IPL Match of Investment

 

Dr. Virendra Tatake

Since the start of the 15th season of the IPL, the atmosphere has been energetic everywhere. If we observe the IPL matches of this season, we can see that the team that combines the speed of the score and the number of wickets in hand is the one that is succeeding. From a slightly different point of view, there are a lot of similarities between IPL matches and financial investment. Some basic rules of investing can also be learned from these IPL matches. By following these rules of investment, we can master the technique of the game and can win the 'trophy of ROI '. Here are some common points between IPL and investment which will be useful for an investor .

1) The basic rules are the same.

Although the nature of cricket matches is different from investment , the basic rules do not change. No matter how many new investment options are available, the basic rules remain same. In addition, to be successful in both these places, you need to have some commonalities. For example, the need of deep of study ,practice , consistency, perseverance and confidence are required for both the investor and the IPL player . If we ignore it, path to success becomes difficult.

2) Strategy.

Just as a cricket Test match, an ODI match and a 20-over IPL match have different strategies, investors need to plan differently for long-term and short-term investments. The strategy of a Test match is not useful in a Twenty20 match and vice versa . Similarly , one investment strategy will not work for another. The player needs to know exactly what form of match you are in. There is no guarantee that a player who succeeds in a Test match will succeed in an IPL match. Similarly, a long-term investment strategy cannot guarantee returns in short-term .

3) Not taking any risk is the biggest risk.

In an IPL match, while chasing the runs of the opposing team , keeping wickets in hand is not sufficient but maintaining required run rate is also equally important . Only by saving wickets and focusing on defensive play , the result can be losing the game . Similarly, adopting a risk-free investment strategy does not yield enough returns to beat the inflation and lowers the market value of such investments in the long run.

4) Balanced approach.

Just as every team in the IPL has a proper balance of batsmen, bowlers and fielders, so too should an investor captain balance his options when choosing a team for his investment. In technical terms it is called as "asset allocation" . If it is done properly, the chances of winning an investment

match increase. Therefore, your team needs proper coordination and balance of different investment options.

5) Each match should be considered differently.

The feature of IPL matches is that every match is different , every day is different. The performance of some players improves with each passing day. Therefore, the losing team in the previous match can be the winner in the next match. Even in an investment match, don't expect every investment option to give you a good return every time. Instead, the investor becomes more successful as he understands the nature of each investment option and expects the fair return from it.

Lets play a safe and successful match of investment .

(The author is an investment scholar and is associated with Indira Global Business School as Director )

  

10 Interesting Facts About Indian Union Budget .

Dr. Virendra Tatake 

1) The first budget of independent India was presented on 26th November 1947. Of course, in that budget, instead of proposing any new tax, the emphasis was on reviewing the economy of India . Considering the overall situation at that time, this first budget had the highest allocation for the defense sector.

2) In the first few years, the budget was printed only in English but from the year 1955-56, along with English, printing was also started in Hindi and this method has been followed ever since.

3) From the year 1950, printing of budget started in the printing press located at Minto Road, New Delhi. However, after the increase in the scope  of the budget, the printing of the budget was started from the year 1980 at the Government Printing Press at North-block, New Delhi. The purpose behind this was to keep all the information in the budget confidential.

4) The late Indira Gandhi was the first woman Finance Minister of the country. She presented the budget for the year 1970-71. Incumbent Finance Minister Nirmala Sitharaman is the second woman Finance Minister to present her fourth consecutive budget this year. The late Morarji Desai had presented the budget  for   ten times which is considered as the record for any finance minister  .

5) The budget presented by the former Prime Minister of India, Dr. Manmohan Singh as the Finance Minister in the year 1991 was  hailed as a guideline to lead the country towards globalization, privatization and liberalization. Also, the budget presented by the then Finance Minister Yashwant Singh in the year 2000 was known as Millennium Budget. This budget revolutionized the Indian information technology sector.

6) From the year 1999, the budget was presented in the Parliament at eleven o'clock in the morning. Earlier, the budget was presented at 5 pm. When the budget is presented in Parliament, its reactions  are immediately felt in the stock market. Therefore, most of the time on the day of the budget, there is a big fall or big jump in the stock market. Of course, sometimes the stock market even gives a 'cold welcome' to the budget.

7) The speech made by the Union Finance Minister while presenting the budget is also a subject of great discussion. The speech of the then Finance Minister Arun Jaitley in the year 2014, when he presented the budget, is considered to be the longest speech ever made by the Finance Minister during the budget.

8) From the year 2017, the railway budget was presented along with the main budget. Earlier, the railway budget was presented separately.

9) In the year 2019, Finance Minister Nirmala Sitharaman started the genuine Indian concept called 'Bahi Khata' by stopping  the suitcase used in presenting the budget.

10) The year 2021, i.e. last year, for the first time the budget was presented in paperless i.e. digital format.

-Dr.Virendra Tatake

( The Author is associated as Director at Indira Global Business School )

 

Success Story of an Indian-Origin CEO getting highest pay package .

-Dr. Virendra Tatake

What can be the highest pay package  that a CEO of a company can have?  One crore rupees?  Ten crore rupees?  One hundred crore rupees?  One thousand crore rupees?  Ten thousand crore rupees? ...... Your guess is wrong! 

There is a person  whose annual pay package  is  Rs. Seventeen Thousand Five Hundred Crore !  And it is more important to us that the person is of Indian origin .  The highest paid person in the world is Jagdeep Singh!  Jagdeep Singh is the CEO of Quantum-Scape.  

He has now been added to the list of people of Indian descent who hold top positions in many companies around the world.E

A native of India, Jagdeep Singh holds a degree in Computer Engineering from the University of Maryland.  He then completed a master's degree in engineering from Stanford University and an MBA from the University of California.  

After completing his education, he held positions of responsibility in various companies as well as participated in many companies.  In the year 2010, a company called Quantum-Scape was formed under his initiative.  This company is working in the field of battery production of electric cars.  The use of electric cars, considered the 'car of the future', has increased worldwide in the last few years.  Governments in various countries are also promoting the use of electric cars to curb pollution.  The company was set up keeping in mind that there is a huge scope for research in this field.  The company is researching ways to extend the life of lithium batteries used in electric cars, and to find better, cheaper, and more durable alternatives.  The company's motto is to revolutionize the field by surprisingly increasing the battery capacity of electric cars.

Notably, Volkswagen, an automobile company, and Bill Gates, an IT giant, have investments in the company.

Jagdeep Singh has been instrumental in the progress of the Quantum-Scape company so far.  Many have raised eyebrows after receiving such a huge package, but the management of the company, while explaining the role behind it, said that we always set very difficult goals and we are constantly encouraging the people concerned to achieve them.  Jagdeep Singh's big package is considered to be a part of that incentive.  The pay hike was also approved at the company's recent annual general meeting of shareholders.

Of course, Jagdeep Singh will have to prove himself in the years to come. Let’s  wish Jagdeep Singh and his team all the best for the revolutionary work that will benefit all electric car manufacturers around the world.

Blog by:

Dr. Virendra Tatake

Director

Indira Global Business School, Pune. 

Email-

director@indiragbs.edu.in

Bhool Nahi Jana Re !

Dr. Virendra Tatake 

    Last month of this year has started and everyone is looking forward to say Goodbye to the year 2021 and to welcome to the New Year. However, in the midst of this turmoil , it should not be forgotten that there are some important responsibilities on the economic front and some important changes that will be taking place . This should not be overlooked as it will affect your financial planning. Some of the important points are as follows.

➤  Income tax return

The last date for filing income tax returns for the financial year 2020-21 is 31st December, 2021. This date is important for taxpayers who have not yet filed their returns for this financial year. Taxpayers need to know exactly what kind of return they need to file and what kind of documents are required for it. Any ignorance on this front shout be avoided .

➤ Term Insurance

Term insurance is considered to be the easiest and cheapest way to get insurance. This type of insurance premium is relatively low. It is suggested that every person needs to have such insurance cover. However, experts predict that the term insurance premium will increase in the near future. In the wake of the Corona, insurance companies are likely to take this step because of the growing risk to public health and the resulting higher medical costs. There fore, those who want to take term insurance should take steps in this regard without wasting any time. Don't forget to cover yourself and your family with such term insurance.

➤ Silver Exchange Traded Fund.

Silver has always been an attraction for ordinary investors. The Silver Exchange Traded Fund (ETF) will be launched this month to invest in this commodity . The option to invest in gold through Gold ETFs is already available to investors. Now there is another option for investors in the form of Silver ETF. Investors will be able to take advantage of the fluctuations in the price of silver from day trading and long-term investing. SEBI has issued guidelines in this regard regarding the operating expenses of these funds, their functioning and security of investments of common investors.

➤ Transparency of mutual funds.

There are two welcome changes this month for investors in mutual funds. The first change will be in Debt funds. From this month, it will be mandatory for the fund managers of such debt funds to inform the investors about the maximum risk they can take while investing in the fund. Investors will get this information through Potential Risk Class Matrix (PRCM) system. This change will allow investors to anticipate the potential future risk of the fund they are investing in. From now onwards , when investing in such a fund, investors should not forget to know about it.

Another change in this context is that employees employed in a mutual fund company will not be able to benefit themselves from stock market investments by using any sensitive information about the company. The regulations announced by SEBI in that regard will come into force this month.

In a nutshell, it is important to keep in mind that the important things in your financial planning should not be overlooked in a busy environment.

(The author is associated
with Indira Global Business School, Pune)

Blog by: 

Dr. Virendra Tatake

Director 

Indira Global Business School, Pune

Mail ID- director@indiragbs.edu.in.

Mind Blowing Performance !

 -Dr. Virendra Tatake

Experts advise not to invest in any equity mutual fund by looking at its NAV. These experts also say that it is wrong to assume that a higher NAV means a better return and vice versa. However, when NAV of an equity fund with an initial NAV of Rs 10 reaches the level of Rs 2,000, it is a testament to the mind blowing performance of that fund. It often happens that the share price of a company in the stock market reaches Rs 2,000 , but it is rare for an equity mutual fund to reach that level. The reasons are obvious . Although the Indian stock market has a long history, it was around year 1993 that various companies started entering the Indian mutual fund business. Even in the early days, the number of new mutual funds coming into the market was very low. Mutual funds, which came into the market in 1993 and in the next two- three years and have consistently performed well, are also limited in numbers. As a result, equity funds with a NAV of around Rs 2,000 is a rare case . One such fund is Nippon India Growth Fund.

The story of Nippon India Growth Fund

The NAV (Growth Option) of Nippon India Growth Fund, which was launched in October 1995,

recently touched Rs 2,000. At the time of launch, the fund had a NAV of Rs 10 per unit, but in the last 26 years, it has reached Rs 2,000 per unit, with an average annual return of 22 percent. This means that the present market valuation of initial investment Rs 1 lakh in this fund is around Rs 2 crore. The performance of SIP investments in this fund is similarly glorious. An investor who has invested Rs 10,000 per month in the fund through SIPs for the last 20 years ,has market value of around Rs. 3 Crores at present . Due to the excellent performance of the fund, investors have invested heavily in this fund, that is why the assets of this fund are huge at around Rs 11,000 crore. The fund has mainly invested in shares of medium-sized companies in the stock market . Although the fund's performance has faltered in the short run, it has been very healthy in the long run. Of course, whenever the stock market collapsed ,there was a loss on investment in this fund. In such a situation, some investors withdrew their investments but the prudent investors saw such situation as an opportunity and made a lump sum investment in the fund. To give a more recent example, the fund's NAV plummeted in March 2020 when the Indian stock market collapsed due to the arrival of the Corona. However investors who then invested at this reduced NAV are now seeing the benefits. The current market value of Rs 1 lakh invested in the fund in March 2020 is almost Rs 2.50 lakh ( October 2021). Of course, it is not always possible for every investor to invest in such market conditions . Therefore, it is wise to have regular SIP in such a fund and keep the couple investing lump sum amount , as much as possible ,in case the market collapses.

The above information of Nippon India Growth Fund is just an example. Many such funds are available for investment in the market. All you need to do is invest regularly in the long run !

(The author is associated
with Indira Global Business School )

Blog By 

Dr. Virendra Tatake 

Director

Indira Global Business School, Pune

Mail- ID- director@indiragbs.edu.in.

A step forward by Mutual Funds Industry

 -Dr. Virendra Tatake

The Indian mutual fund industry has changed over time. Initially, the investment forms were required to be completed in writing and submitted to the concerned mutual fund office. Since then, many banks   ventured into the field and many advisors also  started offering their services, making it a bit easier for investors to fill out the form and scrutinize it every time a new investment is made. If there were any mistakes in filling up forms , there would be obstacles in investing. In the subsequent period, mutual fund transactions were facilitated on demat accounts, which eliminated the hassle of handling documents and facilitated transactions.

Recently , SEBI has taken another step towards making mutual fund transactions even easier for ordinary investors . The new platform is called Mutual Fund Central (MFC). In July this year, SEBI had appealed to all the mutual fund companies in the country to do so, which is being implemented. The total assets of our mutual 

fund business have recently crossed the Rs 36 lakh crore mark. Every month many new investors are being added to this investment which includes investors from big cities as well as small towns and  villages. Of course,  many of these investors are not familiar with online transactions. MFC will help such investors . In the first phase, investors will be able to carry out non-financial activities. For example, downloading  mutual fund investment statement, updating  email and mobile number, registering changes in  bank account, updating  changed address, etc.

 The second phase of the facility is expected to be launched in December this year in which investors will be able to conduct all financial transactions such as buying and selling of their mutual funds from this platform. Using this facility, the investor can do all the transactions in any mutual fund in one place. The transaction will be possible by giving the investor his mobile number and bank account details. In addition, in the event of an unfortunate death of an investor, the MFC will make it easier for the investor to accumulate investments in the mutual fund in the name of the heirs. There is no doubt that SEBI, which gives top priority to safeguard   interest of investors, will ensure that transactions made with this new facility are completely secure.

There are indications that MFC will be a platform to cater to all the needs of Indian mutual fund investors in the years to come. This is an important step for the Indian mutual fund industry.

(The author is associated as Director at IGBS )

Blog By

Dr. Virendra Tatake 

Director

Indira Global Business School, Pune.

Naya Hai Wah..!

 ..Naya Hai Wah !

- Dr. Virendra Tatake

    An important event in the history of Indian mutual funds took place in the first week of July 2021 . Huge amount of Rs  Ten Thousand Crore  was invested in the new fund offer(NFO ) of ICICI Prudential Flexicap Fund. This is the first time such a large amount has been deposited in any new fund. About four lakh retail investors have invested in this new fund .This can be said to be a positive result of the growing awareness among  investors about mutual fund investing.

  When any new mutual fund comes in the market, its price is Rs. 10 per unit. The market price of an existing old mutual fund unit in the market is definitely

much higher than this. This makes investors more inclined towards new mutual funds.

But while doing so, investors should keep in mind  following three points

 1. Understand the difference between NFO and IPO

There is a fundamental difference between a New Fund Offer (NFO) and an Initial Public Offer (IPO). In an IPO, a company brings new shares to the market. The number of such stocks is limited so if the demand for such stocks is much higher than the supply (oversubscription) then the market price of such stocks is likely to increase rapidly in a few days. In NFOs, on the other hand, the number of mutual fund units is unlimited, so it is unlikely that such a benefit will be available in the short run.

 2. New funds are not cheap

It may  be misunderstood that a new fund of Rs 10 is cheaper and older funds in the market are more expensive. However, any fund invests in market shares from the accumulated amount, so the profit and loss of the investor depends on the market value of these stocks. Therefore, it is wrong to assume that a fund available for Rs.10  is cheaper. Older funds may seem expensive at first glance, but they might have purchased shares at a lower prices, which benefits investors.

Therefore, instead of looking at the unit price of a mutual fund, look at its returns  .

We can understand it with the help of a simple example  this. If a new mutual fund, priced at Rs 10  with annual has  returns of  20 per cent over the next year, it  will cost Rs 12 per unit after one year. On the other hand, if a mutual fund with a price of Rs. 200 gives a return of 40% , its price will be Rs.280

 This means that the market value of one lakh rupees invested in a new mutual fund will be one lakh twenty thousand rupees while the market value of one lakh rupees invested in an old fund will be one lakh forty thousand rupees. Therefore, it is important to keep in mind that the profit and loss of an investor depends on the annual returns rather than the unit price of the mutual fund.

 3. New Mutual Fund's Progress Book is not available

It is easy to evaluate the performance of old mutual funds. Information is easily available on how much such funds have returned so far, how much their assets are, how they performed during the previous ups and downs, and whether they are better than other competing mutual funds. In the case of new funds, however, no such information is available as the performance of that fund has not yet started.  So it can be risky to make a large investment in such a fund .

 What should investors do ?

Avoid the hassle of investing in every new mutual fund that comes into the market. Instead, study the investment strategy of such funds and understand their investment objectives. Invest in a new fund if it is innovative and you have not invested in such a fund before. If the stock market is at a very high level when investing in a new fund, then one should adopt SIP route of investment rather than lump sum investment .

(The author is associated with IGBS as Director)

Dr. Virendra Tatake
Director
Indira Global Business School, Pune