SIPs Don’t Guarantee Anything

wealthymatters Equity can also underperform other asset classes in the long term, depending on your time of entry and exit.

Equity cult members believe that equity will provide ‘fabulous’ returns if you avoid timing and invest regularly through systematic investment plans (SIPs). But, if we analyse what the Sensex returns would have been after doing monthly SIPs on the Sensex for 10 years, this is not the case.

The  chart to the left is annualised returns (CAGR) on 10-yr SIPs on the Sensex. For example, the first data point of 34.55% on 31-8-1994 means the CAGR of 10-yr SIPs (i.e. SIPs from 1984-94) and the last data point of 13.37% on 31-8-2014 means the CAGR of SIPs from 2004-14.Dividend yield on the Sensex is ignored because retail investors will be buying Sensex using index funds and the small dividend yield will be negated by the expense ratio charged by these funds.

As seen from this graph, there are times in the past 20 years (i.e. mostly between the bear markets of 2001 and 2003) when equity investors have actually lost money even after doing SIP on the Sensex for full 10 years.

This is not to say that equity is a bad asset class or SIPs are not beneficial but that SIPs only reduce volatility and no in way guarantee fabulous returns from equities in the long term.

Also see in how many years equities have not been able to give 10yr CAGRs of 10%.So now you know what to do when banks have FDs offering 10% or more over 10years.Same goes for bonds, especially of the quasi government variety.


The Power Of Belief


Secured And Unsecured Bill Consolidation Loans

wealthymattersThere might come a time when you are considering taking a bill consolidation loan to consolidate your debts.  This will help to put all of your debts into one loan and give you one payment and one interest rate to make every month.  Having this will help you to pay off your debt quicker and will allow for a total payment to be smaller every month.  When you set out to look for your bill consolidation loan you will find that a lender will offer you two different types.  These are a secured loan and an unsecured loan.  Before deciding what type of loan is best for you it is important to know the difference between the two.

Secured Debt Consolidation Loan Read more of this post

Note The Difference

wealthymattersThere’s a huge difference between a good man and a good husband.

There are good men who work all the time.

There are good men who travel for a living.

There are good men who live cross-country.

There are good men who don’t ever want to get married.

There are good men who aren’t good communicators.

There are good men who suffer from depression.

There are good men who struggle financially.

Ladies,if a man is good, but your basic needs not being met on a daily basis – whether it’s sex, emotional understanding, stability, attention or his mere presence, he’s not a good husband for you.

Associate With The Powerful

By going to the den of a lion, pearls from the head of an elephant may be obtained; but by visiting the hole of a jackal nothing but the tail if a calf or a bit of the hide of an ass may be found.

-Chanakya Neeti App


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