Artha:Shastra - Science & Art of an Investment

    Before we jump to the advantages, disadvantages and limitations of Active and Passive investing, let us first understand what it actually means. The core idea of Active-Passive is, it identifies the style of investment strategy. These are two broad categories, that reflects investment style one can follow to build a portfolio. Funds or schemes based on Active Investment strategy are called as Active (actively managed) Funds whereas, Funds or schemes based on Passive Investment strategy are called as Passive funds.  Passive Investment         As name suggest, passive investment strategy is a method in which investor deploys money in predefined idea. Investor does not have to micromanage the allocation on daily basis. The investment then mirrors the performance that is given by that particular predefined idea. There are over 1000 listed companies in stock market. It is difficult to track price movement of each and every stock on daily basis. So, the ‘Index , an indicator that refle

In the past few months, BSE SENSEX after reaching a lifetime high of 62,245, witnessed a sharp correction. The fall in the index was not purely led by an increase in the new covid-19 variant ‘Omicron’. Omicron cases started rising exponentially after the last week of Dec 21, on the contrary, BSE SENSEX crossed 60,000 marks in the same period. There was hardly any correlation between Omicron's concern and Market movement. Along with the Omicron, there is one more risk market is facing right now which is a 'Rate Hike' by the Central Bank. To boost economic activities, Central Banks all over the world lowered the interest rates or used the fiscal stimulus to pump in more money into the system. But as expected this huge money supply has fueled inflation. To curb this, Central Banks will start increasing rates. The real trouble is, despite the omicron threat and rate revision risk, markets have continued to move upwards with much uncertainty in near future. Apart from these two

On 27 th  Sept 2021, BSE SENSEX Index recorded its lifetime high level of 60,412. The Journey from day’s Low of 25,638 on 24 March 2020 (Lockdown impact) to record high has been extraordinarily fast and unidirectional. Most of the investors are now experiencing the dilemma, “What to do now?”, "shall I invest more as the market is going up?" If yes, then in which category? Or should I book the profits I have made? The market has its own way of moving up or down, let’s not get in the territory of how rational or irrational it behaves. Be it, Fund Managers or well-informed investors, no one can anticipate the exact market movement and its level in near future. To a certain extent, one might get an idea of the future trend based on various financial ratios and history of events. Let’s focus back on the million-dollar question, “what to do in a current market scenario?”. The answer to this question lies in the correct actions taken while building the portfolio. Every investment ma

     In the previous chapter, we discussed the effectiveness of Bank Fixed Deposits to preserve wealth. Lately in falling interest rate scenario, monthly income schemes for Sr. citizens have become very popular.       The sovereign-backed saving schemes like Post Office Sr. Citizen Saving Scheme or Pradhan Mantri Vaya Vandan Yojana are offering around 7.40% p.a. with regular interest payout. Superior Rate of Return, Fixed monthly cash flow and Sovereign backing make these schemes the preferred choice for Sr. citizens. In a scenario where the economy is flushed with excess liquidity where banks are forced to slash interest rates on FDs, these instruments are proving to be beneficial for the Senior Citizens.      The typical structure of these schemes is that initially the investor has to deposit Lumpsum amount in the scheme and then they start receiving monthly income or interest payout till maturity. In order to lock-in 7.40% p.a. interest rate, investors usually invest maximum allowed

Open economies, access to global markets, ease of cross-currency transactions and liquidity has brought an abundance of global funds to markets. Over the last two decades, precisely after the IT boom, we have seen how the Indian capital market has evolved. In fact, till a few years back Indian equity market was dominated by foreign Money (FPIs) but now Domestic Funds have gained importance and their quantum now often counterbalance the trade volumes of FPIs. Too much liquidity and intention of making quick money has led to extreme volatility and uncertainty in Equity Markets and yes… Volatility and uncertainty are here to stay. One might think “Why not just simply Stick to BANK FD, Corporate FDs or Debt Mutual Funds and have peace of mind?”   better let’s not even think of Equity. It is volatile and moreover, there are no assured returns. Why should I expose my hard-earned money to this uncertainty? What if I put my entire savings in Bank FDs? Is it possible to stay isolated and buf