BC GENERICLEARNINGS
Saved by @SAnngeri

Personal Finance 101 – My learning’s about investing

This topic is for everyone, whether you manage your money yourself or through your advisor, it will go a long way in managing your finances.

Do re-tweet & help us educate retail investors (1/n)

 Subscribe to our YouTube for some interesting educational content around Personal Finance - https://t.co/jvgNEDWiAZ

And you can also join our Telegram channel for regular updates – https://t.co/Ekz6I8pDGt (2/n)
(1) Lets start with Life Insurance

Term Insurance is the best way to take an insurance cover & probably the only product to buy in life insurance. Make sure u disclose all the necessary information before taking the insurance. Smoking, Alcohol, any pre-existing deceases etc(3/n)
Have atleast 10-15 times of your annual income as insurance cover

But there are variants of term insurance that you should avoid (4/n)
(A) Term plan with return of premium

For a non-smoker born on the 1st Jan 1985 & policy term 39 years (till age 75), the regular premium for a 1-cr term insurance is 22,157 (inclusive of GST) but with returns of premium is 42670 (inclusive of GST). An increase of 20,513 (5/n)
Return of premium means, if nothing happens to you in the 39 years term, the premiums you paid (minus of taxes) will be paid back to you. If something happens, both the policies (regular term & return of premium) pay you the same, 1 cr. (6/n)
Lets do some basic calculation,

(i) Without GST premium = 42670/118% = 36161
(ii) Premium returned at policy end if nothing happens = 36161*39 = 14,10,280 (7/n)
(iii) vs that, if u invest the difference in premium 20,513 every yr for 39 years @ 6% post tax, future value will b 23,54,112 vs 14,10,280 paid by the policy
(iv) In other terms, the policy is only paying u 2.77% on the additional premium u r paying over the regular premium(8/n)
(B) Term insurance with limited pay is another trick.

They will advertise it saying instead of paying 22,157 for 39 years (total 8,64,123), pay 48,830 for 10 years (Total 4,88,300 and save 43% premium, but, the trick here is time value of money. (9/n)
Lets do some basic calculation,
(i) If u calculate the present value of both stream of cash flows @ same rate of 6%, Present Value of regular pay (39 years) is 3,51,100 & 4 limited pay (10 years) is 3,80,957. In today’s term, u r paying 29,857 more in limited premium plans(10/n)
(ii) One more big difference is recovery of premium. In first 10 years, in limited pay, insurance company has recovered 10 out of 10 premiums vs. 10 out of 39 premiums in regular pay. So, in case the claim gets triggered in 11th year, limited pay option is at disadvantage. (11/n)
(iii) In limited pay option, insurance companies offer options from single pay to 5 years to 10 years. The lesser the payment term, the bigger will be the set back. (12/n)
(C) Third variant is Term Insurance with life cover upto 99 years, which is also a similar story. Read our blog for the data points - https://t.co/sr86RDqq0N (13/n)
(D) Mixing insurance & investment, is the biggest mistake. Insurance should be used for risk management & not investment management (14/n)
(i) Buying traditional Life Insurance (Endowment, Money Back, whole life etc) does nt give u adequate insurance cover. Insurance is generally 10 times of the premium. So if u r contributing 3L a year as premium, you are covered for roughly 30Lakhs, which may not be enough (15/n)
Avoid most traditional plans as neither do they cover u 4 insurance & nor r the returns worth investing 4. Don’t get carried away by the maturity figure & tax-free status. If u ever calculate the actual return in % terms, you will know the return is half of your inflation (16/n)
(ii) ULIP in most cases is an avoid. There are a few ULIPs with Zero premium allocation charge, Zero Policy admin charge which can be consider, specially for the tax free status upto 2,50,000 annual premium, But a big draw back is you compulsorily need to buy insurance. (17/n)
- Imagine paying 2,50,000 as premium but the entire amount not getting invested. If you are 30 years of age without any term insurance, this is okay. Out of 2,50,000, some premium will be allocated to term insurance giving you 25L cover and the remaining will be invested (18/n)
- But if you are 50 years old, a high mortality charge (term insurance premium) will be deducted towards insurance and hence the net investment will be much lower. (19/n)
- Or you already have insurance; this might not make sense because you will pay towards your term insurance in the ULIP when you might not need it, reducing your returns

Which is why, in most cases you can ignore ULIP’s as well. (20/n)
(2) Lets discuss, Health Insurance now. A must to have!

- Make sure you mention all the necessary information while applying for the cover and not hide any material fact. Smoking, Alcohol, Pre-existing deceases etc. This is a major reason why most claims get rejected. (21/n)
- Don’t only rely on the employer 4 cover, u might need more
- In case of a claim, Mediclaim will nt settle 100% of the bill amount; there may be items, which the insurance is nt covering, & the same needs 2b paid by u. Have some medical fund in place 4 such contingencies (22/n)
(3) Contingency Planning

- Make sure you have atleast 6-12 months of your monthly expenses, including you EMIs, kept aside in an liquid fund for any unforeseen eventuality (23/n)
(4) Goals
- Always have a goal in mind and define it in money terms, only then you can plan for it. Ex. Buying a house worth 2cr. in March 2030.
- Having a goal also brings in discipline in your investing (24/n)
- While planning for the goal, keep in mind inflation. The value you may require for your goal may be much higher than the value of the same goal today.
- Keep you goals realistic (25/n)
(5) Start investing as early as possible
-If u want to accumulate 5 cr. at retirement at 60, below is the SIP u will have 2do depending on when u start, assuming 10% returns
-Starting 10 years later will require u to do 40,000 instead of 14,500 to reach the same goal (26/n)
(6) Investing thoughts
-Investing golden rule 30:30:30:10. Maximum 30% of ur income as EMI, 30% household expense, 30% Savings & 10% liquid
-Always maintain an Asset Allocation. Don’t invest most of what u have in 1 asset (27/n)
-Avoid investing in instruments you don’t understand and/or are complex.
-There is no get rich over night investing strategy. You will have to give it time
-Avoid looking at your portfolio value daily
-Save more (28/n)
(7) Equity Investing

- If you don’t understand stock picking, stick to MFs
- Equity is a long-term asset, invest for long term
- Avoid F&O if you don’t understand it
- Investing creates wealth not trading (29/n)
(8) Fixed Income Investing

-Debt mutual funds are better over FD’s if you can avoid looking at the daily NAV and give it the 3-5 years you normally give your FDs
-Higher the interest rate offered, higher is the risk
-Fixed income is risk free is a misconception (30/n)
-Detailed insight on Fixed Income investing - https://t.co/osjZqVDNEA (31/n)
(9) Real Estate

-Don’t consider the real estate u stay in as a portfolio investment, u will rarely b able 2 use it 2 convert 2 cash when u want it
-RE investments r extremely illiquid
-Rent you receive on housing RE investment is 2% vs 6-7% on commercial real estate (32/n)
-Therotically, renting is a better option over buying a residential RE
-Interesting way to invest in RE - https://t.co/7doPyKWe7D (33/n)
(10) Gold
-Don’t consider the Gold jewellery at home as investment if you are not going to sell it when the price increases. Its your emergency fund
-Investments in gold should be in bars and not jewellery. Why spend on making charges? (34/n)
-Best case, avoid physical gold and save yourself from GST, Fraud & Theft.
-Best way to invest in Gold is through Gold ETFs & SGB
-More about gold investing - https://t.co/HubxI58OMZ (35/n)
(11) Tax Planning –

- Always try and utilize your 80C limits to the fullest. If you are in the 30% tax bracket, you directly save 1,50,000 * 30% = 45,000 of tax.
- 80C is no reason to invest in Insurance & 5 years bank FDs.
PPF, ELSS are much better options (36/n)
- Do tax planning & nt tax avoidance
- Cash that u generate by avoiding tax gets spent & does nt help u grow ur wealth. Its better 2 pay tax & invest the rest. Calculations show that in 3 years of investing, u recover the tax u paid & the investment can then keep growing(37/n)
- You can surely consider NPS. Have written about it in the past - https://t.co/KAhkC1WAqR (38/n)
(12) Debt Management
- It’s a blessing to be debt free
- Home loan, working capital loan kind of loans are okay but strictly avoid personal & credit card loans
- Don’t take loans & invest

& finally, have a will! (39/n)
Read our detailed blog by @stepbystep888 on this topic for some very insightful learnings.

Link - https://t.co/sr86RDqq0N (40/n)
We have written multiple threads earlier on
- Sector Analysis
- Macro Economics
- Debt Markets
- Real Estate
- Equity Markets etc.

You can find them all in the link below. Do hit the re-tweet & help us reach a larger audience

https://t.co/UrRt87xaU7 (**END**)

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Learn about the STEEL SECTOR in this thread

The demand for steel is generally only 1.2 times the GDP & there is no significant growth in our GDP but still the sector has rallied relentlessly, lets try & understand

Do ‘re-tweet’ & help us educate more investors (1/22)
#Investing

The metal sector is broadly divided into 2,
-Ferrous is a category of metal that has Iron in it, Steel as an example
-Non-Ferrous is a metal, which does not have Iron content, Aluminum, copper, lead, nickel, Zinc etc.
This thread focuses on Ferrous & hence Steel (2/22)

To start, lets understand with how steel is made (its important).
Iron ore is mined, it is then first converted to Iron & Iron is then converted to Steel. There are 3 processes of making steel
-Blast Furnace
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We will discuss all three (3/22)
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Market PE at 40 and yet the market is not falling, why? Getting asked this question multiple times. Here's a thread covering ‘very basic’ premier on valuation for my retail investor friends.

Do hit the ‘re-tweet’ and help us educate more investors (1/n)


For us to be able to comprehend the situation, we need to understand 4 very basic valuation matrixes
(1) Trailing EPS
(2) Forward EPS
(3) Trailing PE
(4) Forward PE

Formula

EPS = Profit After Tax / Number of outstanding Shares
PE = Market Price / EPS (2/n)

So what's a trailing EPS?

So in March 2020, RIL generated a Profit after tax (PAT) of 39,354 cr. The number of outstanding shares of RIL is some 676.21 cr. which means the 39,354 cr of PAT belongs to the 676.21 cr. shareholders, right? (3/n)

That also means that per share, RIL earned Rs. 58.20 (39,354/676.21). This 58.20 is called the trailing (TTM) EPS. Trailing means past, already done. (4/n)


So RIL earns 58.20 rupees per share but you pay 58.20 * 33.16 = 1930, 33.16 times more to buy 1 share from the market, that 33.16 is called the Price/Earnings (PE) ratio. This is again trailing as 58.20 EPS is trailing. (5/n)
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Amongst other performance details, what we miss out while selecting an actively managed mutual fund is the AUM.

In equity, moderate the better. In debt, higher the better.

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@KirtanShahCFP
Should you add more in Equity or redeem right now?

A thread 🧵to guide retail on why & what should they do at these historic market highs.

Do ‘re-tweet’ and help us educate more retail investors (1/n)

#investing #StockMarket

Some investors feel that markets are trading at a PE of 27 vs 10 years historical average of 20 and a market-cap to GDP of 105 vs historical average of 79 and hence markets look expensive (2/n)


But, in such crazy liquidity driven markets, prices can move much ahead of the fundamentals & suddenly we start hearing commentaries of how the market is pricing in the earnings of FY 22 & 23 to justify the rally

If you r new to fundamentals, 👇 can help


Results for Q4 have come out very well but that is also because of the lower base effect of the last year.

Over the last many years, markets have corrected 10-15% each calendar year. Can it happen this year as well? Can very much and that can be a great entry point. Why? (4/n)


There are a lot of over hangs in the near term,
-Crude going up
-$ index moving up
-Inflation moving up
-COVID uncertainties
All of the above are –ve for markets & liquidity on the other side driving markets up, its impossible to judge the near term movement of the markets (5/n)
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In a business where the buying & selling price is fixed by the government, how is that the sugar stocks are rallying so much?

A thread 🧵 to learn how the sugar sector works. Do re-tweet and hence us educate more investors (1/n)

- Sugar is made out of Sugarcane
- The government fixes buying price (FRP – Fair & Remunerative price) for the mill from the farmers at 2.850/Kg
- Selling price is also fixed at Rs. 31/Kg (MSP – Minimum selling price) (2/n)

Lets understand the sector,

- Sugarcane purchased by the mill is crushed to remove the juice (exactly like you have sugarcane juice at a hotel)
- Juice is heated & boiled to remove sugar (3/n)

- The juice can be boiled upto 3 times to remove sugar. Each time it is boiled, sugar is removed, than some water is added and boiled again to remove more sugar (4/n)

- There are 2 by-products as well. The residue left behind after the boiling process is over is like a gum/paste called molasses & the fiber/stem of the sugarcane after juice is extracted (5/n)
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🧵🧵🧵🧵 👇

Artificial Inteligence = 🖥️ + 🧠

When can you expect your fridge & mobile phone to revolt against you? (Spoiler Alert: Not in the foreseeable future).

Please Do 're-tweet' the Thread & help me spread the knowledge to more people.


1. The Language
In order to understand Artificial intelligence, machine learning, deep learning, we need to start at the very basics.

Humans speak and understand a wide variety of 'natural' languages (this is what computer science community calls them): like English, Hindi, Marathi, Bengali, Tamil etc.

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Chart created and shared by ExCavo: https://t.co/xv5jKjikz4

Share your charts and tag us @TradingView!
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Before I start, a quick disclaimer, please don't ape his portfolio.

As the entry price, horizon and risk appetite would be far different than yours.

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2/ Punjab Tractors:

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- It worked and fetched him 4-5 times which he calls it as a fluke.


3/ He believes that an investor must possess three qualities:

i. Knowledge,
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Common price action trading mistakes that cost me lakhs of rupees:

A thread 🧵

1. Front running the market based on my analysis:

Any analysis we do should be proved by market as correct before we jump into a trade.

How?

(1/n)

Example:

Mr. X marked 1500 as a strong support in HDFC Bank. Next day, stock opened at 1510, came down and hit 1500.

ABC went long in the stock. A few minutes later, stop got triggered. What went wrong here?

(2/n)

1500 is support for HDFC bank as per Mr. X but he did not wait to check if market validated his opinion.

At supports and resistances marked by a trader (you), wait for market to show the stock is actually taking support/resistance at those levels.

(3/n)

For your analysis to be correct, market buying>selling at support, market selling>buying at resistance.

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(4/n)

Remember that no support is too low to be broken and no resistance is too high to be broken.

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8 March 1679 - The date on which 300 saffron clad warriors gave their life to protect temples from mugal army. Thread➡️
Aurangzeb's huge army, which was adorned with artillery, elephant and horses, under the leadership of Commander Darab Khan had marched to punish the ruler of/1


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“What would the best version of yourself do”?
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