Market at Highs: Is it Good Time to Invest
Market at Highs: Is it Good Time to Invest
The equity markets have had an impressive run after the pandemic in India. The Indian economy has shown tremendous resilience and strong fundamentals to back this growth. As of today, India continues to be a bright spot globally, being the fastest-growing large economy. As the rise of India continues and market is scaling new peaks. The last few years have attracted a lot of new investors to the markets and they would likely be sitting on impressive returns.
What matters to you is not the market levels but where you stand today with regard to your financial goals. The focus should always be on your financial and life goals. Thus, one should automatically make investment decisions based on your needs. This will immediately give you answers on the investments required, the investment horizon, and the suitable asset class exposure based on your risk profile. Your exposure to different asset classes, including equity, should be clear once this exercise is done properly. Whatever happens around you and to your portfolio, remember to always keep an eye out for the impact and the status of your financial goals.
Often people miss the big picture, and focus on pennies, ignoring the pounds. Following the asset allocation approach at the portfolio level or at a more granular, need level, is the ideal thing to do. Simply put, one needs to find the appropriate asset allocation and review the same periodically or after sharp market movements. One may adopt a fixed or a tactical asset allocation approach depending on your understanding and experience. Once this is clear, it can provide a lot of information, such as when to buy, sell, or rebalance assets.
Once your asset allocation is decided, one can explore mutual funds as an ideal vehicle for investments as exposure in these asset classes can be easily managed with mutual funds. Within mutual funds, there is a wide choice of funds that offer different levels/natures of diversification. By diversifying your holdings, you reduce the risks connected to the specific type /nature of investments. Diversification and professional management of your investments are the key benefits that mutual funds offer.
As investors, we should also remember that past performance may or may not be repeated in the future. Markets can be volatile, and behave like a pendulum in the short run, but in the long run, they tend to be more like weight machines. Research studies have also shown that the top-performing funds tend to rotate over different periods. Any decision purely based on performance-based rakings and returns, thus can back-fire. Setting our expectations on such past performance is also not wise. What is more important is the quality and consistency of good returns rather than just returns /performance itself.
Numerous studies have shown that the ability to time the market or market timing, often rarely contributes to your long-term performance. What contributes the most is your asset allocation decisions. Further, the time in the market is more important than trying to time the markets. Thus, as investors, this approach is something we should avoid and instead focus on being disciplined in our investments. Regular, systematic investments with SIPs have proven to be the ideal approach to making new investments at any market level. There is an element of rupee-cost-averaging or automatic timing inherent in this approach. Further, for fresh lumpsum investments, just focus on getting the time horizon right, i.e., invest for long-term, for at least 7 to 10 years with reasonable confidence.
Even though we have broken down and tried to simplify a lot of things, managing investments by yourself is not easy. Just like we have professional help in every aspect of our lives from doctors to accountants to lawyers and even your home cook, having a dedicated mutual fund distributor can ease a lot of things and help you get the right guidance. The real role of the distributor or an advisor will be to hand-hold you in turbulent times and help you avoid making costly investment mistakes. Your distributor would be like your partner, helping you in every decision-making process and in managing your mutual fund portfolio, during your entire journey.
Bottom Line
Markets will hopefully continue to see newer highs and some lows and with bright prospects, in the years and decades to come. As investors though, what matters is how we can best take advantage of this lifetime opportunity of the Indian growth story. At the micro level, irrespective of what happens around us, what matters to us is what we do and continue to do in our lifetime. Staying grounded, and going back to basics, even though it may appear boring or less exciting, is what will matter in the long run. A few percentage points up or down today will hardly matter a decade later. The focus, in the end, should always be on identifying, planning, and achieving our life's goals for ourselves and our beloved family members. That is where your 'real' performance in life will be judged.
NJ E-wealth
Types of Investment Risks & Navigating Them
Types of Investment Risks & Navigating Them
In the world of investing, the pursuit of wealth comes hand in hand with the need for effective risk management. As investors navigate the complex wealth management world, they must realize that wealth preservation is as crucial as wealth accumulation. Every investment faces some risks that can potentially lead to financial losses or lower-than-expected returns on investments. Whether you choose to invest or not invest, you knowingly or unknowingly are taking risks. Identifying and understanding these risks becomes important for any investor so that one can effectively either avoid or reduce or take measures to manage the risks.
This is the risk emanating from overall market conditions and economic factors which can lead to the decline of investment value. We can extend this to risks related to changes in government policies, political instability, and regulatory shifts affecting investments. One can easily manage this risk with diversification at the asset class level and by having some understanding of the long-term market prospects given the conditions prevalent today.
The risk associated with changes in interest rates affecting the value of fixed-income or debt investments, like bonds. As interest rates rise, the value of debt investments fall and vice-versa depending on the maturity period of holdings. One can choose to diversify across different maturity levels and issuers to reduce this risk. Understanding interest rate cycles can also help us to manage this risk appropriately.
The risk that issuers or borrowers may default on interest payments or principal repayment, particularly relevant for bonds and loans. One can diversify across different issuers and credit ratings and choose to invest in highly rated instruments to reduce this risk.
The risk that investments may not be easily tradable at desirable prices, especially with less liquid assets. One can diversify into liquid assets and maintain an emergency fund for unexpected expenses to avoid selling illiquid assets in a hurry.
The risk that the purchasing power of investments may erode due to rising inflation. The best way to manage this risk is by investing in asset classes that give positive real, post-tax returns net of inflation. If you are only a debt investor, you can explore diversifying into other asset classes, especially equities, that have the potential for better real returns in the long term.
Risks associated with investing in a certain companies, sectors, or specific groups of companies including management issues, competition, supply chain disruptions, technology disruptions, etc. Such risks can be easily managed with diversification to reduce the impact of adverse events in a single company or group of companies.
Event risk relates to unexpected events that can impact investments, such as natural disasters, wars, or epidemics at the macro level or to personal life, health, and property at the micro level. In recent years, we have seen such risks globally and limited to specific countries. Again, the best way is to diversify, stay informed, and to also consider insuring yourself against any risks faced at the personal level.
This risk is associated with the uncertainty of how long you will live and whether your investments will last throughout your lifetime, especially when planning for retirement. The best way to manage this risk is to ensure that while planning, you factor this risk and create assets that will continue to grow and/or bring you lifelong cashflows. Also, ensure that you are appropriately covered by health insurance with high coverage.
Behavioral risk involves emotional factors influencing investment decisions. Quite often, we may make financial decisions based on biases and emotions. What we do becomes very critical over the long term and is something that will disproportionately impact our wealth in the long term, even when we do not realise this.
The idea is to diversify and spread investments to reduce the impact of market and specific risks or risks of concentration limited to specific asset classes, companies, market capitalisation, sectors, etc. A proper diversified asset allocation is the starting point and then diversification with-in the asset class can help reduce the risk further.
As investors, we should have some degree of information and updates on the economic scenario and the prospects for equity and debt markets. Having a broad understanding and expected medium to long-term trends can help us manage our asset allocation and market risks, systematic risks, and interest rate risks better.
Evidence suggests that the market volatility or fluctuations tend to even out in the long run so by staying invested for the long term we tend to see more predictable and positive returns. This is why we say that for equities, we ideally have to only invest for the long term. A lot of systematic risks and market risks get settled /reduced in the long run.
Guidance and hand-holding by an expert goes a long way in managing risks is a much better way. The cost of learning, gaining experience, and opportunity costs for the initial years can be much higher and set you back by many years. Further, with expert guidance, we surely can expect one to avoid emotional and behavioural mistakes and help shape our investment approach, something which can greatly impact your long-term financial well-being.
In the dynamic investment landscape of India, effective risk management is not a choice; it's a necessity. Diversifying your portfolio, getting adequate insurance, and handling investment behaviour are all vital components of a holistic risk management approach. With the guidance of seasoned experts and professionals like mutual fund distributors, you can have custom plans and a suitable investment portfolio to navigate the Indian market confidently as per your needs and risk profile. Happy investing!
NJ E-wealth
The Importance of Disclosures in Insurance
The Importance of Disclosures in Insurance
Insurance is the cornerstone of financial security, offering individuals a safety net against life's uncertainties. At its core, insurance is built on principles of transparency, good faith, and accurate information exchange. When purchasing an insurance policy, individuals are required to disclose all relevant information to their insurer. This practice, known as the disclosure of material facts, forms the foundation of a fair and equitable insurance contract.
The contract of insurance is based on the doctrine of 'Utmost Good Faith', which means a person applying for an insurance cover has to disclose and reveal all material information required by the insurance company. Material Information means all the information based on which the underwriter accesses the risk profile of the person and decides to accept the risk and issue the insurance policy or decline the same or to determine the terms and conditions of coverage, and establish appropriate premiums. Examples of material facts relevant for an individual would include a person's profile like age, personal & family medical history, occupation, hobbies, criminal record, etc., and other information like income, previous claims, policies from other insurers, and so on, depending on the nature of insurance policy.
Insurers heavily rely on the accuracy of the information provided by policyholders during underwriting to assess risk effectively. Policyholders have a legal and moral duty to provide complete and accurate information to their insurers during the application process. This duty is outlined by the IRDAI guidelines and is applicable to all types of insurance, be it life, health, or general insurance.
Non-disclosure of any material facts may result in the policy being considered null and void from the very beginning and the insurer will not pay out any claims or return any premiums. Policyholders will be left without the protection intended and financial well-being may be compromised. Non-disclosure can also lead to claim denial leaving the policyholder to bear the entire financial burden. It can also affect a policyholder's ability to obtain insurance in the future as insurers have access to shared information and a record of non-disclosure can make it challenging to secure coverage or result in higher premiums. Thus, it becomes very important that accurate and complete information is shared in the proposal form.
Non-disclosure of material facts in insurance in India can occur for a variety of reasons as we we can see below:

Many policyholders may not fully comprehend what constitutes a material fact due to a lack of awareness or misunderstanding. They might unintentionally and unknowingly withhold specific information required to be revealed in the proposal form. Few might encounter difficulties in understanding or accurately filling out the proposal form because of language or literacy challenges. Additionally, some may presume that some information may be irrelevant and not important to be mentioned.
Some people may view the proposal form filling and the disclosure procedure as time-consuming and difficult. They may take the entire process casually and refrain from delivering complete and accurate data while filling out lengthy forms or providing extensive information. Policyholders who are anxious to get insurance may speed up the application procedure and omit crucial information because they believe it to be unimportant.
In certain cases, policyholders may purposefully omit relevant information to influence the underwriting procedure in order to get coverage or cut premiums under false pretenses. Other times, even brokers or insurance agents would encourage policyholders to omit information in order to hasten the approval procedure or close a deal.
Policyholders might genuinely forget to mention certain details. There might also be instances where people do not really have a complete understanding of their medical history and status.
There can also be instances where some important information is missed when the proposal form is filled by someone else, likely the insurance agent /broker or say a relative of the applicant. Such a scenario may arise when the applicant is uncomfortable filling out the form due to literacy or language limitations.
As we can see from the reasons for non-disclosure of material facts, it becomes clear that the same can be easily avoided once we understand the importance of full and fair disclosure. The best way to do this is to take appropriate time to properly read and understand every piece of information asked carefully. You may seek clarification from your insurance agent if something is not clear. Please do not hurry and take time to remember any past medical history, ask spouse and parents for relevant information if you are not sure. Having an experienced insurance agent from a reputed firm also helps a lot in ensuring that the proposal form is properly filled.
Bottom Line
In summary, material facts are essential as they enable insurers to make informed decisions and ensure that insurance contracts are fair and equitable. Both policyholders and insurers must uphold the principle of utmost good faith, fostering transparency and trust. If everyone gives proper information, the pricing of the policies can be appropriately made and the overall premiums would also become more affordable for everyone. Applicants should understand that failure to disclose material facts can have severe repercussions in times of need and thus is never a wise thing to do. Lastly, a good insurance agent /broker can be of great help not only during the application process but in the entire journey from understanding the need, finding suitable policy cover, helping in the application process, and then especially in the claim process helping you manage all comfortably.
# of EMIs paid at Foreclosure Prepayment /Foreclosure rates
≤ 12 EMIs paid 4%
>12 EMIs but ≤24 EMIs paid 2%
>24 EMIs but ≤36 EMIs paid 1%
>36 EMIs paid Nil
above changes will be applicable on new loans sanctioned w.e.f the 1st Aug 2023. There will not be any change in Rate of Interest, Prepayment/Foreclosure charges in loans sanctioned before 01/08/2023.

We are happy to inform you that Laptops, bigger size LG TVs, Samsung Galaxy S23 Ultra 5G Mobile and Travel loans are available at low cost EMI. Visit the NJ EMI store for more information.
Fund Manager INTERVIEW
patner Interview
Mr. Shriram Ramanathan
CIO - Fixed Income, HSBC Mutual Fund
Mr. Shriram Ramanathan oversees the management of more than Rs 30,000 cr in assets across various fixed income funds. He has over 18 years of experience in fixed income markets.

Shriram was managing the Global Emerging Market Debt (Asia) at ING Investment Management Asia Pacific in Hong Kong for about 5 years. His earlier assignments were with Zurich Asset Management Company in fixed income research and with the Treasury department of ICICI Bank, where he started his career in investments in 2000.

Mr. Ramanathan is a Chartered Financial Analyst and holds a Post Graduate Diploma in Business Management from XLRI Jamshedpur and an Engineering degree from the University of Mumbai.

Yash Shantaram Khanolkar (ARN-250374)

Yash Khanolkar

  • Financial Assessment
  • Retirement Assessment
  • Child Future Assessment
  • Portfolio Review
  • mutual fund : debt/equity/elss
  • insurance : general/health/life
  • realty : plots/villas/flats
  • portfolio management services (pms)
  • fixed deposit : company fixed deposit
  • bonds : tax saving bonds

"We have taken due care and caution in compilation of this E Newsletter. The information has been obtained from various reliable sources. However it does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions of the results obtained from the use of such information. Investors should seek proper financial advise regarding the appropriateness of investing in any of the schemes stated, discussed or recommended in this newsletter and should realise that the statements regarding future prospects may or may not realise. Mutual fund investments are subject to market risks. Please read the offer document carefully before investing. Past performance is for indicative purpose only and is not necessarily a guide to the future performance."

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