Droplet Wealth

In the previous two blogs we saw- Gold does not necessarily out beat other asset classes.  Because of the way we "Buy" Gold , the returns further diminish.  Gold can never become an investment. It is purely an hedge,  Hedge  -  against Inflation,  against a falling equity market or  against a collapsed debt market.  So it would be naive on our part to "Invest in Gold" and expect out sized returns.    So in this blog, we would like to layout probably an easy guide on how to handle Gold as an "Asset" for layman investors.  Allocation -  Try and keep 10% of your Net worth in Gold.    Options for Investment -     1. Physical Gold (Jewellery) - If you have no gold at all then start a monthly Gold Scheme for 10% of your savings and start accumulating the same. Sometimes, you might already have Jewelry but if you prefer accumulate further gold in Physical form then continue to do this or buy as gold coins....

       What you see is not what you get!                                     In the last blog , we showed that even though Gold has given better returns in recent times, the long term returns of Gold are still not the best among all asset classes. In that the returns compared were the returns of pure gold vs other Asset class. In this blog, let us understand the difference between the actual returns we make from Gold vs Paper returns based on Gold Prices we see.                              Let us first bring to your notice that our families usually buy gold as Jewelry and not as gold coins or bars. When we buy Gold as Jewelry, there are costs that get added to it, making / wastage charges + Taxes that we have to pay. A friend of mine recently bought a ring and came to me totall...

         Ever since the Gold started soaring my twitter timeline is filled with Social media "experts" calling out Gold as winner against Amar, Akbar & Anthony, i.e., Stocks, debts & Real Estate. Okay, so I now switched on to News Channel and they too were running headlines like - "Gold outshines bla bla..." I was like - Ye Tu, Brute? We thought that this too shall pass. But then started a galore of news pieces that called the doom for most of other asset classes. We said, enough, lets try and add some common sense to this non-sense! The 1st thing that we noticed is that the 20 Year returns of Gold is shown against the 20 Year returns of Equities. So it looks like this -  So Yes over 20 Years looks like Gold has given better returns than Equities. But wait this is a twisted narrative. To know why lets press the rewind button and go to 1997. In 1997, the Price of Gold was Rs 5100 and Nifty was trading @ 998.  Between 1997 to ...

Investing is a simple yet complicated. That's the precise reason we see a lot of people losing the game altogether. Only a handful of Investor really do it well. All others hop in, hop off and never come back again after losing big time. Blaming the markets for their own mistakes. In today's blog we will be looking at the common mistakes that people repeatedly make in investing . 1. Choosing a Mutual Fund based on Star Rating - The first and worst mistake every investor does is Investing in a mutual fund based on star rating. The star rating of a mutual fund changes weekly, monthly or quarterly as updated by the rating agencies or websites offering the ratings. Investing based on ratings is a disaster by itself. Don't pay too much attention to the ratings when you invest. Even if you were to consider the ratings, just take it as pinch of salt.  2. Investing based on last year performance - Few of our clients do know a little about mutual funds and as an advi...

                                           The mighty fall in the stock market has spooked a large many investors and they face the conundrum as titled in the blog. But fortunately for us, with exception of 3-4 Investors, our clients have remained resolute to the path laid out for them and not bothered by market volatility . We thank them :)                                            Back to the question now, honestly there is no one answer that can be applied to all those who are investing. In personal finance, One Size never fits all. But like always Droplet will try to throw some data at our readers and let their sagacity decide what to do. After all, Stock market Investing is not everyone's cup of tea. It is all the more true if you are a "Do-it-yourself Invest...

My Partner called me and told me that we are no different from laymen who know that Short term Interest rates are going to fall. We both know the same and hence we are the same. Yes I would say but only for the sake of that knowledge.                            The 1 Year FD in SBI in 2012 would have fetched a interest of 9.25% per annum but today it fetches only 6.25% and this is of course a grave matter for Fixed deposit holders. Because if they had known the interest rate would fall, they would have bought 10 Year FDs which would have paid the same 9.25 % today instead of ending up getting a measly 6.25 % today. So simple.  Now it is expected that Interest rates can fall further - what do we do? Buy 10 Year FDs and lock the "assumed" higher interest today or Wait for the Interest rates to go up?   Speculate. Speculate. Speculate.  This is where a good financial planner...

We were worried as financial advisers about the budget. Of course the Union Budget because if the budget was perceived to the be good then the markets would rally and our investors will not get discounts on their Investments. Discounts are always good, Who knows it better than you guys! The fact is good business shall always thrive irrespective of the budget and when we choose to invest in equities we invest in businesses that will do well in future. Note that we have used the word "Perceived". Again most of the govt policies being good or bad are perceptions of the people. A good businessman would identify each of them as an opportunity. A classic example is Titan which when was forced to import Gold due to "Govt Policies", it started Tanisq and today Tanisq is one of the largest contributor to Titan's Profits.  So now lets look at the Budget from the view it would affect us.  1. As a (Citizen) Owner of the Country and  2. As a (investor) Owner of the Comp...