FinAtoZ Blog

The Budget of 2021 highlights India’s bold, resilient, and self -reliant approach in its fight against COVID. The Budget will propel India towards the path of a double digit economic recovery in the coming year. This will be a major relief after witnessing one of the worst economic contractions witnessed in 2020.

Despite operating at a fiscal deficit pegged at 9.5% of the GDP in the current year, the government has opted to pursue an aggressive pro-growth policy for the coming year. This is done via increased expenditure in key sectors and enacting key reforms in legislation aimed at boosting investments.

Investing into a volatile asset class like equity without a proper exit strategy is akin to entering into a Chakravyuh without knowing how to come out of it. A robust Goal based exit framework ensures a very high probability of achieving the target amount for a given financial goal. Sudden market crash and black swan events like "Covid-19" may seriously jeopardize your financial journey. A robust Goal based exit framework is your insurance against such unpredictable events.

Coronavirus or Covid-19 originated in Wuhan couple of months ago. However,  it reached viral proportions this week on Wall Street — and literally throughout the world. Cases of the illness have stabilized in China, but its spread outside the country, to nearly 80 countries in total, is what may have truly injected uneasiness into the global stock markets.

How to play the current markets under such uncertain times? What is the right thing to do keeping in mind a long term investment horizon? We believe that the answer lies in the following famous Warren Buffet quote:  "Be Fearful When Others Are Greedy, Be Greedy When Others Are Fearful" .

How many times your bank relationship manager has pitched you ULIP (Unit-Linked Insurance Plan) and has discussed with you about different advantages of ULIP. So, we all are well aware of the advantages of ULIPs but none of us is aware of the hidden disadvantages of ULIP.

As per Harry Markowitz - The father of Modern Portfolio theory, diversification is the only "free lunch" in finance world. This notion that you’d get something for nothing is nearly unheard of in economics. The key concept behind the “free lunch” is correlation—or rather, a lack of it. Typically, the performance of individual asset classes isn’t perfectly correlated. If asset values do not move up and down in perfect harmony, then a diversified portfolio will have less risk. It protects the portfolio against unexpected or unpredictable events. Diversification is spreading one’s investments to protect against unexpected/ unpredictable events.