (Non-cashflow). So this is my diversification too, rather than spending my money for owning a home. It's hard to me that i am not interesting to invest in Gold, but may consider in future. I am looking for an alternative investment(s) in the upcoming days.


On the above pic, i had mentioned the debt securities splitted as 'Debt mutual Funds' and 'Bank Deposits' and you can note that my majority of investment is behind on my Retirement savings (PPF, NPS).

Thanks for the SEBI (Investment adviser) L1 course and exam, it helps me to extract the knowledge of Asset allocation and Investment strategies.


My Financial Investment objectives are like:

• My Family Retirement planning
• My Kid's Education and other goals
• My Future Business plan
• Retire Early plan (REP)

You can also share your views / comments on this post.


Rich Investing with my investment portfolio.

#myportfolio

How is my Budget Planning today - July - Sep 2017 - PQFR

How is my Budget Planning today - July - Sep 2017 - PQFR

My paycheck also got an annual increment from the month of July 2017. Here is my PQFR (Personal Quarterly Financial Report) for the Quarter - July - September 2017.

How is my Budget Planning today - April - June 2017 - PQFR

How to set a simple Budget Planning 2017

The PQFR  is based on the Super Budget 50:30:20

Kindly note that, the fixed expenses are reduced to 53 %  and the flexible expenses at around 13 %, as i bought some Tech gadgets in the September. Usually i am increasing my savings and investing by year.  you can also try this with your own values. 

If you interest to share any comments, i wish to listen for that

Rich Investing with PQFR !

Set your own Budget Planning

Set your own Budget Planning

Hi, welcome to - "How is my Budget Planning today ? "

We all have a Budget or may not :)  But, we have an expense and less over savings or investing. We often like to watch the Government's Union Budget and finding the pros and cons for ourselves. If someone asking you, what's your budget planning today ? Then, it seems a different for us, even we ask ourselves. How many of us have a personal budget planning today ?

A Question with triumph !

Of course, most of us don't have the plan to initiate for the Personal opinion, on Budget Planning and also we haven't experience that on results. We are always discussing or gossiping about the Government's fiscal deficit and how we can see our self debt on finance ? Self Financial analysis also an important one and it should be primary than any other, to make Financial planning and be Financially free.

Why i need Budget Planning ?

• Track our Daily Income / Expense.
• Track our Needs and Wants.
• Plan for the Emergency required and unexpected one.
• Prepare for our personal Financial Goals and Retirement savings.
• Financially, we can grade our values.

How to set your own Budget Planning:

• Buy a new Note book (or) download the Expense manager app or related one.
• Input your daily income, expenses and savings.
• Track you monthly reports on Income, Savings and Expenses.
• Do it regularly - After completion of 3 months, you have a PQFR (Personal Quarterly Financial Report).
• Now, you can have an idea on your PQFR that,  what is your income, where your money spending and how is your savings or investing.
• You can do the same PQFR analysis for Half yearly, Annually.

(Image source: unsplash.com/@stilclassics )

Post Analysis:

On our Personal Quarterly Financial Report (PQFR), we can make or set our own budget planning like how much money need for the monthly fixed expenses, and how can we increase our savings, what is the opportunity lies for our secondary income.

Use, the Super Budget 50:30:20

• 50 % Needs of our total monthly income
• 30 % Wants...
• 20 % Savings / Investment...

Let's ready for your own Budget setup :)

Rich investing !

What's your Earning - A Personal Cash Flow Meter

What's your Earning  - A Personal Cash Flow Meter

Earning money, isn't an easy one ?

Absolutely, Earning money is an easy one, but it's hard to keep (grow) it. I mean that the Jobs and Earning money are easy on these techie days. Somebody have the value on their Dignity, Prosper and many of us have, earning more (Money) is a big value. Still, few one can make easy and more of them think that, it's hard to earn. Everyone of us, feeling that the rich one have more money and other's can't. But is it a right away to tell ?

Not always, many of us hurting their health to make wealth (Money). Even Apple's Steve Jobs had earned a lot and respect too, but the health was not support for him.

I am not telling you that, you have to earn more to be Rich (or) Financially Independent. The think is, how you utilize the earnings and to grow, while you have a little money or No job.

What you have Earned ?

As an individual, he earns ₹ 1,00,000 /- salary per month and spending ₹ 99,000 /- , then he actually earned just ₹ 1,000 /- ( 1,00,000 - 99,000 ). He is not earning ₹ 1,00,000 /- (Not keeping). If another one is earning ₹ 20,000 /- and saving a ₹ 5,000 /- at the end of the month, then his expense went as ₹ 15,000 /- and earn a way of ₹ 5,000 /- by saving. Your Earning money must grow is an important.

But, we socially dropping a word that a person earning  ₹ 1,00,000 /- is a wealthy one and who he earns just ₹ 20,000 /- and saving a ₹ 5,000 on that called as a Middle or lower class men :)

" If you born poor, it's not your fault. But if you die poor, it's your mistake"

- Bill Gates, American Business Magnate ( Microsoft Corporation)

"Earning in simple terms, that your Spending should be lower than your income and saving a some percent on that(income) to earn. "

This will help you to give an additional (or) secondary source of income.


Suppose, you have owned a Home to live and you want an another one. If your plan for the home is to Rent, then it's your choice and may create secondary income. Else, it's absolutely ridiculous. Many of us taking a loan for their second home and they are thinking that they are good on Saving Taxes. You have to be know truly that, you are spending your hard earned one for your second home. We must aware about the building depreciation, maintenance, insurance and taxes. Your second home may benefit for the Government to earn taxes or good for the House plumber for their maintenance fee :)

If you have a second home for rent, you should know the Rental yield which is satisfy or  not.


For Example:

Your Home Value:   ₹ 50,00,000 /-
Rent per year:          ₹ 1,50,000 /- ( 12,500 X 12 months, after cutting the maintenance)

The Rental yield is at 3 %  per annum


Suppose, if you are going to invest in a Bank FD - 1 Year, which gives 6 % p.a. instead of second home.  then,

your earned interest income ( 1 Year):  ₹ 3,00,000 /-   [ ₹ 25,000 X 12 months, before taxes ]

Which is more than your second home and Zero work here on FD.  You can now think about the other instruments which gives more than bank deposits.

Had you kept the Gold, in Jewels or any size of other type. is it earning for you ? It may appreciate on price in the market, while you sell. We also keep the gold in physical for so many years, without earning a single rupee. It's not an asset, but an expense. What's your earning yield on your physical gold ?


Suppose, if you are started a business with an investment of ₹ 5 Lacs and your monthly business expense at 2,000 and getting an income of ₹ 10,000 /- , then your monthly income cash flow from business is at ₹ 8,000 /- (10,000 - 2,000). If you sell that business in future for a particular value it may appreciate (more or less). Some times, may your customer or retailer not paying after getting the product from you. It will also make delay on your monthly cash flow. So, What you have got in your account on that period is meant an earned cash flow.

Investing a part of your income to grow regularly. Your regular cash flow meter is on your regular savings or investing. Keep it on systematic.  I recommend you, that you can try the Rich Dad Poor Dad's  CASH FLOW CLASSIC game (Web / Google playstore) - The game about investing. So, you can get a better idea on your income, savings, debt and understand about the Cash flow meter.

Start  your meter with postal savings, bank deposits, stocks, mutual funds, realty, or any regular cash flow offer...

RICH INVESTING 

The Sharp Knife cuts (hurts) your dream - Inflation

The Sharp Knife cuts (hurts) your dream -  INFLATION

Can anyone tell, 'Why your dreams never come true ? "  OR  Not always ?


I am always start with a caution and raising questions myself. Even starting an article with a question in this blog :-)

No need to worry (or) stop, but we have to ask question by ourselves, with a word, 'CAUTION'. We are having the fixed habits, but not having a flexible one.

• We go for the School Education
• We go for Graduation
• We go for Job
• We go for Wedding
• We go for Kids
• We go for teaching the above to our kids
• We go for Retirement

and finally, we felt bad that something we are not achieved (or) not happy with what we had / did.

Why... ?

On our school and graduation days, we have so many dreams and likes to get. Then, we think that we can get after our job (Day Job). But, that is the area, we don't have a flexible one. We go for a job, We Spend... Spend... Spend... on our money, not with our precious time ! The time is the matter that can take us to get our dreams and likes on Live. But, we felt badly and go with a fixed one. We have a dream like buying a fancy Car, Apartment, Foreign Trip, Giving a Rich Dinner for your friends. Then, What ?

We just spending, but not achieving for our dreams and likes. Because, we are getting a salary or a single income from our business(Self Employed). We also hanging with our Increment, Promotions, Bonus Pay checks. Even sometimes begging with our Employer(s). We have to understand primarily that the Increment, Promotions, Bonus are giving just for your time or work to the production. If the company make profit, they will do the above for your work or time. Not for you :) The Employer(s) also an individual, if he wants a robot (Automation) for his production, then he can. Really Not for you :) They no need to care about you always, but sometimes. They really need their growth of the company or Government. We think that we don't have a precious time, that's why the employer providing you the PF (Provident Fund), Medical, Insurance, Pension and Gratuity Benefits (We think). So, we also saving a little with our salary. But, we can't get our dreams with that little one. 

Of course, they are providing you some monetary benefits, but they could not save you from the Sharpe Knife.

The Sharp Knife - Inflation

Can you think again, why the Government or Employer giving you the monetary benefits like Increment, Promotion, PF, Bonus,etc ?  They just protecting your work and time from the sharp knife, called Inflation. They can survive ! If the employer is going as a defaulter, some one can undertake their business. Even the Government going on bad debt, they can print more currencies to protect them, then what about you ?  

Inflation just eats you and gaping you from the dreams and likes of yours.

"Inflation is an increase in the cost of living due to rising prices of daily needs. It also being decline in the purchasing power of your money”. 

Work and time for the production; Demand and supply for the inflation !

Usually on many occasions, we plan and save for our buying a Car, Home, but the cost of living (Inflation) rising and beating us. Then we go for the EMI, Loans, debt, etc. Finally, we entered into the Rat Trap, the knife hurts you more. And you too asking your kids to do the same, what you did !

We need a solution with the trap, A Flexible one like a Government (or) Employers' business. We mostly thinking that 'Taxes' are the enemy for us. Taxes is also a good one for us, to improve. Taxes is not a matter, so that we can do saving and investing for the best one. We have to save and invest regularly with a small amount, but take a plan that beats Inflation. May be your Goal (or) Dream is for a short term, 5 Years or 15 Years, you must create the wealth more than the Inflation is important.

• Don't hang yourself under the knife.

• Don't buy cheaper products on Insurance and Investing, and don't confuse with the two (Insurance and Investing) also.

• Try to learn and understand the investment products and its risky that beats the Sharp knife (Inflation).

Knife is not on your hands, but Life is :)

source: tradingeconomics.com