Why to Invest ?

The relationship between money and us starts at an early age when we notice our parents exchanging rupees to buy stuff which we need or like. We learn the value of money when we buy our first chocolate with the money from our piggy bank. These experiences teach us and mold us in the way we handle money.

Our parents, in our early lives become our authorities on how to save up for that Game-boy we needed, or the clothes we need to be in trend. This relationship between us and money grows more complicated over a period of time. The collection of our working life is either a comfortable retirement or a struggle to make ends meet.

Setting Financial Goals

When we associate money goals to a life event, the process of planning for it becomes easier. Setting short-term, midterm, and long-term financial goals is an important step toward becoming financially secure. If you don’t plan for a life goal then you are likely to spend more than you should. And then come up short for most of your bills in the future, you start compromising on things like basic insurance which leaves you more vulnerable than you already are.

Establish a budget

Make your present clearer, basically means spend some time on seeing where your money is flowing. “You might be shocked at how much money is slipping through the cracks each month”. With the tools and accountability our phone gives us on where we spend, you might discover that ordering seamlessly every work-from-home day is costing you on an average around 10000 a month. You might learn your spending another 2000-3000 per weekend on date night meals or on a socializing weekend.

When you see how you are spending your money you’re guided by that information and this makes informed decisions on where you want your money to be going.

Planning investments

Define goals into short, medium and long term, match natural life stages of youth, middle age and post-retirement.

There’s never an early or late time to start investing. Of course playing catch if you have not started early this will mean making few lifestyle changes based on your budgeting, major benefits accrue when you start investing early.

Debt management takes priority because it makes no sense earning 11-12 % on your investments if your debt is at 9-10% as inflation will make your money negate the benefits. Bear markets and bull markets are inevitable in your investment journey. Don’t invest just because you haven’t got a chance to be part of a bull market instead save up some money which is less volatile and invest when the markets are depressed and an opportunity presents itself. In our lifetimes we might have comparatively fewer opportunities while investing in equities the important trait to learn is perseverance, patience and seizing the right opportunity.


Starting early and figuring out your investment goals earlier helps reduce unpreparedness later in life. Even if you don’t make perfect linear progress towards achieving your goals it’s important to be consistent. Review your financial portfolio annually to make up for changes in financial goals. This continued pursuit towards achieving financial discipline will make you more aware of daily finances and make it easier to achieve your financial goals.


While investing the key parameters to watch for are returns and goal associated with the investment.

Equity does give better returns over the long term compared to other asset classes.

While investing we need to look at the treaties of tax done between countries which will help in avoiding taxation errors in the future.

We don’t want the IRS to call us saying that you have been avoiding taxes and you need to pay penalties for it. This also doesn’t bode well with the internal rules in the company you work for as well.

1.Direct Equity Investing

An investor can directly invest in stocks by opening a PIS account (Portfolio Investment Scheme) commonly called as a PIS account. This account has to be linked to your demat account. Investing in stocks directly needs a lot of time as you will have to be constantly looking for opportunities and studying about companies which is fruitful but not at the cost of the full time job you’re in.

Returns are higher over the long term but it will have periods of volatility, Risk is higher over the short term and this isn’t a good option if you’re looking to park money for short term.

Taxation is based on the report that is generated by your stock broker.

I would recommend Zerodha’s platform if investing through this route as the seamless experience will make it easier for investing in direct stocks.

2.Mutual Funds

Some Mutual funds in India do offer investments with them. Taking care of the taxation part in the USA is primary before venturing into them. The mutual funds here obtain a declaration stating that they will comply with IRS in case there is an under reporting of gains made and taxes not paid there. Although India has signed a double tax avoidance treaty with the USA. It is still not very clear whether you need to pay taxes on the gains in the USA as well. Few leading mutual fund houses avoid taking investments for US and Canada based investors as it’s still a grey area.

Mutual funds can be a better to way to passively take part in India’s equity growth and an equity mutual fund will give better returns compared to other asset classes.

Fixing goals while making an investment plan plays an important role.

3.Real Estate

Real estate does play a role in diversifying your investments. “Diversification is the holy grail of investing”. While it sounds attractive owning a physical asset there are certain drawbacks with investing in real estate. Some of them involve large ticket size, meagre returns when you compare against equity as an asset class, higher taxation and transaction costs, finding the right opportunity as it is not as transparent as other asset classes, low liquidity.

It should be a part of the overall portfolio for diversification but not a large part.


Having an FD through your NRE account will also serve a tool for returns on your overall portfolio and also be a way to diversify your investment. The safety grade being high and volatility being low to the asset class makes it an attractive form of return as the interest rates also tend to be higher.

Happy Investing…

The Post COVID-19 World

Humans are resilient. More than one quarter of the world’s population are now largely confined to their homes, the virus has turned living cities into hospitals. It is hunting everybody regardless their caste, creed or religion and the best defence is to remain indoors as much as possible.

Humans have been preyed on before for most of history on the planet. Our ancestors have faced many more pandemics without the privilege of the modern day healthcare system and they fought against them by sticking together.

There is no question that Humanity will prevail over the present crisis as well. The only question is how fast will it recover. There will be an immediate change in the way things are done post crisis. Perspectives have already began changing during the lock down period.

A New Human Being Will Emerge

Post the epidemic we will see difference in the way we perceive things around us. We will find ourselves faced with a generation who thinks differently from the pre-pandemic generation. The thirst for more information around us will make our decision making different. Priorities will get reassigned. And we will adapt to it all of it within a short span.

How business economics will change

Events such as this, change the way goverments, economis and business do things, altering the course of history. The black death in 1300’s changed the feudal system in Europe with a modern employment contract. In modern times the SARS pandemic of 2002-2004 changed the way Chinese bought goods with the emergence of Ali baba which was a small ecommerce company then. Similarly it will lead many businesses to picot the way they were doing things, lot of emphasis on automation and supply chain will make businesses more efficient.

Yes it will lead to fall of many businesses which don’t pivot, but it will lead to a more efficient world order.

Probability of industries that gain and those that loose

Video games might be more popular and we should’t be surprised to see its emergence as a sport for the masses. A recession usually accelerates business model changes driving costs down. And pandemics tend to get in entirely new businesses. Firms which capitalize on changing will succeed those who don’t will get disrupted.

Investments in businesses which adapt become defensive bets.


Emergence of technology to monitor things around us will become the new normal. When the Chinese started to monitor people through their phones they were heavily criticized, this can become a new normal throughout the world. South Korea used smartphones to tag the movement of the infected – alerting people around via real time updates.

This will lead to cities needing to become smarter.

What’s in store for us ?

We should prioritize that we are built of the same constituents. It means that this is a threat to everybody around us. Facing this together will help us go through it faster and it will lead to lower recovery time. The more divided we are, that’s what the virus wants.


Where should I invest now ?

With increased volatility the market wide impact would have deterred your equity portfolio returns and this could get more volatile with the VIX (annual volatility index) being at an all time high, will also make your investments more volatile over the short term.

Although the swings started with global factors , it will get more domestic in the coming months and the volatility is expected to remain high.

What Happened During The SARS Outbreak ?

Because of lower exposure to China’s economy compared to peers India was the only Asian economy that didn’t have a major decline in it’s growth due to the SARS impact in 2003. It’s expected to have a similar effect this time as well if the pandemic is contained in the country.

What to expect in the coming months ?

The pace at which the government takes measures will be closely watched , the demand scenario which was already weak will get weaker. The contagion which is already developing will make people more averse to traveling and vacationing , people will switch to modes of entertainment at home, stocking up on essentials and this will impact a growing economy to a large extent. Automobile sales will plummet as it did in China. This is bound to make the market a risky asset class to invest in the short term.

How have markets responded previously ?

While past rebounds can’t predict what will happen in the future. In the past, markets have rebounded after the peak of the outbreak.

Currently the COVID-19 situation looks more grim than the previous outbreaks and it is difficult to predict it’s peak.

The markets were trading at life time high valuations 60 days back (NIFTY P/E : 28.56) and a correction based on fundamentals was expected. The outbreak has just hastened the fall. However long term investors should stay put.

The long term fundamentals of the markets still remain intact , yes there had been pockets of overvaluations in certain large caps , this correction will only make the markets more attractive. Long term investors shouldn’t be deterred with the dips in their portfolios and should be looking to invest some more when the market becomes less volatile.


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