New approach to FFP

 
New approach to FFP

Investors now a days are caught in a conflict between what their parents and elders practiced and what they should themselves to now.
Traditionally anything to do with the capital market was frowned upon by the elders and was called Satta . If they were not in the government job they had their EPF and they could plan easily with 12% bank interest for their FDs. Their life revolved around saving as much as possible by cutting down the expenses and keeping the savings as high as practicable. Biggest expense used to be daughter's wedding and building a house, both of which used to happen closer to retirement.
Now our young Seafarer who goes out to sea at the age of 18 or 19, when he starts earning he gets torn between the advice that he gets from his parents and what he sees around him on media and television. Whether to choose between a well trodden path of savings in the bank or investing in mutual funds and stocks which some of his colleagues also follow on board.
This is a question that almost 90% of the youngsters ask me.
Answer to the question lies somewhere in between both of them - that is the conservativeness of the parents and the modern Outlook of Equity investments.
The economy in the yesteryears before 1991 lay in savings and keeping the money locked either in the safe or in the bank. That was the biggest reason for our low growth rate. The governments attitude was reflected in its citizens also.
The government used to control who will eat what ,who will produce what and in what quantities. Things went even to the extent of what anyone will wear.
There were 3 brands of scooters with 5 year waiting list and 2 brand of cars. Income tax rate was as high as 95% .
Slowly everything changed as the income tax rate was reduced to 50% and below and later the economy was opened up in 1991 and the licence Raj was almost abolished.
This liberalization did not only remove the shackles from the producers manufacturers and importers but also from the minds of the people who slowly started opening their coffers.
Slowly our economy became the economy of consumption. Consumption boosted the earnings of the companies and also their profits. The new companies were encouraged to access the public for money via IPOs. Thus people got access to a new source of capital enhancement.
In 1993 the country got exposed to a new method of investment which could involve even the smallest earner who had the capacity to invest at least ₹5000 at one go and later as low as ₹500 per month.
What we are seeing is almost 25 years of capital market development made possible for the lowest of earning population.
So where does the old thinking fit into this?
The answer to this is- in the wisdom of savings that our forefathers taught us.
The wisdom of the old and conservativeness applied with the technique of today is the answer to the modern approach.
No longer can we afford to save as much as possible and expect to get high returns because this is a economy of consumption.
Nonetheless we must save like our elders taught us. Because of you don't have the habit of saving how will you invest it.
 If we will not spend on all the sectors that exist, the companies will not profit or move forward  and we will not get the  returns on MF and stocks. So it has to be a wise mix of spending and consumption.
We must remember this that in the mutual fund returns that we get from the capital market it is the contribution of the lowest of earners and even the non earners like beggars and destitutes. Everyone buys goods and services and pays GST on it. Company creates profit and passes it on to us.
If everyone in the country decided to only save then we will be back to pre 1991 condition. Everyone decides to mostly invest and not consume that will also lead to imbalance.
So this brings us around to conclusion that economy would only start moving and remain in the fast lane as long as those who have a large amount of dispensable income to consume and also invest.
This automatically brings us around to the topic of discussion that we should conjoin the old philosophy and wisdom of saving and a modern outlook of balance of investing and consumption.
Home must be built,paints , electrical gadgets must be bought, cars and new clothes must be bought more often .
Dinner outs must be had and also Zomato services must be used, holidays must be spent in hotels and of course unhealthy lifestyle must be pursued so that Pharma companies and hospitals remain in business.
So help you God.

Regarding Financial Planner or Professional Guidance

 Regarding Financial Planner or Professional Guidance


Few days ago I had suggested to the group members to opt for a professional review of their portfolio and continuity of investment journey.
The reason  was largely personal and as follows:
1. When a member joins the group and he is fresh- guidance is provided to him to start his journey in a methodical and minimal disruption to his lifestyle.
There are also cases where people have been investing in traditional avenues of real estate and fixed deposits.
Both  the classes of people do not entirely give up their approach and adopt our method of equity investment in a nominal way or as a token. The way their mind works is -"let me start of in a small way and later increase my investment."
But they never truly take up the equity mutual fund way entirely or substantially which can make a difference.
2. Some of the people do take up in the right amount and proportion of 35% or more of their annual income.
But at any critical moment like the past pandemic and lockdown or even a call or rise in the market they stop their systematics.
3. There is another smaller group which does continue their investment but do not give a feedback on the progress or performance of their portfolio.
Now I believe that for all the above category of people it is important to be connected to someone who can give them a continuous and consistent feedback and also suggest any changes.
I have observed that the worst portfolios are of those people who are otherwise close to me or well known to me. Which brings me around to the conclusion that they do not take me seriously.
Right now I am in the middle of a wedding in Vadodara and two very important things took place.

First, I met a person who had just survived a life threat earlier this year. I had gone to meet him and in that moment he realised that he wanted me to look at his portfolio which was being handled by foreign bank based in India. I had summoned his wealth manager and given him a earful and restructured his portfolio to a slightly more aggressively tone.
I was pleasantly surprised that his portfolio has increased by about 25% in 9 months- which was better than my own.
Now apart from my own, this is one portfolio that I could see in detail and compare it with what it was earlier.

Second episode which was even more important - I met an Australian fintech person who manages the software for Australian pension system.
He elaborated to me in great detail how various options are given to the pensioners there. He reviewed the small endeavour that I have made and has approved of the method and assured me that it will take care of everyone who follows this path diligently.
As I have learnt that in the Australian equivalent of NPS , a contributor can himself manage his own Corpus instead of the fund managers( as an option).
So we are precisely doing this on our own.
Further than this I would suggest that please do form clubs in your city where you can meet at fixed intervals of 2 months or more and discuss among yourself what is the right and wrong that you are doing in your portfolio.
The ground rules of consistent and perennial or regular investing should remain intact.
In fact in the past 7/8 years many a times I have underlined the importance of organising yourself city wise and having regular meetings like we have in Dehradun.
Furthermore we can have regular webinars to discuss our personal finances in which you can join with the audio only.

Hope this awakens the sleeping ones.

Changing the Mindset

 Today a member of Finworld@Sea group suggested to others that we should keep our traditional Life insurances running..

Quote///At least with the name of lic policy and paying premium yearly save some money. Because i have seen lot of Mariners spending all money and going back to ship without saving anything.

///Unquote.

I was actually pained to read it after so much of the effort that I'm trying to put in to change this thinking.

Still I tried....

This is my response...

 All this is old thinking and behind us. That is precisely what we have been trying to change for 25 years.
Days of little bit here and little bit there and 4-5% returns are over. Now neither can you buy property like yester years and hope for it to multiply from 1cr to 200cr , nor can you get 12% returns from banks.
We move cohesively and so far over 2200 people that I'm aware of are on this path and plenty have retired safely and others are guiding their colleagues further  on their ships.

Over 11 people in this year alone have reported reaching the critical point of 1 cr , and by some strange coincidence most of them are of 2/O and 3/E rank.  The reason for this could be that the seniors do not wish/like to share their status for some reason.
So you see, it's not sufficient to halfheartedly prepare for future life, it is not possible.
The effort has to be well thought and researched and then followed aggressively  only then will you be able to get the best out of the hard work that you're putting on the ship.
Don't count the days on board in terms of the salary, think of it as the days of sacrifice and blood , sweat and tears. The days away from wife, children and parents. It represents time that will never come back.
Hence it is in our interest to be determined and ensure that our salary is treated like a seed or sapling which SHOULD grow into a big fruit tree. This tree will give fruit if we care for it for some time- till it reaches a certain height (or quantum) after that this tree will give you such sweet fruits and in such sumptuous quantities that you could have never imagined.
Instead of looking around at toxic products , we must keep reading to see how the equity scene is changing or the bank rates are moving. e.g. The rise of Index funds and ETFs, some optimism for debt funds etc.
We should read more about Personal Finance to understand the pitfalls.
In my opinion more than money it is Time , Patience and Strong determination that is required to attain Financial Independence.

ATTAINING FINANCIAL NIRVANA

 ATTAINING FINANCIAL NIRVANA

I have been asked a very logical but an innocent question that when should the investor who has been investing with the goal of retirement planning, consider that he is on his way to financial freedom.
Should it be a landmark in the Corpus, should it be some percentage gain in,form of cagr or annual return or what.
Assuming that investor has constructed a proper portfolio with equity as the stronghold and fixed income schemes to support as a buoyant measure...
There will come critical level after a few years which can be approximately 5 to 7 years that one's portfolio will mostly remain in the green round the year despite the market taking a nosedive or  staying sideways which means neutral.
This stage will happen because in the previous span of 7 years one would have invested in a systematic manner and thereby gaining the advantage of rupee cost averaging and since normally it has been seen that in a 7 year period there is one cycle of bull and bear.
Beyond this as the investor will move on he or she will find that the return on his investments are becoming  more or less equal to a his monthly take home salary.
This fact he will judge for himself and if he does not touch his investments these gains will keep increasing.
Beyond this a stage would come when the annual rise in his portfolio would be much more then the annual take home salary.
This stage of course will definitely take more than a decade to come irrespective of the amount that one puts in.
 But it will definitely be a very satisfying and even an exhilarating stage a corresponding stage of what one may call a financial Nirvana.
When a person has reached the stage where the net corpus is beyond the above mentioned critical limit and  if he withdraws from it for his family needs the sum will never diminish.
If a person has been investing consistently along with his earning from profession then there will be lot of changes that will come into his nature.
First will be the change of equanimity: in so many years he would have seen the market rise up and come down almost everyday and every week so he becomes used to it. Even at 10 to 15% fall will not disturb him .
Second change that will come into his nature is of keeping on the fixed path and becoming lethargic to look into other popular avenues of investment. This should be taken as a good sign because historically the investments which are boring are the ones which give immense Returns.
Third change that comes into the person is a calmness settles into his nature. Since he is contented financially he starts pursuing his hobbies & looking after his family and also starts the exercise of discovering himself.
Somewhere along the stage he will find it necessary to give up his profession and concentrate more on himself and the people around him.
This is the stage where he can consider himself financially independent and having attained the stage of Financial Nirvana.

What is so DIFFERENT about Financial Planning for Mariners

 

 This article could be approached  in so many ways...
Why is the life planning of Mariners different?

Why should the life planning of Mariners be different?

Why should mariners plan differently for the future?  And so on...

The reasons why none of the plans that conventional financial advisors belt out with percentage and graphics would fit our conventional mariner is because...
1. The cash flow is very different from any organised sector.
2. The process of career promotion is quite different than conventional employment, all the same it is compensated by the top most rank being achieved at early age.
3. There is no pension system or social security.
4. There is no definite healthcare system.
5. There is no adequate provision for any compensation in case of disability or death.
6. The income from one year to another could differ by as much as 35% in case the resident status changes.
7. Status of employment is most uncertain at its best and is sometimes beyond the control of the employer himself.
8. The security of his employment is dependent upon so many external agencies and legislations.

9. The most important one that I find is that when one returns home after employment there is a complete break of from the place of employment. His source of earning stops abruptly. I can't think of another profession where this happens .

In this regard I would like to mention my personal experience of receiving salary all round the year. This happened when I was working with Maersk tankers and it was basically the monthly salary split into two and being distributed and given to us all round the year. Apparently It looked that we were getting only half salary and company was benefiting as it got to keep half of a salary for another 6 months. But the way it worked was that I got to invest all round the year without break thereby taking advantage of all the ups and downs of the market. It also enabled me to take advantage of the 2008 economic meltdown. Probably if I was paid the same amount in 6 months as usually it is done in shipping and certainly my investment would not have taken place all round the year.

This is one factor which keeps playing at the back of the mind of our typical sailor and affecting his chain of investment..

10. Detachment with reality: while growing in age and rank, our mariner becomes unconnected with the rise in the cost of living, realistic issues and challenges of shore life. He starts seeing things through the glasses of his colleagues on board who themselves may be or may have become quite uninformed.

Because of all the above reasons it is impossible to follow the typical formulas of equity allotment , asset allocation to debt or any fixed income scheme which gives sub-inflation returns.
One has to become aware and adopt Financial Literacy at a early stage and get on with it as soon as one starts getting a regular salary. In actual practice there is no limit how much one should save and invest.

The earlier one starts ...he lays the most important seed for the tree of his wealth or The Wealth Tree ( from today onwards I will use the acronym TWT instead of Portfolio or Corpus ...in my posts, articles and blogs). All the future contributions to his investment will go towards providing for the fertilizer, water, upkeep of this tree. 

Initial years will require extra care for this tree... later it will start looking after itself. Soon there will come a stage when fruits will start appearing on this tree .
Still later this tree will be robust and will not require any attention and will give such tasty fruits and in great quantities.
All you need to do is be Financially literate and then focused. In this journey you may not need any advisor except your own family.
Be determined...because nothing in life will work with the formulas...neither the inflation nor the returns, neither the expenses nor your living standard .
Your living standard will be more dependent on your family and also your peer group.
The most expensive events will occur at later stages of your life and most unexpectedly. e.g. children deciding to  study abroad, some serious illness in family members, marriage of children or siblings etc.
One needs to be prepared for as much as one can and take all steps to mitigate  such risks. But how can one do all this? Simple ! By being connected with oneself and ones family and discussing things with them at all stages.
Discussing finance and all other plans and challenges on the dining table threadbare so that all family members are aware of your plans and can also be encouraged to share theirs with you.
Your spouse and children will understand the importance of astute Financial planning and will try to co-operate as much as possible in the journey.
If you wish to add something, please send your comments, I will certainly edit this article to include your feedback.
©Rajeeve Kaushik
2Sep2022

Report Card of 50 Funds that have lasted for 25 Years

 https://m.economictimes.com/mf/analysis/what-is-tax-advantage-of-investing-in-balanced-advantage-funds/articleshow/93892495.cms?utm_source=newsletter&utm_medium=email&utm_campaign=NewsDigest&utm_content=MF&utm_term=2%20%20%20%20%20&ncode=de011d7747e1706e6e95a58801b4862ccf0c9deefee08be5d3823fe9742296683efddda0c489f6361b1cf35adff8be22e6d036614ce4ceda0c1de1f9232680fe678c77b8a101a87ac03cf2d107c4cd35

Thank you CE Swapneil Tamhankar for the above link...

This is so very correct and thank you for sharing it.

Though few of the mutual fund companies have changed hands like Quant and even our dear old HDFC has been taken in over from its previous avtars.

But what is also important to note here is that most of these returns have come from the era of 2.5% entry load and the same amount as exit load.

This list of 50 funds also gives us one very important lesson...

After our wise selection of funds , if in the successive years you find that they are not really the best performing anymore like the recent under performance of Parag Parekh Flexi cap or a little older HDFC equity then you should not get disturbed.

Another lesson here is upon the longevity of AMC itself... No AMC can just close shop and run away. It has to find a buyer who will buy it's business and also pay it a premium for the brand. This has been seen so many times in these 25 years.

For the extremely long time span that you are starting to invest , a  lot of changes will happen in the economy of the country and the mutual fund industry but a diversified equity fund will be capable of handling all those changes.

As a assurance to all the members on this group and even those who have left it now after achieving their financial independence,  I wish to say this-  that mutual fund industry in India is one of the most heavily regulated one's in the world.

The regulation is so heavy that it actually makes the business very unattractive to those who are in the distribution chain.

Since continuously there are people joining this group and leaving after few years I have to keep repeating myself that please start your investment journey as soon as yesterday with a substantial outlay into it if you want some good result.

It pains me no end to see... That those who are earning over 5 lacs a month are investing 5 000 via SIP.

Not starting early and not starting with a noticeable investment amount will make you lose the opportunity as and when it arises.

And as you may have seen in the past few years this opportunity comes overnight and leaves overnight as well.

You may not have noticeable returns for one two or three years but in just one month it may cover for all those years of under performance.

So it is my experience  but your understanding -your money -your decision - your endeavor and your gains.

Why the Passive funds will overtake Active funds Unnoticeably

                           Why the Passive funds will overtake Active funds Unnoticeably

There is a concept of efficient markets in international finance and Capital Markets.

This refers to the  true and transparent valuation of all the companies and the same data being available to everyone who is interested, in real-time across the world.

 In the market there are a lot of stories and rumours and perceptions regarding various policies of the government and the corporate world. In the developing economies like India due to the various Nexus between the corrupt government officials and the corporate world this information is not circulated and rather the Mis information is stored widely.

If you will notice the developed economies do not have many  public sector units like India in fact their Federal Bank which is the central bank like our own RBI is also privately-owned .

This results in fewer people having access to internal happenings of a particular company and even if they have such information, the controls are so strict that no-one would consider indulging in insider trading.

In a developing economy due to absence of sufficient and deterrent penalties even if such practices are uncovered the punishment is largely like a slap on the wrist.

In developed economies like US, the relevant public vigilance body has sufficient incentive to keep snooping upon people with grave misconduct and the penalties are severely and sufficient deterrent. Best example of this is Rajat Gupta the founder of ISB Hyderabad and A very respected name in the US corporate circles and his Srilankan accomplice.

In India so far even if sach malpractices are discovered the penalty is largely monetary as was in the case of HDFC MF front desk trading.

 Because of this information being available to some select people and the fund managers, they tend to leverage this information and hence the active funds which they manage, perform or try to outperform the broader market and the index funds which are dependent on it.

However things are changing and SEBI has become a toothed tiger and has started observing and handing out penalties and in the same fashion RBI is also becoming sufficiently aware.

Recently the prize for reporting (whistle blower) successful insider trading has been raised from 1 CR to 10 CR.

All these small steps will lead to  the information being reported on the portals regularly as is presently being done by every company to the stock exchanges and SEBI.

 PSU companies like IRCTC are reporting even the running and stopping of trains to SEBI and the exchanges.

I distinctly remember as late as 2018, the heads of most of the mutual fund companies and also Dhirendra Kumar of value research used to say that active and will still rule the roost for a decade whereas I was very sceptical of their stand.

 In 2007 when gold bees NFO was introduced, I knew that the change had arrived.

Few of the AMCs who introduced the etf and other passive funds did it in imperceptible way that few noticed the arrival.

Now you can see the steady rise not only in the AUM of index and ETFs but also the trades volume.

Passive funds did take the market by surprise after March last year but me not continue to do so in the shorter term.

And now slowly you will not only have asset funds for equity but also debt securities.

About 10% of the employees provident Fund money is channelled into SBI Nifty ETF.

Even though Nifty BeES is an older ETF, because of the above reason it's AUM is smaller but traded volume is much higher.

Strategies: even with the short history of passive funds now you have various mutations and combinations to think of e.g. whether to go for Nifty and junior Nifty separately or just invest in nifty 100.

All should you invest in nifty equal weight.

Should you invest in NV20 or in Nifty low volume.

Soon the choice will become even more.

With the clear choice of the investor to directly invest because of technology , the process will be simpler too.

So please be vigilant. Something which is simple can also lead to mistakes.

Do your own research; take in the articles that you read as information and not knowledge. Knowledge will be what you will do and achieve on your own.

Since the field is new the advisors will know as much or as less any of you.

God speed thee.

For Finance group ( FINWORLD@SEA ) now on Telegram

For Finance group now on Telegram

Despite all of us being familiar with finance and market requirements there is often need to to repeat oneself for the benefit of those who come later in the day.

Whenever person joins our group we try to introduce him to the basic tenets and options available for Investments. Our focus is not to be a billionaire overnight, Rather to gain experience and wealth slowly and steadily.

Our focus is not to become the know all of the finance world rather to be able to distinguish between the rights and wrong of investment so that the unscrupulous elements in the society do not try to get the better of us and fool us.

During our journey of investment our focus should be to ultimately  become independent financially and not be dependent upon the employer for the unscrupulous companies in the market over whom we have no control.

 I would like to advise all those who have joined later in the day please do not be swayed by empty promises and distant mirages.True wealth grows in an organic way in keeping with the economy of the country.

The basic rules of economics dictate this, that you cannot outperform the economy of a country consistently.

Hence I would like to ask newcomers on the group to please first read the books that I have shared above and visit my blog holisticrajeeve.blogspot.com and also the Facebook page Kaushik's FINWORLD.

Since the book was written quite a few years ago a lot has happened in the financial world which calls for upgradation of our strategy  and priorities.

In view of this I would like to to enumerate the following:

1. Please take a simple clean Vanilla and cheapest term plan early  in life.

2. Take a floater health insurance for yourself and the family irrespective of what the company covers you for. The family may mean your parents before and after your marriage also.

3. Target to keep 8-10% per year in your fcnr or nre fds. However at no stage you need to let it go beyond 50 lacs INR.

4. Open the PPF for spouse and children. Sukanya for daughter below 10.

5. Insure your house against natural causes, fire and theft.

6. Having done the above please distribute your monthly salary between 3 to 4 AMC or asset management companies which is an acronym for mutual fund companies.

Deposit this money  in liquid funds of those companies and plan a STP or systematic transfer plan into  4 or 5 equity funds.

7. Your equity funds can be suggested as follows:

- 1 index fund investing in in nifty or Sensex plan.

- one junior Nifty index fund which is also called next Nifty.

- one multicap fund which at the moment can be PPF flexicap fund or any other suitable one.

- 1 fund investing in the international market like PGIm Global opportunity or most N100 , or S&P500 or PGIM emerging markets fund etc.

- as a personal choice I would also like that you invest in one small cap fund which will be very volatile and aggressive but will give a boost to your portfolio.

Keep your investment ongoing permanently and without any break.

Do not be distracted by the market going up down or sideways. The STP  will ensure that your money is invested round the year 52 weeks.

- all the expenses should be met from the remaining money of your salary after the above investment has taken place.

- for buying or making a house do not hesitate to take a loan from a proper institution. By virtue of any calculations the outgo in form of interest will always be lower than the return on your Investments.

- if you will follow the above path it will only be a matter of time before you will achieve your goal and that is is the financial independence.

One final point I wish to reiterate ...

Very often we asked the question of how much would be sufficient for a retired life. For this I had come up with the figure which many found a little daunting. Truly enough a 30 year old may find it difficult to raise 4 cr before retirement and hence may feel discouraged.

Hence I have a separate parameter to enable everybody the flexibility of age as and when one can retire.

So as per my my experience with self and other colleagues if for three years your CAGR on your portfolio is more than annual expenditure then you can assume that you have sufficient funds to last you till you find another stream of income. However if your responsibilities and goals like children's education and marriage are over then certainly you are financially independent and can pursue what you wish in life.

Amen!!!

REGARDING NEW POSTS AND ARTICLES BY ME

 REGARDING NEW POSTS AND ARTICLES BY ME

My interaction with my fellow Mariners takes place through various social media channels apart from the official Telegram group called FINWORLD@SEA .

Some times I have to repeat myself because lot of Mariners while on ship, exit from the group because of expensive data charges.

So in order to provide them with a singe point of reference where they can check for guidance before asking further questions , I would be posting all those posts on this blog. 

So this just to inform you that you can always come back here to check if you have missed anything.

I would avoid posting any copyright material.

In case you have a question you can reach out to me on Whatsapp (9808640497) or Telegram .

CASE STUDY FOR GOLD AS PERSONAL INVESTMENT

 

CASE STUDY FOR GOLD AS PERSONAL INVESTMENT

Much has been said about gold and case has been made often regarding investment into it and against it in equal measure.

There have been qualitative and quantitative case studies done and articles written.

Recently a friend of mine suggested some opposition to my suggestion of buying gold as a bullion for personal saving or investment. As per him it is a very unpatriotic action as it leads to a stress on the GDP. When I suggested that this was more as a suggestion for our local group of friends who are there with a common goal of investment for retirement planning he very sensibly pointed out that if each of those members suggests the same thing to further 20 people. This point of his was also very valid.

But something that we forget while planning for ourselves and our family is that personal finance is all about personal and it happens within the ambit of national laws regarding wealth   acquisition accumulation  and taxation. At no point  any citizen can or should try to circumvent those laws.

However same is not applicable for the government. It can change its laws every year during budget and even 12 times during the year or as often as it likes.

It can even change the law of making the laws to  suit itself.

For example if at the end of the month you have to pay more bills then the salary which you earn , your bank balance will show red and if you do not have any other monitory asset you can be declared  bankrupt etc. It's not that difficult with the government. It's budget is first designed to spend and then to collect the money towards those spendings.

If after 1 year it is found and as it is found every year that they have not collected enough money for those expenditures they can take that money from RBI LIC different PSU companies or even from the nationalized banks as dividend. It can further raise your taxes ,duties ,tolls surcharges. And if even then it cannot make up for the losses... Then it can print more currency. It can also sell off its gold holdings with the RBI. And all this will be within the law.

Not so much for you. You not only have to take care of your own expenses but also those of the government. Somehow you cannot print your notes either !!!

With all these events there can be some extraordinary events like economic liberalization and devaluation of the Indian currency in 1991 or the demonetisation of 2016 or the Kargil war or the Covid lock down or the present Russian war... And all these will have a direct bearing on your financial situation and and personal well being.

And you can further add to these some changes in your personal and family life disasters like death illness or accident. In none of these events will the government step in to be in sympathy with you or give you the benefit of all the taxes that you have paid so far.

With so many changes that have happened already in the past 25 to 30 years and so many which can be further not imagined for the next few years... All you have to left to backup is your saving and investments in various asset classes.

Amongst all these asset classes equity no doubt rates  number one in the wealth creation. To counter the volatility of equity one invest in Bank fixed deposits and the fixed income funds. However this asset class also suffers a big disadvantage of firstly having a low sub inflation return and a heavy taxation on top of it hence delivering a big whammy.

And though most of these asset classes keep changing their form every few years and even as the fact that none of the world's currencies are more than even 100 years old in the present form ,the only asset class which has been standard for just a few thousands of years and not changed this form and has been universally accepted is- Gold.

It is the only form of a naturally occurring commodity which is recognised and respected across the world and in every nook and cranny of the world.

Even though gold has given a fairly high return across a substantial and equivalent number of years as other asset classes of fixed type it stands much superior to them for the purpose of portability acceptance and bartered for any range of goods or services.

There was a report of the working group to study the issues related to gold imports and gold loans in February 2013  by the RBI. And even before  addressing the issue of controlling the gold imports almost 9 years ago from today the paper starts with the following...

" Any attempt to moderate the demand for gold is an arduous and complex task.

The nature of demand for gold in India is not strictly comparable with that of demand for Golden many other countries as over 1.3 billion population of India would invariably continue to create demand for gold imports due to cultural religious economic and social reasons.

AWARENESS ABOUT GOLD AS A LUCRATIVE INVESTMENT AND STORE OF WEALTH IS GROWING AND HENCE IT IS DIFFICULT TO BREAK THE LURE FOR GOLD FROM BOTH THE INVESTORS AND JEWELLERY CONSUMERS. DEMAND FOR GOLD IN INDIA IS AUTONOMOUS AND MAY NOT BE AVAILABLE FOR REDUCTION THROUGH POLICY INTERVENTION.

SEVERAL STUDIES HAVE EMPIRICALLY VALIDATED THAT GOLD CAN BE REGARDED AS A LONG RUN INFLATION HEDGE. ABSENCE OF ANY CLOSE SUBSTITUTE TO GOLD AS AN INVESTMENT ASSET WITH THE HIGH LIQUIDITY GOLD CAN OFFER IS ONE MAJOR REASON WHY GOLD HAS BECOME A MUCH PREFERRED ASSET.

This is what the 400 page report starts with. It accepts that gold can you regarding as a long run inflation ahead and there is no substitute to go doesn't investment with high liquidity. IT ALSO VERY SHEEPISHLY ADMITS THAT 1.3 BILLION INDIANS ARE RIGHT AND BETTER ECONOMISTS THAN THE ENTIRE WORLD BANK, IMF ,US AND THE DEVELOPED COUNTRIES COMBINED AND PUT TOGETHER

It is only after this study by the RBI that it started releasing licences for nbfcs offering gold loans. These gold loans proved to be good for both the investor and the lender as it provides a secured loan for the nb fc and the possibility of immediately liquidating for the gold holder.

WHY PHYSICAL GOLD IS BETTER THAN ITS CORRESPONDING PAPER FORM:

APART FROM THE GOLD ETF THERE HAVE BEEN MANY ATTEMPTS AT LURING THE PEOPLE TO BUY GOLD IN E OR ELECTRONIC FORM AND KEEP THEM SECURE WHETHER DEPOSITORY.

Once such used to be the MCX which used to offer e-silver and E gold. This gold had the option of being converted to bullion at the time of delivery if required by the customer or investor.

After few years of operation the exchange itself was shut down by the government on account of violations of some laws.

In 2015 government introduced to simultaneous plans  for monetization of gold to which did not find many takers. Second was the sovereign gold bonds which were offered with some paltry rate of interest and also tax benefit if the gold bonds were kept up to maturity. The takers to these are also in minority as compared to the buyers of physical gold. The reason of which can be attributed to either the cultural and mental makeup of possessing gold in physical form or its reluctance at trusting the government. The third reason may of course is that the transaction has to be conducted in cash or equivalent.

Various personal, National and international disasters have proven that it is only gold which could keep the people survival and  afloat 

During such Times one should not try to become an economist or patriotic nationalist. It is one's duty to make ones wealth grow through legitimate and proper means utilising the financial freedom which the government offers in terms of taxation. The gold which you possess may give you less returns but it does not carry the annual taxation of a fixed deposit or the capital gains in case you're offering the gold for equivalent good or services.

The trend of the world governments is to convert everyone's assets and monetize them not only into paper but electronic formats. I personally feel (even as a proponent of equity investor) that this over dependence on digital format of wealth can prove to be disastrous in case of a element attacking a common format or  a depository.

In simple language it means that if all your money ,mutual funds, stocks, fds ,debt funds, PPF ,NPS etc are centralised in one place then it does not take too much time to evaporate in case of natural or artificial attack on the mode of electronic holding.

In short all I suggest  is that do not try to align your own interest with those of the government, they run parallel or even divergent as far as you go as a high networth individual.

With leaving some food for thought on the proverbial table I rest my case.