23 Sep

Focus on the big picture

Focus on the big picture
Investing is not always about getting the highest returns or beating the markets. It should be about achieving one’s financial goals like safety for family, better life for children, maintaining one’s lifestyle on retirement, building a secondary passive stream of income or creating wealth.
Hence, as financial consumers it is more important to get the macro picture right rather than being too bothered with smaller things. Let me explain this with suitable examples. Do note that the numbers and names are chosen randomly but they would be suited to your personal finances too.
1. Ram and Dennis are of the same age and earning similar incomes of roughly Rs 50,000 p.m. While Ram saves 50% of his income and invest @ 6% p.a. while Dennis saves only 20% of his income and searches for high return products which yield 15% p.a. consistently (tough to find though). Fast forward 10 years. Ram accumulates Rs 41 lakhs whereas Dennis dabbling for high return products could only accumulate Rs 27.50 lakhs. While earning high returns are not in our control, focusing on more savings is definitely within our control. Message is focus on Savings and not high returns.

2. Anu has a financial portfolio of roughly Rs 2 crores. She has Rs 10 lakhs invested in equity markets and equity mutual funds (roughly 5%). The remaining (95%) are deployed in FD’s and other fixed income bearing instruments which yield her 5% p.a. Anu spends lot of time tracking markets and gets very worried with the volatility. Now let us imagine, even if she earns 20% returns from equity portfolio, her overall returns will only increase to 5.75% p.a. which is still a small number. Was the allocation in equity worth the effort?? Anu would do well to focus her energy on her 95% wealth which is stagnating. Message is focus on good meaningful allocations to get better outcomes.

3. Tenali has an overall financial wealth which is roughly Rs 5 crores. He had invested roughly Rs 20 lakhs in a mutual fund which got stuck because of supposedly aggressive investments. This has given him such a rude shock that he is not able to come out of it. But think of it –this investment is hardly 4% of his wealth. This loss could be made good easily by prudent management of his other 96% wealth. Message is focus on the overall numbers and don’t get disheartened if some small portions go bad.

4. Desmond is a rich retired man with financial wealth of Rs 3 crores with predominant investments in safe investments. He has invested Rs 15 lakhs in equity products (just 5%) and is constantly complaining that equity does not give good returns. His monthly lifestyle expenses are a maximum Rs 50,000. Even if the Rs 3 crores are conservatively deployed, he can manage his regular expenses well. There is no need of equity linked allocation for Desmond which is spoiling his peace of mind. Message is focus on the financial goal and not high returns.

5. Ravi loves the growth of the equity markets and is fairly convinced of its long-term prospects. He however fears the short-term extreme volatility of equity assets. He has hence marked his allocation to equity between 35% to 50% and the remaining in conservative allocation. The equity allocation is also fairly diversified in different strategies to give better risk adjusted growth. Message is to focus on asset allocation and diversification.
The list and examples can go and on. But the message is very clear. Focus on the big picture which can make meaningful difference to your financial life. Everything else is a plain distraction.
As financial planners, we have been continuously advocating the principles of asset allocation, diversification and cost control so as to make the most of investment opportunities based on one’s risk profile. We believe if Risks are managed well, the returns will take care of itself.
Do connect with me at 98455 57582 or naveen@naveenrego.com, for getting your focus on the big picture in managing your personal finances right.

Wishing you all a safe and exciting investment experience.

1. It is very important to consult a Professional Planner/Investment Adviser while implementing any of the above ideas.
2. The above are mere suggestions and not Investment Advice as individual cases might differ.

Naveen Julian Rego-CFPCM
SEBI Registered Investment Adviser

22nd September 2020

23 Sep

Boom times in Equity Markets- Invest/Stay or Exit?

Boom times in Equity Markets- Invest/Stay or Exit?

As I write this, equity markets locally and globally are on fire. While things on the ground have got worst, the equity markets are rocking. This new found love with equity-oriented portfolio is driven more by the generous monetary policy being followed by most of the central banks across the globe. Interest rates have been reduced drastically (near zero in some economies) which is fueling investment in equity assets. As long as the interest rates are kept lower, equity markets will give a damn to corporate earnings.
The big question is till when the party will last?
And what should be the typical strategy of an equity investor be- invest more, withdraw or stay invested?
My guess is- best times to invest in equity portfolios for very high short-term returns are slightly behind us. Does this mean there would be a big crash? My humble answer is nobody knows. But one has to be selfish to his/her condition and act accordingly. The following points will help:
1. Maximum allocation to equity linked portfolio should not be more than 50% of one’s wealth. Investors who are looking for regular income like retirees or those having a very low risk profile should have the equity exposure limited to 25% or lower.
2. Aggressive extra investments which were planned to be done on a regular basis to benefit from the earlier lower prices can be scaled down now. These could ideally be moved to safer asset classes like fixed income debt mutual funds or Fixed Deposits based on tax efficiency.
3. Regular investments in equity investments for those financial goals which are very far (5 years and more) and those investors whose allocation to equity is much lower based on their risk profile can continue investing and benefit the fruits of long-term investing. However, avoid one-time investments.
4. Investors who have breached their equity allocation limits need to gradually scale down (exit) on a regular basis and de-risk themselves. They could also invest increment savings to safer asset classes like fixed income debt mutual funds or Fixed Deposits.
5. Exit those equity portfolios gradually which have a financial goal maturing in the next 3-5 years and move that to safer assets as mentioned earlier.
6. Non-core equity portfolios should be the first to be exited. Best time to clean up now.
7. Equity portfolios should be sufficiently diversified (not over diversified though) across styles and geography.
8. For clients who have large exposures to US Markets through technology stocks (either stock options or active purchases), the humble advice is diversify.
9. Do not expect returns of last 3-4 months to cloud your future investments.
10. Speculative transactions and day trading is a strict NO-NO.
The intention of a well-designed financial plan is to help one to reach their financial goals and not always to get highest returns. As long as we manage the risks better- returns will take care of themselves. So, a focus on asset allocation (not put all the money in one basket- spread in equity, fixed income, gold and real estate), diversification (not to have a style bias within an asset class) and lower costs would surely help.
So, go and revisit your financial plan and your overall allocation strategy. Now is the time to do it. If confused, then take the services of a fee only financial planner who can give an unbiased opinion of your condition.
We request you to get in touch with us at 98455 57582/ 9741157582 or naveen@naveenrego.com, for strategies to create long term sustainable wealth.

Wishing you all a safe and exciting investment experience.

Naveen Julian Rego-CFPCM
SEBI Registered Investment Adviser

22 July 2020

23 Sep

The costs of Investing- Are you Penny Wise and Pound Foolish?

The costs of Investing- Are you Penny Wise and Pound Foolish?

We all invest in financial products to fund our financial goals. Some might do this on their own and some might take the help of financial intermediaries (like agents, planners and advisers). Whatever mode one follows, the cost of investing can have a large bearing on your overall returns in the years to come. While benefits from investments will accrue over longer period of time and are uncertain, the costs are more or less certain. Hence, having a broad understanding of the costs/expenses is very important.
The costs of investing can be broadly divided into product costs and intermediary costs.
Product Costs:
Financial products like Bank Fixed deposits, savings account and government savings schemes (typically postal savings) do not reduce their costs if approached directly by you. However, one can have substantial lower costs for Corporate/NBFC FDs, Mutual Funds, insurance plans and equity transactions through discount brokerage firms if done directly. Within this direct option, we might have specific plans in insurance and mutual funds products which have lower costs than others without much change in benefits.
Intermediary Costs:
These costs might be like the brokerage you pay to the broker/agent (one time or annually – generally embedded within the product) or the fees one pays (one time or annually) to a fee only Financial Planner.
Let me explain this with numbers for your benefit. Mr. Rakesh Pinto has a total financial wealth of Rs 1 crore. He deploys Rs 75 lakhs in Assured return schemes (based on conservative risk profile) like FD’s, PPF and other government schemes. The remaining (25%) investment are done in equity mutual funds. The costs would be as follows:
1. Consulting an agent or done oneself through a broker’s online platform: Rs 50,000/-p.a. (product cost Rs 25,000 p.a. and agents/brokers earnings Rs 25,000 p.a.)
2. Consulting a Fee only Financial Planner: Rs 41,250/-p.a. (product cost Rs 16,250 p.a. and planners’ fees Rs 25,000 p.a.).
With the above numbers, it is absolutely clear that partnering a fee only financial planner does not increase the costs (actually decreases the costs) of investing which is the traditional thinking. The benefits would be much more if the portfolio sizes are larger or proportion of market linked portfolio is larger.
The above Expenses/Costs have been derived based on the general expenses charged by mutual funds. These are as follows: Regular active equity funds annual expenses 2% p.a., direct active equity funds 1% p.a., direct passive equity funds 0.25% p.a., direct active and passive equally split portfolio 0.65% p.a., FD and government savings schemes no reduction in costs and Annual fees of a Fee only Financial Planner is Rs 25,000/-( for a Rs 1 crore portfolio). We have left other financial products costs like direct equity and PMS for the sake of simplicity.
The regular option of equity funds is generally advised by financial agents/bankers/brokers. The extra expenses over the direct option is their earnings. So, it could be noted that the advice from your agent/broker or the online platform is not coming free.
Direct modes of investing in mutual funds/passive funds is generally advised by Fee only Financial Planners who charge an annual fee. They would also help in building a direct equity/ETF portfolio as part of equity allocation to bring down the annual costs still more. The costs of investing would still go down if recommended to buy insurance plan directly online as online insurance plan expenses are much lower
While lower costs of investing are the obvious benefit in partnering a fee only Financial Planner, the other kicker is the unbiased financial advice. A fee only financial planner would also help a client to avoid costly mistakes (this is the cost of investing based on one’s own partial knowledge) and hunt for tax efficient products thereby increasing the benefits of this partnership.
However, there could be an argument that one can research and invest directly in active and passive options at much lower costs without the support of a fee only financial planner. It is quite possible. But one should be able to devote their quality time and effort in managing this. And quality time and effort do not come free. It will eat into one’s family or professional time. Costly mistakes done in this strategy can make this quite expensive affair (time and money lost) for many people.
I leave the choice to manage one’s personal wealth to the reader. Always know that any choice made has a cost to be paid. Don’t be penny wise and pound foolish!!
We request you to get in touch with us at 98455 57582 or naveen@naveenrego.com, for strategies to create long term sustainable wealth at much lower costs.

Wishing you all a safe and exciting investment experience.


1. It is very important to consult a Professional Planner/Investment Adviser while implementing any of the above ideas.
2. The above are mere suggestions and not Investment Advice as individual cases might differ.

Naveen Julian Rego-CFPCM
SEBI Registered Investment Adviser

18 June 2020

21 Oct

The Role of Financial Planners in Wealth Creation

Financial Advisors as a community is more misunderstood than understood. Let me explain to you the various types of players with a simple example.

What do you do when you have headache? You visit a doctor or hop to the nearest chemist shop.

What does a good doctor do? He will diagnose the disease and prescribe appropriate solutions like changing the diet, taking rest, a dose of medicine etc. He will also review your health after a few days.

What does the chemist do? He will recommend a pill without knowing what exactly has caused the headache.

The stark difference between a doctor and a chemist is that the former is a solution provider and looks for curing the disease and the latter is a product seller, trying to maximize the sale.

Now let us look at the financial advisory industry where we have solution providers like professional financial planners and pure product sellers like financial agents, postal agents, insurance agents, banks and stock brokers.

A financial planner’s objective is to provide comprehensive solutions to an investor’s problem but a financial agent is a mere product seller out to make profits from transactions. A good financial planner is one who is able to give you a combination of products, if required in the right proportion and one which is most suitable for you.

Now how does one differentiate between financial agent and a professional financial planner? The following are the differentiators:

  1. Financial agent represents a financial institution and only is interested in selling a particular product. Financial Planner represents you and recommends appropriate
  2. Financial agents main earning is commissions/brokerages. Financial Planners charge fees for unbiased advice.
  3. Financial agents are looking for short term relationship. Financial Planners are partners in your long term financial goals and conduct regular reviews.

Some basic qualifications to search for a financial planner is educational background, ethical approach, experience, market standing, infrastructure, type of products he deals, compensation mechanism etc.

Financial planning relationship is a very delicate relationship where both the planner and the client should move together. Just like we respect a doctor, the same should be done with a financial planner.

Though it is said that health is more important than wealth, many a time we exploit our health in order to earn wealth. So it is very important to invest this wealth rightly by partnering a professional financial planner.

21 Sep

10 Common Financial Mistakes

  1. Postponing investment decisions as it is low priority area. This can be very costly in the long run.
  2. Higher income/savings means more wealth. This is big mistake. How does one utilize his higher income /saving in productive investments makes one wealthy/poor in the long run.
  3. Stock trading can make you rich very fast. Actually the other way round is more true.
  4. Investing in stocks requires lot of time and research. Actually good companies always deliver if you have the patience.
  5. Mutual Funds are very boring to invest. Actually the main reason to invest is to increase returns and make the activity boring.
  6. Life Insurance is considered as saving. In reality it is a very costly saving but is pushed by life insurance agents.
  7. Unit Linked Insurance Plans (ULIP’s) are mutual funds with life cover. Actually they are costly cousins of mutual funds. They neither give large life cover nor give better returns.
  8. I can manage my own finances. If that was so easy why are very few wealthy even if they had similar resources.
  9. Credit Card and Personal Loans are good. Yes they are good if you are disciplined else they are best left to the bankers.
  10. Real estate always appreciates. Please check the risk factors and don’t get influenced by the sentiment.
16 Jul

10th Year Celebrations – Part 3

We had celebrated 10 years of our Financial Planning & Wealth Advisory Practice on 13th July 2013. On this occasion, some of our esteemed clients had spoken about their experiences with us. Here we have Mr Shankar Kotian speaking. He is B.E(Computer Science) from NITK, Surathkal. He was a software engineer in Infosys for 15 years, managing large projects for overseas customers. He recently moved out of the IT world and is now full time into agriculture and business.The event was held at Hotel Deepa Comforts, MG Road , Mangalore

15 Jul

10th Year Celebrations – Part 2

We had celebrated 10 years of our Financial Planning & Wealth Advisory Practice on 13th July 2013. On this occasion, some of our esteemed clients had spoken about their experiences with us. Here we have Mrs Ashima SushilChandra-General Manager-Responsible Care- BASF Ltd, Mangalore speaking. The event was held at Hotel Deepa Comforts, MG Road , Mangalore.

14 Jul

10th Year Celebrations – Part 1

We had celebrated 10 years of our Financial Planning & Wealth Advisory Practice on 13th July 2013. On this occasion, some of our esteemed clients had spoken about their experiences with us. Here we have Mr Ashwin Rodrigues speaking. He happens to be a CA turned winemaker. Owner and Winemaker of Good Drop Wine Cellars Nasik, specializing in sparkling wine The event was held at Hotel Deepa Comforts, MG Road , Mangalore.

21 Jun

Managing Retirement Surplus

Many elder people, who move away from active work either on attaining superannuation or optionally have to face many challenges in managing their retirement surplus. The foremost would be to have a monthly income to take care of regular expenses. I have compiled a list which I believe would be very handy for those who would be looking at creating a retirement income portfolio.

  • The first step in managing the retirement surplus is to pay off any outstanding loans either on a car or a house. This would reduce the mental stress when you are retired.
  • The next step is to appropriate amounts for any uncompleted major financial responsibilities like children’s higher education or children’s marriage. The financial products for this would be fixed deposits or debt mutual funds. Shares, real estate and equity mutual funds could be avoided. In case, gold needs to be accumulated for marriage purpose of children then it is advisable to go through the mutual fund route by investing monthly (SIP) either through an gold ETF or an open ended gold fund. The monthly purchases would reduce the risk of market timing for gold purchase.
  • Next, would be to keep appropriate balances in a savings a/c or liquid fund to manage short term emergencies. Ideally 6 months of mandatory regular expenses (groceries, medical expenses, bills, travel, fuel etc) should be parked here.
  • The continuation of an appropriate medical cover is very important at this stage. Choose a medical insurance company which would cover most of the medical expenses till maximum age. Do proper health declaration while filling the proposal form as non disclosure would render the contract void. However, have a proper diet and take good care of your health.
  • After managing the above steps, take a relook at your entire financial net worth less your primary residence & gold ornaments with the above adjustments (mentioned in the above steps). This portfolio (after some restructuring) if properly deployed would give you the desired monthly income along with any other monthly pensions/income. This portfolio has to be invested judiciously taking the following
    factors into consideration:

    • Life Expectancy: Plan your finances well because of medical advancement one generally lives for between 75-85 years. This means your finances should last for another 15-25 years.
    • Inflation: Regular monthly income what you receive now would not be sufficient at age 70 yrs because of inflation. Utilize inflation beating products like equity mutual funds in your financial portfolio.
    • Taxation: Paying taxes is good, but avoid taxes through judicious deployment of one’s financial portfolio. Use debt mutual funds in addition to fixed deposits.
    • Real estate and direct equity investments including IPO’s could be avoided as they would require more skill sets and large resources.
    • Invest upto 50-75% financial portfolio in safe investments like Bank FDs, Postal MIS and Senior Citizen Bonds. The remaining could be invested between equity and debt mutual funds. However, do not over diversify.
    • Review your financial portfolio once every 6 months. Restructure, if required.
    • Do not invest in high return earning speculative schemes. Get rich quickly schemes generally makes one poor quickly.
    • Do not invest in Life Insurance (traditional or ULIPs) as they are costly and do not serve any purpose for your financial goals.
    • In case the regular income is not sufficient from the capital deployed, then do not hesitate to draw into the capital. Do not live poor and die rich.
    • Have your nomination across all your investments and have a proper registered will in place. Make a list of all your finances and share this with at least one close member in the family.
    • Enjoy your money and let not money management give you more stress.

People who find the above steps confusing and complicated can associate with a good fee based financial planner/advisor who would guide you in each step as per one’s financial goals.

23 Dec

Panic in Equity Markets-Opportunities for Long Term Investors

The problems in global markets are having their effect on Indian Equity Markets. We believe the problems would not solve anytime soon and this would lead the markets even lower in the coming weeks and months.

We as Financial Planners are not the ones to predict the market bottoms but would like to give some perspective from similar such events in the past.

  • There would be lot of negative news flowing from the media and analysts.
  • People would get bored and panicky with equity assets including equity mutual
    funds. Many would lose patience and look at exiting.
  • There would be flight to safety for capital safety products and fixed deposits.
  • People also would invest in so called safe assets like gold & real estate.
  • Insurance companies would push capital safety products like endowment, money
    back or highest NAV guarantee schemes.

However, invariably it has been seen that after a period of 3-5 years from such events, lot of such issues get solved. Equity portfolios which get beaten down in panicky markets reward patient investors with handsome returns in a 3-5 year time frame. A case in point was the terrible situation prevailing around end 2008 and beginning 2009. Investors who came in then made upwards of 100% returns in one year’s time frame. Most of us would have missed the bus then.

Our sincere advice to the readers is as follows:

  • The party in gold and real estate would not last long. Reduce allocation to gold and postpone investments in real estate.
  • Do not get carried away with high returns of fixed deposits and capital safety products.
  • Increase allocation to equity assets in your overall portfolio preferably through diversified equity mutual funds.
  • To reduce the risk of market timing, invest your money over the next 6-12 months.
  • Do not put any money in equity assets which you want in the next 3 years and have the capacity to hold your equity assets for atleast 3 years.
  • Do not indulge in day trading and speculation. Hence completely avoid complicated strategies like futures & options.
  • Ignore the bad news and focus on your financial goals.

For clients who have long term goals( more than 5 years away) like children’s saving, wealth accumulation and retirement portfolio these are the excellent times to increase allocation to equity.

However, one should not get carried away by so called high cost/non transparent products like Unit Linked Insurance Plans (Pension, Children or Wealth) or Portfolio Management Schemes. This is because the main beneficiaries of such products are the agents who sell rather than the ultimate investors.

We believe equity markets would be available at CHRISTMAS DISCOUNT RATES ranging from 25-50% over the next few months. Do not lose the opportunity and regret later. As the legendary investor Warren Buffet says “Buy when there is blood on the Streets”

We wish each one of you a MERRY CHRISTMAS and a PROSPEROUS NEW YEAR 2012.

Happy Investing!!