Opinion | Four investor types a zooming market shows up

There are always those two or three days in a five- to seven-year period that patient equity investors wait for. They wait for these days not just to see the value of their money go up, but also to quietly push back at the jibes of non-equity believers. The Sensex has gained nearly 8% in three trading sessions, wiping out the losses of a few months and the despondency that was beginning to set in, aided by the naysayers who had begun to escalate the “equity-is-useless” narrative. But mature equity investors understand that you have to be in the game to profit from it. They know that nobody can predict when a big market move will happen and it is good to be in the market rather than scramble together money and routes to get to the market when the move happens. They know that investing in equity is not an art nor is it a science for retail investors. It is actually a routine and, therefore, boring activity that uses the stock market for long-term wealth creation. Here are four investor types and how financial advisers deal with them.

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Opinion | The FM should extend the tax nudge to personal income tax too

Putting at rest months of post-budget gloom, the Indian markets roared back on Friday as the finance minister announced a reduction in corporate income tax. In an unexpected move, the dismissed-as-a-newbie to finance,Nirmala Sitharaman used a smart nudge to get the existing firms to on-board a lower tax regime, while she announced the reduction of the tax rate for new firms. Firms incorporated on or after 1 October 2019, that do not avail any tax break, will now pay 15% (effective rate is 17.01% post surcharge and cess) as corporate income tax, down from the existing top marginal rate of 34.94% for firms of turnover over ₹400 crore.

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Opinion | An aspiring $5 trillion nation needs new role models

We’re getting back from an overdue team lunch and my colleague next to me in the car exclaims: “Oh! a VIP car is getting checked!” We all cheered. The new Motor Vehicles Act had just kicked in and stories of fines that cost more than the vehicles were giving social media its new outrage. Lawless Delhi was beginning to stop before the zebra crossing and the four-hour lines at the pollution centres were telling their own story of the degree of non-compliance with basic road rules.

We’ve all heard and told stories of order and rule of law in the more developed parts of the world and shaken our heads to say—how well we behave when abroad, why don’t we do the same here? Then we’ve aspired for tougher rules and their implementation at home. But bring tighter rules on the ground and we resort to strange acts of defiance—newspaper reports said that one drunk biker set his vehicle on fire rather than pay the fine. Reacting to the public outrage, several states are rolling back the steep fines with one eye on political gains.

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Opinion | Why real estate makes a poor emergency fund

A friend who runs a small business was hit by a series of events post the North Atlantic financial crisis of 2008. The crisis wiped out a large chunk of the overseas market, hitting his business badly. Next, a series of poor business decisions and external events prevented him from recovering in the next few years. Just as he was getting it back together, GST (goods and services tax) compliance and bribes for refunds dealt the next blow. Thinking that the end was around the next quarter for many years, he got into a debt trap with unpaid dues to banks, suppliers, family and friends. The only way out of this tight financial corner was to sell some land bought more than a decade ago, the price of which had gone up exponentially, with lakhs now worth crores. The sale will more than clear the debt and then leave some capital for restarting the business or just retiring. But one year later, he remains in the market looking to liquidate the land. This story is a text-book example of why real estate is such a clunky, and sometimes dangerous, asset to own, maintain and dispose, and why it is a poor asset for an emergency bail-out situation.

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Opinion | Decode the secret mantra of money to find balance in life

The way we think about the future reflects the stories that decode our past and the present. Growing up in the 1960s and ’70s in India makes our generation risk averse and overprotective about the future. In a supply and opportunity starved post-Nehruvian world, we learnt from our parents that there was no space for errors with your job or risk with your money, and unless you lived frugally and planned hard for the future, your sons would not join the Indian Institute of Technology (IIT) and your daughters would not have the wedding that your social standing mandated. We stepped into a different world where opportunity blossomed post 1991—of course, the right convent accent and education were quick facilitators—and the overall less slowly gave way to overall more. And then those born after the millennium change have a totally different world view. Risk appetites are higher for trying out new professions, the we-own-the-world swagger obvious as is a disdain for the future and for those who plan for it. This disdain, rooted in the current stories of plenty but a future discourse of climate change that predict a dystopian near future and the bad stories around their married peers, make them reluctant to think about future finances or marriages. In the not so long run we are all dead, they seem to say, why then think about the future or plan for it?

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