_*Bull, Bear & Theories*_

In a _Bull_ market, any & every Investing theory is correct.

In a _Bear_ market, any & every Investing theory is incorrect.

Then, what's the theory that's always correct & never ends on the wrong side for an Investor...

_*Asset Allocation*_

Yes, _Asset Allocation_ theory holds true always & ever; _to hold the bull by the horn or to escape from the paw of the bear_

_*Margin of Safety, Price, Holding Tenor or Both*_

Benjamin Graham said, have a _*margin of safety*_ while investing.

He was referring to a *buy* price point.

Yes, he was undoubtedly right

But, I'll add to it that

_*Margin of Safety*_ on a suitable investment increases with the _*HOLDING TENOR*_ of our investments. And probably, irrespective of the price point we invested (unless, the investment made is absolutely worthless in the first place).

Yes, they'll go down when such black swan events hit us.

Yes, they'll go down when there is pandemonium & panic.

Yes, they'll go down when there is fear gripping all around.

Yes, they'll go down when the markets probably reflect the 6 or 9 month reality down the time.

But, _the Longer we hold our investments, the lesser is the damage to our capital_

Gains can come down (temporarily), but by the time it comes to hits the initial invested capital....it's going to be really tough and long. 

The recent events in some debt funds exactly illustrate this point (for someone invested in 2011 to 2017)

Equities or any other asset too, run with the same logic.

_*BUY for LONG*_

_*HOLD for LONG*_

_*Virus, Virus & Market Virus*_

_Coronavirus_, made in China & exported to the world.

_Market Virus_, made by the _*feelings of investors*_  in the short run, but, goes by the _*reality*_ in the long run.

_*Karma - Past, Present & the Future*_

*Karma* - The Oxford Dictionary defines it as, _the sum of someone's good & bad actions in one of their lives, believed to decide what will happen to them in next life_ (yes, unless I refer to Oxford, most people wouldn't believe that the word exists) 

In simple terms as I understand,

Karma = _All our Actions (past & present) lead to All our Consequences (present & future), good or bad_

_*FINANCIAL KARMA*_ 🙂

is no different 🤷🏼‍♂

Our past & current  _FINANCIAL KARMA_ or _MONEY KARMA_  decides our current & future state of monetary & financial consequences

_Good Money Karma (actions) lead to decent outcomes_

_Bad Money Karma (actions) lead to unwanted consequences_

Benjamin Franklin, referring to money, said the same... *Your current financial state is because of your past financial actions* 🙂

_*Decision Variables & Spending*_

Ability _(having money)_

Willingness _(to spend)_

Utility / Need _(having a real need to use)_

Best decisions on *spending money* happens at the intersection of all these 3 variables 

Any one variable is not satisfied, there is bound to be a _*spending regret*_ trigger in the mind for the short & long term of our life.

_*Circle of Money, in Life*_

Everything starts with *Earning* (unless, money falls into your lap, just that way)

The *Circle of Money, in Life* is such that, what we earn has to end up in _giving it away_ to someone (Inheritance or, for the benefit of larger society). 

_Money has to keep flowing, else, it might just start to stink_

_Surely, on the Money front, we come empty handed & we leave empty handed_

*Get the happiness of giving away, whatever you can afford to, during your lifetime or after*

_*Learning, Earning, Retiring, but Money Lessons?*_

_*Learning & Preparing*_ , the first 25 years of my life

_*Working & Earning*_ , the next 40 years of my life

_*Retiring & Introspecting*_, the last 15 / 20 years of my life

The one variable without which I can't survive in this world is *Money*, but _none prepares me to handle it at any of my life stage_ 

_Handling Money issues... remained, remains & will remain a challenge to the majority of the population_

_*Assets, Variables & Mix Match*_

_4 main Asset Classes_

_4 critical Impact Variables_

Our entire _Investing Life_ depends on the way we handle these 8 parameters .... _Individually or in a Combination_

But, What decides this mix / proportions?

_*Our NEED in Life*_

_*Assets & Pains*_

*Real Estate* is a _*Real Pain*_ (procedurally to buy, hold or sell)

*Equity* is an _*Emotional Pain*_ (daily volatility)

*Fixed Income* is a _*Fixed Pain*_ (we'll never see growth in purchasing power)

*Gold* is a _*Goldilocks Pain*_ (the price / return sits between a bull & a bear)

But, if we need to avoid the critical long term _*Money Life Pain*_ ....there is no other way than to embrace the above 4 pains, in whatever bearable proportions 😀

_*Risk, Cash Inflow & Outflow*_

_*Risk*_ is best managed when it syncs completely with my _cash inflow & outflow needs_

Liquidity, Risk & Returns - Is this Possible?

An Investment Product with Reasonable Liquidity + Low / Medium Risk + Maximum Returns ---- Is this Possible?

_*Asset Allocation & Needs*_

 _Asset Allocation_  - text book definition.....   an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.

Wow...that looks seriously tough for a common man to understand

In simpler terms.... 

*_Asset Allocation_ is nothing but, _investing money in a common sensical way_*

That's just allocating money into the 4 avenues.....

Equities

Fixed Income

Real Estate

Gold / Commodities etc.

_*The ratio of allocation among these 4 asset classes is based on ONE'S NEED (short, medium & long term)*_

_RETURNS_ are immaterial here, but the _RISK_ is quite material.

_*DOES IT SUIT MY NEEDS IN THE SHORT & LONG TERM OR NOT?*_

_Nothing else matters_ 😀

_*Insurance Purchase, Taxation & Need*_

This year's Budget proposals on the various  _exemptions & dedictions_ getting phased out sooner than later, I've only seen the below headlines in every article / clipping / video, that I've come across

*It's NEGATIVE for Health Insurance sector*

*It's NEGATIVE for Life Insurance sector*

It's NEGATIVE

It's NEGATIVE

🤦🏼‍♂

_*The primary purpose of  adding / buying a LIFE or a HEALTH Insurance plan to one's Money Life is not to claim a tax exemption or a tax deduction*_

It's supposed to be for *Risk Mitigation* in our lives.

All these decades, the selling point for the majority of agents / brokers / distributors in the Insurance Industry was on claiming a *tax benefit*; & the *Money Illiterate population* has been lapping up their talk for decades 🤦🏼‍♂🤦🏼‍♂🤦🏼‍♂

*INSURANCE* is for covering our _financial, health or life risks_

*INSURANCE* is _NOT_ for claiming tax benefits

_Whether Tax Exemptions / Deductions are available or not - One has to be Insured for Health, Life & Any other Needed Insurance_

_*INSURANCE IS A LIFE NEED, NOT A TAX NEED*_

_*Water, Work Time & Money*_

Approx 72% of our body consists of *Water*

Approx 72% of our waking time is spent on *Earning Money* (directly or indirectly).

The majority neither focus on the *impact of water* on the human body, nor do they focus on the impact of *earning More (up-skilling)*

🤷🏼‍♂

_*Line Items & Portfolio Tracking*_

In _tough times_, we focus specifically on the *possible bad* line items in a portfolio.....(a product / asset / scheme's performance)

In _good times_, we focus specifically all the *possible good* line times in the portfolio.....(a product / asset / scheme's performance)

In bad times, we shouldn't calculate the absolute amount of INR lost 

In good times, we shouldn't calculate the absolute amount of INR gained

_Both are notional figures.....until we've actually realised the loss or gain, by selling_

Yes.....we need to keep a track & keep reviewing on the specifics.

But.....the golden rule is

In _good or bad times_, we should focus only on the *Overall Portfolio Returns Vs the Asset Allocation we've chosen*

_We cant keep changing the way of evaluating a portfolio performance based on systemic & unsystemic variables which keep cropping up_