Markets are too high, I will wait for them to cool down before I invest. Nifty broke 10,000 and Sensex is at 32,000, is it too high? We’re in bubble territory for sure. Markets are in an overdrive—this ends badly. Markets are looking ahead and pricing in the structural reform the government is doing. Goods and services tax (GST) will cause markets to drop in the next 2 months—we’re just a few days away from a crash. Market is pricing in the long-term benefits of more taxpayers, less black money and better compliance due to GST.
Listen to the voices about the market and you’d imagine people are talking about two very different things. There are two voices that we hear today—one believes that we are already in a stock market bubble. The other believes that small corrections will happen, but we are in a long-term bull run.
A guy I know wanted to retire when he was 25. He just didn’t have the money. If I get Rs1 crore, he said, then I’ll retire. Now, 30 years later, he’s still working and still not done with gathering the corpus he needs to retire. Anyway, he’s wiser and agrees that financial security and going to work need not be either/or. People can continue to work even if they are financially secure. But how much do we really need to save out of our incomes to know that we will hit retirement with enough to maintain our lifestyle for another 30 years? Every time I speak to a friend about buying a life cover, he tells me—the risk we have is not of dying too soon, but of living too long.
It was reported earlier this week in this newspaper that the insurance regulator is considering allowing portability in life insurance products. You can read the story here. I’m going to unpack what this means and whether it is possible to ‘port’ an insurance product. First, what is portability? When we think of a telecom service, then switching service providers from say, Airtel to Jio, is portability. Your number and basic services remain the same, but you switch your service provider. S.S. Mudra, deputy governor at the Reserve Bank of India (RBI), had suggested last year that bank account numbers become fully portable. You can read the story here. While bank account number portability is yet to happen, the logic is clear—our phone numbers and bank accounts are linked to multiple services we use. Often we stay with the service providers or banks out of inertia.
Are you thinking of investing in a debt fund? If data is any indicator, you may be already there because the assets under management of debt-oriented funds held by non-HNI (high net-worth individuals) retail investors have jumped by just over 40%, as on 31 March 2017, over the previous year to reach around Rs67,000 crore. As bank deposit interest rates fall, investors begin to look for better return options. This has coincided with rising awareness about the efficiency of the mutual fund vehicle to offer a full basket of products for instant to very long-term needs. Along with the awareness have come products and fintech solutions that now allow instant access to some parts of your money. Once on-boarded and linked to an online platform or app, mutual fund investing is a breeze.
I wrote about the removal of key consumer rights by the insurance regulator in my previous column. You can read it here: bit.ly/2njjAI1. Insurance Regulatory and Development Authority (Irdai) responded with a letter. In the interest of fairness, I’m using key arguments of the letter here and putting the rest online at: bit.ly/2nAhs2H. I will also respond to Irdai’s letter.
he chaos has begun. The phone calls, email, smses, whatsapp have all begun to ping and ring – average people calling to ask if their currency is useless now.
Rumours are beginning to spread. The reason for the panic is the move by the Narendra Modi government to demonetise the Rs500 and Rs1,000 notes. What this means is that starting midnight 8 November all the currency notes you hold in Rs500 and Rs1000 are worth nothing. But remember that all the currency notes you hold in your bank area still worth the money they denote.
Just that you wont get Rs500 notes from the ATM, but Rs100 and Rs50 notes.
RRR exit, hmmm. Brexit, meh. Shrugging off plenty of bad news, the Sensex hit an 11-month high this week. What’s going on? The story for India is the thickening of the retail equity pipeline, not directly in stocks, but through institutions such as pension funds and mutual funds. Sustained flows of retail money is coming in. And it is coming in a staggered manner. Indian household money has traditionally been in real assets such as gold and real estate, in bank fixed deposits (FDs) and to some extent in life insurance policies. The organised sector contributed to their provident fund, which again went into bonds and other fixed return paper. Think about the change in our own investing behaviour—we swore by FDs and Life Insurance Corporation of India policies, but are now die-hard SIPpers (investors into systematic investment plans of mutual funds). What changed?