BAD Equity SIP Returns VS FD Returns

Dear All,

This is an interesting read by ET Wealth. I think during such troubled times they're trying to educate investors to stick with their SIP's instead of stopping them and to have faith in the Equity Markets over the long term. 

I totally support this process and believe that investors should show a little more faith in the time frame and the performance of the fund manager. Although the short term / near term for the Equity Market looks to be terrible, over the long run your Systematic Investments will work out just fine. 

A 27% return CAGR over 10 years is pretty impressive where clearly Rs. 1.2lakh was returned as Rs. 12.79lakh. 

Our view at DENIP is that we anticipate at least a 10% - 15% fall in the indices (BSE Sensex & NSE Nifty) over the next 1 quarter. We believe that all long term investors should look to add a Gold SIP to their Equity SIP portfolio as a hedge to the oncoming fall since in the worst case inflation linked returns around 6% will  persists and during such turbulent times (2008 crisis, 2011 EU crisis) higher returns to the tune of 20%+  can be expected. Following is an email we had sent to a client on the 31^st of October 2011 who had started investing recently:

Scheme Name	Folio No.	Amount Invested	Current Value	No. of Units	Current NAV	Profit / Loss	P/L %
HDFC Top 200 Fund	7228258/61	15,000.00	14,099.14	73.953	190.650	(900.86)	-6%
Reliance Regular Savings Fund	404120184465	5,000.00	4,744.64	171.952	27.593	(255.36)	-5%
DSP Black Rock Top 100 Equity Fund	2496587/94	10,000.00	9,298.50	102.142	91.035	(701.50)	-7%
Kotak Gold Fund Growth	1913261/95	10,000.00	12,415.69	959.859	12.935	2,415.69	24%
	Total	40,000.00	40,557.97			557.97	1%

The whole portfolio was saved only because of investments in a Gold fund. If you work on proper asset allocation, the return game changes completely.

Do get in touch with us if you're interested. You can call us on (022)40156688/99 or 9320496699/9320196699.

Thanks,

Dewang K. Mehta

DENIP Consultants Pvt. Ltd. 

IFCI Ltd. - Unsecured Bonds at 10.5% for 10 years and 10.75% for 15 Years

Dear All,

 

On similar lines to the Muthoot Fincorp Ltd. Offering, IFCI Ltd too is offering bonds to raise capital. However these bonds are unsecured and although they carry an “A” rating by CARE, I would peg it in a higher risk category as compared to Muthoot Fincorp’s Secured bonds.

 

These bonds offer an interest rate of 10.5% p.a. for a 10 year bond and 10.75%p.a. for a 15 year bond. Minimum investment of Rs. 10,000. The bonds issue opens tomorrow i.e. 1st June 2011 and closes on the 15th of June 2011.

 

Kindly go through the image file below and let us know if you’re interested in investing money in this asset class.

 

You can contact us on (022)40156688/90/99/92 or drop us an email on dewang@denip.in / nimesh@denip.in to get the application forms.

Thanks,

Dewang K Mehta

DENIP Consultants Pvt. Ltd.

Fixed Maturity Plan (FMP) VS Bank Fixed Deposits

Dear All,

With a lot of Fixed Maturity plans (FMP) offering as high as 9.85% these days, we at DENIP decided to compare them to Bank Fixed deposits which tend to offer around 10% or more depending on which category you’re investing in.

For ease of calculation and understanding we decided that its best to let the Bank FDs have a 0.5% point advantage over the FMPs since yields tend to vary depending on the time you’re investing in them. So with the Bank FDs interest rate set at 9.5% and FMP yield set at 9% we decided to see which instrument got us the best post tax yield.

Fixed Maturity Plan offered by Mutual Fund houses  VS Bank Fixed Deposits	Bank FD	FMP (Retail Plan Growth Option)
		Without Indexation	With Indexation
Investment Amount	1,00,000	1,00,000	1,00,000
Assumed net yield to investor(p.a)	9.50%	9.00%	9.00%
Tenor (days)	400	400	400
Amount at Maturity	1,10,410.96	1,09,863.01	1,09,863.01
Interest/long-term capital gain	10,410.96	9,863.01	9,863.01
Indexed cost acquisition (double indexation)	NA	NA	1,12,360.00
Indexed gain/loss	NA	9,863.01	-2,496.99
Tax Rate*	30.90%	10.30%	20.60%
Tax on interest on FD/capital gain on MF	3,216.99	1,015.89	NA
Post-tax income	7,193.97	8,847.12	9,863.01
Post-tax yield (simple annualized)	6.56%	8.07%	9.00%

As per the table above if you do fall in the 30% tax category, its best to opt for FMPs rather than Bank FDs. We also think that for companies which tend to invest in Bank or Corporate FDs should definitely consider investing in FMPs due to the tax benefit they offer.

All your views and opinions on the same are more than welcome.

Thanks,

Dewang