Vipin Khandelwal

What if you are unable to work? Accident Disability Insurance

May 17, 2016 by Vipin Khandelwal

Rohit was driving back from Pune to Mumbai through the expressway. After crossing Lonavala, in the Ghats, the curves on the road become so sharp that sometimes you cannot see what’s around the corner.

Rohit saw the milestone. He was 70 kms away from his destination. Just then he happened to look at his speedometer, which was hovering at 70kmph. He could not help but smile at this sheer coincidence of numbers.

Rohit was crossing that part of the Ghats, which had a few consecutive turns. He crossed the first, the second as he turned into the third one he saw a huge trawler overturned, less than 100 meters away.

As a natural reaction, he pressed the brakes with all his strength, but it was too late. His car rammed straight into the trawler’s rear end and overturned.

The car’s engine was smashed, the wind shield was shattered and Rohit lay inside unconscious.

Mutual funds have a new CV

May 22, 2016May 13, 2016 by Vipin Khandelwal

Year ago, when I started out as a newbie investor, I called up my friend who was working with one of the largest and most respected mutual funds in town then. Of course, he knew a thing or two about mutual funds.

“Tell me which fund to invest in. I want to do some tax saving.”

He told me 1 ELSS or tax saving fund and I invested. That was the beginning of my relationship with mutual funds.

I didn’t care to understand any further about my prospective investment. A trusted friend had recommended them, that was enough. Why would I bother?

For a couple of years, I continued to rely on his advice until, I myself started to work with a financial advisory company.

New Investor: Beware of Direct plans

May 10, 2016 by Vipin Khandelwal

“Are direct plans all that beneficial?” was a twitter headline I read this morning and I was stumped.

To me:

Is the question really about benefit of direct plans or the way advisor is compensated? @PrashantmET https://t.co/hY7t1e02bz

— Vipin Khandelwal (@vipinkh) May 10, 2016

This summarises all that is wrong about the understanding about the direct plans of mutual funds.

The popular media and some advisors too has also not been able to hold its horses and has given out interpretations and views that show the direct plans in not so good light. So much so that it has been declared that new investors should not invest in direct plans.

Now, the investor is left utterly confused. In this post, I will try and bring out the facts and help you, the investor, to make the right decisions about direct plans.

John Bogle’s 8 Rules to build your mutual fund portfolio

September 28, 2017May 6, 2016 by Vipin Khandelwal

John Bogles 8 rules to build a mutual fund portfolio

Who is John Bogle?

Back in 1975, the world’s first index mutual fund was started with the guiding principle of “trusteeship”. It sought to put the investor first and tilt the scales of investment rewards towards the investor. Not just that, this organisation has established the norms of running a trusteeship driven organisation.

The fund house, as would be a familiar name to you, is known as Vanguard. As of today, Vanguard is the largest no-load mutual fund in the world managing trillions of dollars for its unit holders.

I want to bring your focus on this man who built Vanguard, its founder John C. Bogle.

John Bogle has studied mutual funds in-depth since 1949, when he began his senior thesis at Princeton University before joining the industry in 1951. He was named as one of America’s four financial “giants of the twentieth century” by Fortune magazine.

He is a prolific author and has penned his wisdom on investing in books such as Common Sense on Mutual Funds – New Imperatives for the Intelligent Investor.

Mr Bogle is a hard-core believer in indexing or buying index funds. In his findings (supported by data), a broad market index fund will almost always beat an actively managed fund. This will primarily be a function of the costs that are loaded onto actively managed funds. He outlines his approach very logically in his book Common Sense on Mutual Funds.

However, for those who would still go the other way and choose actively managed funds, he has shared 8 rules to build a mutual fund portfolio. These rules are based on the same strategies that help index funds to succeed.

While the rules have been explained in great detail in his book Common Sense on Mutual Funds, in this post I bring to you the essence of these 8 rules.

While the context of these rules is in the US, I believe they would apply to any sensible investor building a portfolio to meet long-term financial goals.

All the 8 rules are listed below. To read a detailed explanation as also the India mutual fund context, you may want to download the full guide.

A saving you cannot do without

April 30, 2016 by Vipin Khandelwal

I learnt the importance of water, the hard way.

I spent my childhood in Alwar, a city on the eastern border of Rajasthan.

In my early years there, water was always scarce.

The daily water supply was for just 1 to 2 hours in the morning and about half an hour in the evening, if at all.

During peak summers, the evening supply was discontinued and the morning one reduced to only 1 hour.

And then there were days when the municipality did not supply water at all. We used to wait for hours, staring the tap connected to the local pipeline, with not a drop of water in sight.

You are financially literate, so what?

April 28, 2016 by Vipin Khandelwal

Your financial behaviour can still be messed up.

The problem with financial literacy

According to Wikipedia, in a financial literacy survey:

In Australia, 67 per cent of respondents indicated that they understood the concept of compound interest, yet when they were asked to solve a problem using the concept only 28 per cent had a good level of understanding.

This quickly summarises all that is wrong with financial literacy.

You may get a new tool, but you may not know how to use it best. Imagine yourself holding a knife from the sharp side.

Being financial literate is no guarantee that you would make the right money and investment decisions.

If that was the case, Chartered Accountants, MBAs (Finance) or commerce graduates would not be falling into all the obvious traps – buying ULIPs for investments, investing into real estate trying to become property moghuls, not realising the amount of interest they are paying on the loans.

Not to mention, you sent the concept of diversification limping down a one way street.

One of my clients aptly described his situation as, “The amount of interest I am paying, it feels like I am working for the bank.” Sigh!