Have you done your and your portfolio’s annual health check-up?

Word ‘healthy’ prompts an array of words in my mind viz. strength, endurance, longevity, immunity. Add responsibility to that and it gives a sense of comfort and security. A HEALTHY PORTFOLIO is what you can count on. It is a manifestation of thoughtful planning, good and consistent feed, continuous attention and adaptation. As a primer, I am highlighting broad aspects of portfolio management.


Macro-economic environment

“Is our economy doing well?”
“Is the inflation too low or high?”
“Are commodity prices rising?”
Where’s the currency headed?”

Answers to these and many more questions influence asset allocation decisions dictating how much of the portfolio should be in debt, equity or alternative assets such as real estate.

Micro-economic environment

Industry and company specific aspects that define productivity (Return on Equity, Return on Capital), profitability (Profit Margins) form micro-economic environment. This guides in selection of securities and/or investment vehicles in each asset class.

First part of portfolio health-check will focus on whether asset allocation is right for current environment and client’s life cycle stage, assets, liabilities, income, expenses etc.


Portfolio management at its core is management of risks to maximize the rewards. Portfolio must endure the adversities and thrive during conducive environment. Some elements of construct are:

  • Asset Classes: Am I aware of various assets where I can invest such as fixed income (debt), equity, alternative assets (real estate, commodities etc.). What are the ways in which I can invest in these?
  • Diversification: Have I put all my eggs in one basket? Do I hold excess of fixed income (such as PPF/FD) or I have excess of equity shares? Have I considered my homes as investments? Balance is always better!
  • Liquidity: If need arises, how much can I convert to cash without compromising on fair price? A distressed sale will add to worries during emergencies.
  • Risk & reward management: What is the correlation of my portfolio with my income source? Will I lose both at the same time? What are my post-tax returns? Is there a tax-efficient way of investing?

Review and Management

Whatever is built must be reviewed, maintained and managed with due respect to changing environment.

Is there an ideal review and re-balancing schedule?

How much value professional help will add to my portfolio?

Have a healthy and wealthy portfolio!

Inflation – The Silent Killer

Financial planning is like a guiding map. But one needs to understand that it is just a tool and the output is just a function of what input we feed in.

One of the most important and tricky variables to feed, in any financial plan is “Rate of Inflation”.

Inflation denotes a rise in the general level of prices. Inflation reduces the purchasing power of each unit of currency.

For Each, His Own

Although, inflation number is published on a monthly basis by MOSPI and it tells us about increase in a general price level, it is not at all comprehensive indicator of how your expenses have moved. Inflation for various individuals having various socioeconomic backgrounds, life stages and behavior pattern is different.

To give an example price of iPhone 4 launched in May 2011 was Rs. 40,900 and iPhone X launched in November 2017 costed Rs.80, 600, which means prices of iPhone have grown at 13% CAGR. In the same period CPI has grown by 6.7%.   As our standard of living improves our inflation also increases. If you plot your expenses over last 5 years you will realize how our consumption pattern has changed. Our day-to-day expenses either get expensive or as our standard of living improves, we move to more branded and expensive things.

Understanding Real Return

The real return is simply the return an investor receives after the rate of inflation is taken into account. For example, if my investment is yielding me 7% return and inflation during the same period was 5% then my real return is 7% – 5% = 2%.

As an investors we need to be cognizant of the fact that whether we are getting returns which are more than the Inflation rate. If not, our ability to purchase same good in future is getting hampered.

So, while planning for the future we need to keep this silent thief away from eating into our pie

If you succeed in planning, you plan to succeed!

Yes, that holds for financial planning as well! Financial planning is gaining popularity in earning population across age groups. Individuals seek it with diverse objectives such as,

  • Investments of lump-sum received through inheritance or some windfall gains
  • Planning for retirement
  • Education and much more …

Time value of money forms the base of any financial planning and in simplest terms it is the reward received in future for consumption sacrificed today. The reward is further beefed up with premium for risk taken and duration of sacrifice. However, there are many moving parts when the journey is long and a lot of course corrections are required while following the map drawn out by your financial planner.

Your Needs and Requirements

A financial goal is defined by financial need in monetary terms required at a particular point in future is what an individual wishes to fulfill. It’s easier said than done.

Distinction between needs, wants, desires and dreams is vital in the goal-setting process.

For example,

  • Managing living expenses post-retirement is a NEED
  • That with maintaining present lifestyle becomes a WANT
  • Bequest of assets to children is a DESIRE and
  • Setting up a trust fund for provision of generations to come can be a DREAM

Capital Market Expectations

All the money saved and invested by individuals and institutions lands up in capital markets where those who want to consume it today (for future sacrifices to pay it back) borrow it. The terms of these investments vary depending on if it is equity, debt or any other structure. Every structure and source of capital comes with some risks.

Investors must consider risks associated with their investments, capability of those who manage their investments, global and domestic macro-economic scenarios and many more before taking a decision.

Finally, the decision regarding YOUR investments will depend on confluence of your requirements and capital market expectations. Outsourcing this task to an investment advisor will definitely result in a favorable cost-benefit. The clock is ticking and a lost opportunity due to self-management with a busy life is also a cost.

Wish you a Successful Planner!

Macro-Economic Indicators and Challenges in using it for Investment Portfolio

Stock market is driven by Earnings and Change in how investors are willing to pay for those earnings

Quite a few times we hear or read following sentences in financial media –

“India’s GDP growth slows down to 6.6% in December quarter, fails to meet expectations”

“S&P expects RBI to cut rates on falling inflation”

Often one wonders how these things affect my investment portfolio.

We need to understand that capital market is integral to the overall economic activity. For this reason, most of the major macroeconomic indicators are very important pieces of data for the outlook of the market.


GDP is a primary indicator of an economy’s overall health. So, when business sectors report an increase in earnings and production, the economy will reflect a positive movement in the GDP and vice-a-versa. Stock market is driven by Earnings and Change in how investors are willing to pay for those earnings. When GDP is rising, market participant extrapolates good performance and assume that economy will do good till eternity. This usually leads to extreme exuberance and ultimately leads to bubble.

Inflation is a situation of consistently rising prices in the economy. Although inflation up to a certain level is considered desirable for growth of the economy, above certain level it becomes a Curse. Inflation higher than desired level leads to higher interest rates which in turn hampers companies’ earnings as their cost of borrowing increases.


Although Macro-economic indicators can provide broader framework to better understand the economy and in-turn company’s performance, there are quite a few challenges in actual utilization.

  • These indicators are pieces of ever evolving puzzle and one needs to think of these data points from various aspects for better understanding of this puzzle.
  • Different Macro indicators can at times provide contradictory signals about economy.
  • Indicators can be leading or lagging, hence understanding leading-lagging effect also poses challenge.
  • Often there is series change or methodology change which makes use of this data even more difficult
  • Impact of Macro indicators on particular sector needs more in-depth understanding and skill.
  • To comprehend interrelations of a single country’s Macro indicators with those of other economies is another challenge.

To conclude, Macro Indicators are definitely useful piece of information which can provide substantial understanding of economy, sector in which one needs to invest.

But it is equally important to have someone who understands this and has experience in solving this puzzle.

Visit us at https://www.wealthmanagersindia.com/

Taking Care Of Your Money – The 3 Excuses

Never Taught In School

Understand some simple principles and practicing them will help us take charge of our financial fitness. It is helpful to spend an hour or two with a financial planner to understand these.
However, most people are hesitant to do this, and there are typically three excuses:

The 3 Excuses

1. My parents did fine without planning

All this idea of financial planning is okay. But, my parents did so well financially. They never needed any plan like this!

Things have changed. Life different for the earlier generations. The conveniences and luxuries did not exist – which today make demands on our money. We have shifted from joint family to nuclear family. While we will do everything to give the best future to our children, do we wish to depend on them for looking after us in our old age?
We want to become financially independent to live with a sense of self worth and self respect. That’s why, we need planning!

2. Where is the money to save and invest?

“I earn well, and so does my spouse. But we need to keep up our lifestyle. Everything’s getting so expensive”

It is not easy to save money. Just consider – We must give something to ourselves first! We are the two most important people in my life! Look at the equation below.

Income – Expenses = Savings

For financial success, change it to:

Income – Savings = Expenses

3. I am comfortable now, and this is how it is going to remain

But I am leading a comfortable life now. Retirement is far away. I will certainly save for retirement, not now, but later – when my income is higher

Sounds logical, right? But have we taken inflation into account? Do we want to go through life’s journey without a map? Can I have the freedom to retire early?

To take of these, meet a financial planner. Create your roadmap and,

  • Start Early
  • Save consistently
  • Invest wisely