INVESTMENT FUNDA 2011.01.01

There was a mail from my batch mate this morning,
Quote-
Hi all,

FMP when invested from NRI account , the TDS which is deducted is claimed when u file yr nri returns. cant find a better investment than this one from the NRI account.Hassle free and almost 9 - 10% returns from NRI account.

Any special comments on this one.

The other good one I am finding is ULIPs , better than Mutual funds. you have the option of switching over , and have managed to switch over twice at 5700 Nifty levels and back again at 5500 , if can catch downwards 500 points on the Nifty you are already making 10% , this is on top of what the market is giving you year on year. This is normally done online , In case of Mutual funds you keep thinking kab bechoge , when money will come in account and when u will buy again , and if u keep on sitting on yr bum , then market keeps moving in a range and u r still there , kya bolte ho.

daily ki satte baazi to chalti rehti hai.
Das: Long time no fwds , ki ho gaya , kaam karne lag gaya hai kya......

Kaushik: kahan ho aaj kal , apna to route more or less Indonesia - Korea hai.
Kya bolte ho bhai log , how much lead will England take today , my bet is not more than 175.

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As it so happened England is presently with a lead of 236 and still going strong with 7 wickets in hand.
Now moving on to more important things, as I replied to him:Hi Vivek

1. Point regarding FMP is well taken. However if you invest for a period of more than 1 year in BSL Dynamic Bond Fund/ HDFC Cash management Fund Treasury option etc your returns will not be too different. With the added option of liquidity. In HDFC CMF you have just one day of lock in period. The former has returned 9.4 % return over 5 years and latter about 7.5%. Not too bad for a NRI. I’m getting my automatic refunds from IT every year.
2. Regarding ULIP – Sanatani has been quite vocal and I agree with him 110%. In fact after all these years why wste money even in any insurance- I’m sure our families can be comfortable even without the premium of Term Insurance . Because most of the insurances are as it is void with most of the international waters being declared as Piracy Infested. They’ll not pay a penny.
3. Finally about MFs. Pls do not, repeat do not ,churn . With a daily STP or a SIP of about 10000 (yes 10K) the returns in the right kind of funds will be enormous and will be effected by about 2-3 % over 10 years if you use too much brains and churn. Do that with your stocks if you like but not from investment point of view- only for the thrill of a ODI.
4. There is something called IRR (internal rate of return) which is very complex to calculate. But it is always in favour of an investor who puts in money very very regularly and during a fall puts MORE money.
5. The main question is when to sell? Start selling about 3 years before you retire (when is that???).In our case you can start selling methodically even after you retire since the debt corpus shall look after the period of any upheavals in the market. With the market like this one you can never time it. Check the chart of last 365 MDA and you’ll find that it was very easy to take the right steps only 2 months after the market would have moved.
6. Another very good suggestion that I can give is invest in NIFTY BEES and JUNIOR BEES. ETFs which can be more closely followed and traded the way you are intending to do. BUY low and sell high. Believe me you can do much better there. Of course not if you are deep into derivatives in which case your auditory nerves would have already closed to saner advice


BSKMH