Monday, July 20, 2015

My interview about the book

You need to know how not to lose money


The importance of a mutual fund account statement

Click on the link below to read my article in Mid-day Mumbai edition today:

The English translation is as under:

“Can you please provide me the information of your investments?” Asked the financial adviser to the client. The client answered: “I invested so much in XYZ mutual fund, this much in ABC mutual fund, …, etc.” The adviser was not satisfied with the answer, as he wanted to know the current value of the investments.
The client was unable to understand the question, as they were talking on phone. The adviser suggested that they meet. He also requested the client to carry the account statements for the meeting.
How the adviser helped the client to know the value of investments?
When an investor invests in a mutual fund scheme, one gets an account statement. This statement looks quite like a bank statement in that it contains the record of various transactions the investor has done in the account as well as the current balance and any dividends one has received. The statement also contains some basic details of the investor and the mode of holding.
As far as the investor’s question in the discussion above is concerned, the account statement serves an important purpose. An investor can see the unit balance in the respective mutual fund scheme folio. Multiplying this unit balance with the current NAV of the scheme gives the current value of investments.
While how much money you invested is important to know, after a while, it is important to know how much money has been accumulated in this account.
An account statement, as mentioned earlier, also shows the cumulative value of the dividends paid by the scheme in this investment folio. This gives a good idea to the investor about how much Rupee returns one has made.
One should be careful to understand that the total returns one has got through the investments cannot be simply added as what one received few years ago cannot be equated with what one got now. The concept of “time value of money” is important for anyone interested in the study of investments and loans.
How often can one get an account statement?
Actually, any number of times. A mutual fund account statement is just a document that records the transactions and unit balance, it can be obtained from the office of the mutual fund company or the registrars any number of times one wants. There are no charges levied for this. Mutual fund companies also offer online services to the investors, which help an investor check the current value of investments anytime and from anywhere. Today, there are mobile phone applications also that help one check the current value of investments.
Investing in mutual funds is quite simple. Checking the current value of investments is even simpler.
Amit Trivedi
The author runs Karmayog Knowledge Academy. Recently, Amit has authored a book titled “Riding the Roller Coaster – Lessons from Financial Market Cycles We Repeatedly Forget”. The views expressed are his personal opinions.

Monday, July 6, 2015

You can pre-order the book at various websites

Should you invest in stocks directly or through equity mutual funds?

Read my article on whether it makes sense to invest directly in stocks or through equity mutual funds

The English translation is as under:

“Should I invest in stocks directly or through equity mutual funds? Which of the two can generate better returns?” A participant asked in one of my investment seminars. This is not the first time that one has faced this question. This question keeps cropping up periodically.
There are quite a few investors who think they can easily generate higher returns than most mutual fund managers. Many also quote some of their successful stock picks. Such examples could be quite attractive, and seductive sometimes. The result being, some individuals start thinking that beating other investors is quite easy. When one sees someone making money (or hears about such a story), the above question is raised.
What should one do? The question is straight forward, and so is the answer.
One has to go back and understand what a mutual fund really is. A mutual fund is an investment vehicle offered by an asset management company. An investor investing in a mutual fund is outsourcing the activities related to investment management to a professional fund management and administration team. This professional fund management team takes up certain tasks on behalf of the investor, e.g. analyzing and identifying for investment opportunities, managing the inflows and outflows in the fund, taking care of investment administrative activities, valuation of the portfolio and calculation of the NAV, etc.
If an investor has to do all these activities, one would need three things, viz. (1) skills and abilities to manage money, (2) time required for various activities including investment research and administration, and (3) liking for all these activities. In the absence of one out of the first two, the performance could turn out to be disastrous.
Investment management is a full time job and requires one to devote time towards study of balance sheets of companies to understand the businesses one is buying. It is surprising that so many investors buy stocks of companies without knowing the business of a company. Let us understand that one becomes part owner of a company by buying stocks. The owner of a company is entitled to profits of the company in proportion of the shareholding. If one is looking at becoming shareholder of a company with this understanding, it is important to buy stocks of companies that can remain profitable for long. In order to understand whether a company would be profitable or not for long, there is only one way – study the business of the company.
During one such discussion, one gentleman looking for buying stocks asked, “How many people know how to read a balance sheet of a company?” His question is right. However, there is a bigger danger if one really understands what is happening. Anyone looking for buying stocks should read the balance sheet. However, if one does not know how to read one, is trying to invest one’s hard-earned money without realizing where the money is going. Isn’t that a bigger danger?
Well, in the absence of abilities one would be better off taking professional help. This is where mutual funds come on.
Very often, we tend to look at things, which are less important and ignore things that matter the most. In the question of managing money, whether direct investment in stocks would be more rewarding than investing through mutual funds, one often misses out the amount of time and effort one has to put in. there could be better utilization of one’s own time – spending time with the family, pursuing some hobbies, etc.
Enjoy life!
Amit Trivedi
The author runs Karmayog Knowledge Academy. The views expressed are his personal opinions.

Riding the roller coaster - lessons from financial market cycles we repeatedly forget - what is the book about

Riding the roller coaster - lessons from financial market cycles we repeatedly forget

Events spread over a period of five centuries and involving four continents; vehicles of investment or speculation ranging from equity to fixed income to derivatives to real estate to…hold your breath…tulip bulbs!
The market prices of instruments fluctuate wildly during these events, giving rise to numerous theories on what could and should have been done to preempt them. But why do these events keep recurring from time to time? Is it possible to foretell such episodes? Can they really be preempted? 
When such market tsunamis occur, large and small investors, alike, burn their fingers. Governments and regulators try to intervene with measures that seem too little, too late. Great nations are brought to their knees while they seek out someone to blame in the aftermath.
Against this backdrop, what should investors do? What are the lessons they can learn? 
A veritable page turner, Riding the roller coaster is packed with information and insights on the subject and yet extremely lucid to read. It talks to simple investors, narrating, cautioning and advising in its uniquely wise and witty tone.
As a “seat-belt” for the next financial market roller-coaster ride, and all those that will follow, this book remains evergreen and begs revisiting from time to time to ensure that we refresh our memory of Lessons from financial market cycles we forget.