Kakode Consultants Pvt. Ltd.

03/02/2023

Is this worth a look as an investment?

01/01/2023

03/02/2022

How Can Goa benefit from the budget?

The Central Govt has announced a couple of schemes in the budget announced on 01.02.2022. Would urge the dispensation which will form the Govt in the ensuing elections to look at the following:

1. Awas Yojna: An allocation of 48000 crs has been made. Can a sizeable portion of the same be availed by the Goa Govt for the benefit of housing in Goa. Apart from housing for the deserved, the same will give impetus to a lot of industries and trade in the housing sector.

2. ECLGS Scheme: An amount of 50000 crs earmarked for the tourism sector under the same. Tourism being a major sector of the Goan economy, this should benefit the industry in Goa. The Govt will have to play the role of the facilitator here.

3. CAPEX Plan of 7.50 lakh crores: With a plan of the size announced, Goa Govt should try and obtain a decent size of the same pie to enhance the capital infrastructure of the state. A strong Govt with vision can take great advantage of the same.

4. An outlay of 1 lakh crores has been provided for exclusive for states to spend on the capex.

5. 5 urban planning institutes have been announced to be set up at a cost of 250 crs each as centres of excellence. Can we get one of this in Goa. This will also promote Goa as an education hub.

6. A new SEZ policy will be announced shortly. If Goa can make a KPO (Knowledge Process Outsourcing) SEZ, it will be a huge booster to the Goan economy solving multiple issues like investments and job creation.

- PpK
- Investing Buddha

, , ,

19/11/2021

A couple of days back received a msg from a friend stating that his wife is interested in investing in equities and that some investing firm is promising her 10% returns per month and if she says invested for 3 months the returns would be 35% and 65% returns is invested for 6 months.

Please remember, Any promise of assured returns on equities is not allowed by SEBI.

Also let us understand how to look at returns:

The old school of investments generally follows risk premium over risk free rate. This brings us to question what is the risk free rate?

Generally accepted risk free rate is the 10 year yield of GSec Bonds, which is in simple terms means the rate at which the Government of the country is borrowing for a 10 year duration. Anything more that that generally carries an additional risk. The current GSec Yield for India as I write this is 6.345%

So anything above this rate carries some amount of risk and that increases as the returns increase. Imagine 10% per month compared to 6.345% per annum. Mind you, the most famous living investor in the world Mr Buffet has succeeded in getting about 20% CAGR.

The other way people generally sell financial products apart from the lure of high returns is giving out returns in absolute numbers. Always remember the moment you hear returns spoken in terms of numbers, please remember the returns are not going to look good. Please ask for returns in % terms and that should scare the seller in revealing the truth.

- PpK
- Investing Buddha

07/06/2021

Is it sensible to invest in capital gains bonds?

An assessed can invest up to 50 lakh rupees in capital gains bonds to save the long term capital gains tax incurred on sale of a capital asset. Currently the same attracts an interest rate of 5% and are taxable. Assuming the person is in the highest bracket of income tax @30% his net returns would be 3.50%.

Assuming he does not invest in these bonds and opts to pay the tax which would be @20%, the investment would need to make an return of approximately 8.50% to break even.

Given the current situation locking in money for 5 years at a net return of approx 3.50% , would it not be better to try and make that 8.50% or more?

Get in touch with us to know more.

- PpK
- Investing Buddha

25/05/2021

I was asked an intriguing question in relation to an investment that I had suggested. Due to Covid this particular company that I had recommended was not doing well in the markets and the quarterly results were also not up to the expectations.

The question posed was, is this a good time to buy this particular company considering that their results are weak and that it has not performed in the last couple of months in the market.

Let me confess that I follow the buy and hold strategy for investments and generally take a long view of the markets (generally 8 years plus). That does not mean that once invested I will not keep myself abreast of the developments in the company. Exits are generally when there is froth in valuations or the thesis of entry no longer stands.

My argument to him was, Is it not better to buy a structurally sound business with great long term prospects and a solid management at the helm of affairs?

It is at times like these that anomalies of the market play up and we can get good companies at a discount. Have seen that play up in the past and hoping that it continues to play in this case.

Will keep you posted. In case of any investing queries please get in touch with us.

- PpK
- Investing Buddha

13/04/2021

The other day I was having a conversation which veered towards investments. The question posed to me in the middle of the conversation was, should I use a direct platform like Groww to invest. To answer that question, my simple reply was if you know the basics of investing please go ahead and do it. So, for other who want to try the direct route, I am sharing my selection process. (let me handle the equity part in another write up).

I basically look at the following filters to whittle down the funds for further analysis
1. Fund in existence for over 5 years
2. The fund manager is unchanged for the last 3 years (In converse it also means that if the fund manager changes, think about moving money around)
3. The fund should have a corpus which is sizable to withstand shocks (current filter for me is 1000 Crs)

Once the funds pass the above muster, apart from the sectors where it has an exposure, I also look at the major stock investments of the funds.

Apart from the above I also try and select low beta, high sharpe ratio funds.

After doing the entire exercise, it is still not assured that the thesis will work out and for that one needs constant monitoring.

So Happy Investing Friends

01/04/2021

We like to live our lives without the fear of the most certain eventuality that we all face i.e. death. However that is the most certain aspect of our lives. Every person that is born has to eventually pass off to another realm. Though the event is certain to occur, the timing of the event is something that no one is aware of. So how do we ensure that in the unfortunate circumstance of an untimely eventuality we protect our family after we are no longer available to take care of them.

The answer in one single sentence is LIFE INSURANCE.

The definition of insurance as googled is “a thing providing protection against a possible eventuality.” So insurance is an income replacement and not an investment.

As soon as an individual starts earning, one of the first things that the person needs to do is to ensure that his/her life is covered. (The first precaution should always be the health of the individual, hence medical insurance takes precedence over life insurance). Life Insurance cover should be initiated the moment one person has dependents on his earnings. If the person is a unmarried and has dependent parents, the individual needs to get his life covered, else the day he gets married is a good time to cover his/her life.

The next issue is what should be the amount of life cover that one needs. A way to look at this is: how much amount if I invest in a very simple savings instrument like bonds will be able to substitute my active income. For example, A person earns a salary of 7 lakhs per annum. And the current bond rate is 7%, than his sum assured will need to be 1 Cr. 7% of 1 Cr is 7 lakhs.

Another aspect that needs to be dealt with is what kind of insurance policy should I be taking? The easiest answer to the question is term insurance. It works like the car insurance, one never sees the money paid to the insurance company but, the survivor gets the benefit of the sum assured in the case of eventuality. Please do not mix insurance with Investments. Investments are required for building a corpus and ensuring a comfortable retired life, not insurance.

The total time of insurance cover that will be required will be the working life of the individual. If a person will be working till the age of 60, the person needs a cover till the age of 60, (just a reminder it is a replacement of the earning capacity).

Please feel free to get in touch with us if you need any further clarifications or need any assistance in your matters related to money aspects.

17/03/2021

Investments and the game of tennis.

I am sure everyone has been engrossed watching Wimbledon at some point in time. Nice green courts where white uniform is adorned, and a fierce battle is fought for the coveted Wimbledon crown. The champion is always granted a place in tennis history.

I am also equally sure that not many in India would have seen the amateurs play the game in clubs across the country. If anyone has spent some time watching tennis in these clubs one would realize that competition is less, and many unforced errors are the norm.

What can we learn from these 2 types of games and how can we apply those principles to investing? Should we play the game of investment as the professional would play at Wimbledon or like the players who would play their Sunday match in the clubs.

Intuitively we would say we should be like the professionals and play the game to win. The professionals play the game hard and have to ensure that they defeat the opponent for every single point that they win.

Is it required in investments to play like the professionals? I would go with the counter intuitive opinion and say that the Game of Investments should be played like an amateur.

When I say play the game like an amateur what I imply is the following:

• Take less risks. Play the game you understand within your constraints. Don’t try everything that is on offer in the market rather stick to the products that you understand.

• Don’t try to beat the markets on the upside. Beating the markets on the upside is for the professional players. Be on par when the markets are rising and do a lot less unforced errors that will ensure that you beat the market handsomely on the downside thereby giving you a handsome overall returns.

• Come to play the 5 sets. Don’t try and finish the game in a straight sets victory. Give your investments time to ferment in the markets. The longer the duration in the market for the investments the better the probability of your returns being outsized.

So Happy Playing and for Once enjoy being an AMATEUR

- Pankaj Pai Kakode