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5 Traits of Smart Investors

The COVID 19 crisis has tested the mettle of investors like never before. From the heady highs of February to the dark depths of March, and to the sharp recovery that has followed since market movements of 2021 have been truly unprecedented. 

However, smart investors continue to remain relatively unscathed through all this madness, while the less smart ones have seen their portfolios getting pulverized. Do you want to be a smart investor too? Start by cultivating these five traits that characterize them.

1. Don’t obsess over your portfolio

Someone wisely observed that a watched pot never boils. They may well have been talking about investing! While smart investors do check their portfolios periodically and make a sincere effort to stay on top of things, they also understand that obsessing over their investments will only serve to incite a host of behavioral biases in them that will work to their long-term detriment. 

In short, smart investors review their investments periodically and then sit tight until something changes materially. They do not count their daily losses and profits.

2. Be goal-focused, not returns focused

Smart Investors seldom invest in an ad-hoc manner. They recognize money for what it is – that is, a means to an end. Resultantly, their portfolios tend to be segregated neatly into goal-based buckets. Long-term money being saved for retirement automatically flow into higher-risk funds, whereas emergency funds get set aside into safer, more liquid investments. 

They understand that returns fluctuate, and so they measure their success by the more robust yardstick of the percentage of goal achievement instead. Retirement corpus down 30% due to COVID? So, what – there are still 25 long years left to cover lost ground!

3: Understand risks

Smart investors never commit money into an investment without total awareness of the risks (and potential rewards) involved. By doing so, they assume full responsibility for the fluctuations that may ensue during the investment life cycle. 

Instead of turning a blind eye to risks, they study how a prospective investment has fluctuated previously during good times and bad before deciding whether it fits in with their objectives as well as their bounds of risk tolerance. And once they do – they stay committed through the ups and downs that follow, without breaking into a sweat every time markets fluctuate.

4. Follow a “Core & Satellite” approach

A “core and satellite” strategy is a proven strategy that smart investors have long employed. It entails investing the bulk of one’s assets into long-term and relatively passive assets while setting aside the rest to play sectors and themes that may outperform the rest of the pack in the medium term. 

By doing this, smart investors effectively contain portfolio risks while cashing in on opportunistic trends in a controlled manner. Importantly, smart investors draw the line between their core assets and satellite plays with unflinching discipline.

5. Avoid “Heropanti”!

While heroics are fantastic for Bollywood movies, they simply do not work well in the investment world! Buying into every dip, exiting opportunistically at every bounce, and getting back in swiftly at the next correction – these are just fantasy moves that sound great in your head. 

In reality, such mercurial actions will leave your portfolio bruised and battered. Smart Investors understand that successful investing is more like watching grass grow or watching paint dry. They mentally prepare themselves for a marathon, while leaving the sprints for the novices!

The support of a qualified Financial Advisor can make you a smarter investor! To get started on your journey towards smart investing, get in touch with us today.

3 Mutual Fund categories worth considering right now

Has the COVID conundrum left you wondering which Mutual Funds make sense right now? Here are three fund categories that are worth considering – in increasing order of risk tolerance!

Dynamic Asset Allocation Funds

Dynamic Asset Allocation funds present an ideal solution to the moderate risk taker’s quandary at the moment. Since they implement automatic portfolio rebalancing models that go against the grain of market movements.

They act as a safety mechanism against a host of behavioral biases that would otherwise plague any investor who’s endured the absurd roller-coaster ride that equity markets have witnessed since March! For multiple reasons, not all Dynamic Asset Allocation funds are worth considering right now; so be sure to seek the support of an expert Financial Advisor before you invest in one.

Value Funds

Traditionally, exogenous shocks such as COVID-19 have thrown the door wide open for value investing. When the going is good and hot money is in full flow, it is growth stocks that benefit the most. However, when a crisis results in severe market dislocations, sectoral leadership undergoes dramatic shifts. 

In times like these, the high margin of safety in value stocks makes them lucrative as contrarians come cherry-picking. For this very reason, Value Funds have always outperformed Growth Funds during post-crisis revivals. 

Risk-taking investors who have the patience to weather returns that are frustratingly uncorrelated with index movements, and have a time horizon of at least 3-5 years from today, should add value funds to their portfolios at this juncture. Invest in a staggered manner though.

Small-Cap Funds

Small-Cap Funds invest in stocks that lie beyond the top 250 companies by market capitalization. For the past three years, these stocks have received the drubbing of a lifetime – most of the companies in this space are now trading at bargain-basement discounts of 60%-80% to their January 2018 peaks. 

While they may well correct further and will likely be the last to recover from this cycle, their lucrative valuations are hard to ignore at this point. 

Small Caps tend to rally after Large and Mid-caps do; but when they take off, they switch on their afterburners and rocket ahead with such force that fence-sitters are left gasping in awe! If you’re a savvy investor who doesn’t break into a sweat every time markets move sideways, this is an excellent time as ever to accumulate units in a small-cap fund in a staggered manner. You’ll need to have a 5-year holding time horizon, though.

Confused about where to invest? Leave it to the experts! Get in touch with us today.

BITO the first Bitcoin futures ETF starts trading on NYSE

The long wait for Bitcoin futures exchange-traded fund (ETF) in the U.S. is finally over when the cryptocurrency officially hit the New York Stock Exchange (NYSE) during the week with the launch of the new Bitcoin-linked futures ETF. 

The ProShares Bitcoin Strategy ETF (NYSE: BITO) started trading on the exchange with increased participation from the Wall Street investors.

ETF touches a $1 billion in trading volumes on the first day of trading

The ETF started trading on October 19, for $40 a share and posted a rise of 4.85% before closing on the first day with gains of 2.59%, at $41.94 per share. At the end of Day 1 of trading, the ETF surpassed the $1 billion in volumes and becomes the second most traded ETF on its first day. 

The number one position is held by the BlackRock U.S. Carbon Transition Readiness ETF with $1.16 billion in trading volumes on its first day.

What are Bitcoin Futures?

Bitcoins and Bitcoin futures are two different assets. In the futures contract, as in the case of BITO, an investor will agree to buy or sell the asset in the future at some specified price (similar to other stock futures contracts). 

Futures contracts here are derivatives of Bitcoins and are not directly backed by physical Bitcoins. Investors are not directly buying and selling the underlying asset (Bitcoin in this case).

How does this ETF work?

The ETF trading under the ticker symbol BITO, lets investors buy into bitcoins through the futures contract (F&O segment) without actually buying it on a crypto exchange. By investing in this new ETF fund, investors are likely to be betting on the potential of the shares of the ETF to be worth more in the future. 

The underlying driver behind the value of the shares in this fund is Bitcoins. This works similar to other futures contracts like the commodities ETF or the gold futures ETF where the investors do not buy physical gold or gold bars. 

How does a Bitcoin ETF impact the price of Bitcoins?

Bitcoin price surged to a record high of more than $60,000 on the news and touched $66,974 on Wednesday, crossing the previous high of $64,889 set in April. Since this ETF is a future-based ETF that tracks futures contracts as opposed to the current price of the asset, the price of the ProShares ETF won’t be the same as the price of the Bitcoin.


ProShares had to peg the future price to a listed exchange price and has picked the Chicago Mercantile Exchange (CME) as the benchmark. This may lead to a situation where the ProShares’ fund is likely to trade at a premium in a bull market and a discount in a bear market which might make the ETF a good short-term investment than for an investor who is looking at long-term investments. 


What are the costs involved?

BITO has an expense ratio of 0.95% which looks quite high at the moment. In other words, if an investor invested $10,000 in this fund $95 will go towards the funds’ operating expenses. 

The ideal low-cost index funds have an expense ratio of around 0.30%. Since this is a new asset class, there may be many middlemen and the price of the futures ETF is likely to be high until more competition brings down the fees and expenses of the ETF. 

It also seems that in the coming months, it’s likely that more firms will follow in ProShares’ footsteps and offer their own futures-based crypto ETFs. Fund houses like Valkyrie Investments, VanEck, and Invesco are awaiting the SEC’s green signal.

Market hours

BITO will be trading at regular market hours like any other stock, unlike Bitcoin which can be bought, sold, or traded at any time. Investors can place orders for BITO during off-market hours, however, the orders will be executed during the market hours only unlike Bitcoins. 


Bitcoin-linked ETF comes with protection in line with other conventional investments. While only a cash balance in a traditional brokerage account is covered by FDIC insurance, brokerage accounts are protected by the Securities Investor Protection Corporation (SIPC). 

This insurance covers accounts up to $500,000 in securities if a brokerage is closed due to bankruptcy or other financial difficulties and if customers’ assets are missing from accounts.

So, should you buy a Bitcoin-linked ETF?

Bitcoin is still very new compared to conventional stock market investing, which means it lacks the historical track record which investors can use to anticipate future performance. 

While there may be a difference in the price of Bitcoin and the price of BITO, Bitcoin is highly volatile and the ETF is also likely to see similar volatility. Bitcoin prices saw an all-time high of over $60,000 in April before losing half of their value and trading below $30,000 and have now returned to $60,000 levels once again. 


Investors can expose 5-10% of their portfolios in buying cryptos or investing in crypto-linked ETFs like BITO. 

Also, investors should remember that investments in any speculative investment should never be at the expense of other financial goals like paying off high-interest debt or saving for retirement since these are high-risk-high-return assets in the portfolios.

Having said that, we are pleased to bring BITO, the first Bitcoin-linked ETF, on our platform for our investors to make use of this opportunity so that they can conveniently invest in Bitcoin ETF in their regular brokerage account.  

This ETF is going to allow many investors who were looking to invest in Bitcoins and other Cryptos but did not know how to begin with.  Also, BITO is safe for investors to gain access to the crypto world as it is regulated by the SEC, marking it the first regulated cryptocurrency investment vehicle in the U.S. to go mainstream. 

ETFs allow investors to diversify their portfolios without having to own the assets themselves. We have seen some good participation from Indian investors in BITO after the ETF was available on our platform during the week.

4 Tips to Achieve Your Financial Goals Through SIP’s

The “Mutual Funds Sahi Hai” campaign has fuelled an increased interest in Mutual Fund SIP’s (Systematic Investment Plans) over the past five years. The industry’s monthly SIP inflows have doubled to Rs. 8055 Crores since 2017, and assets have tripled in the past five years. If you’re one of the thousands of investors who are using SIP’s to achieve their financial goals, here are four things to keep in mind.


Select Your Funds Based on Your Time Horizon

Counterintuitive as it may sound – when it comes to goal-based investments, it makes sense to disregard your risk profile and focus only on your time horizon instead. 


For instance, choose aggressive small & mid-cap equity funds for goals that are more than a decade away, and short-term debt funds for goals that are a year away. 


Doing this will ensure that you reap the maximum benefits of rupee cost averaging and compounding from your SIP’s


Be Disciplined… Very Disciplined

When it comes to goal-based SIP’s it is mainly your discipline that will determine your long-term success. 


If you’re the kind of person who frequently stops and starts his SIP’s, or lets them bounce for a couple of months and lets them debit for a couple of months, your chances of achieving your goals through them are fairly slim. 


Ensure that you start with an amount that is comfortable for you, but once you do – make sure you treat your SIP’s as sacrosanct and ensure that they keep running like clockwork.


Ignore the Noise

Short-term events such as BREXIT, demonetization, elections, crude prices, and RBI rates have very little bearing on the long-term returns from SIP. 


If you get rattled into action every time the newspapers sensationalize something, you’re likely going to wind up taking some very myopic decisions with your SIP’s When it comes to SIP’s in Mutual Funds, dispassion is more important than active management! Just ignore the noise and keep going; rewards will follow sooner than later.


Have a Step-up Plan

An annual step-up plan is like rocket fuel for your Mutual Fund SIP. Here’s an interesting calculation. If you run a SIP of Rs. 10,000 per month for 25 years for your retirement, you’ll probably end up accumulating something to the tune of Rs. 2 Crores at the end. 


However, if you step up the amount by just Rs. 5,000 per month every year, you’ll have closer to Rs. 8 Crores! Some Mutual Funds even allow you to automatically step up your goal-based investments every year. Enrolling in this feature would be a great idea.


Source: FinEdge



5 Things that all great Advisors expect from their Clients

While much has been said about the traits of great Financial Advisors, the fact remains that the Client-Advisor relationship is a deeply symbiotic one, whose long-term success is contingent upon the attitudes and actions of both parties involved. 

Here are the five things that your Financial Advisor expects from you to ensure that your investment experience is a great one.


Financial Planning is a journey, not a destination. Along the way, there are bound to be many euphoric crests and dispiriting troughs. While a great Advisor will do all that she can to handhold you and keep you aligned to the big picture, her efforts will fall flat in the face of impatience on your part. 

As an investor, you must give an adequate amount of time to your investments, without being swayed by short-term market movements. Remember, your patience will give your Advisor the requisite bandwidth to take better long-term decisions on your behalf.


Few things impinge upon an Advisor’s efforts as much a trust deficit does. If you’re going to take her recommendations and run it past your banker (a salesperson), your LIC agent (a salesperson), and your well-meaning uncle (a little bit of knowledge is a dangerous thing!) before proceeding, you’ll have a hard time creating any wealth at all. While no Financial Advice is bulletproof, remember that a conflict-free Advisor is in a much better position to make the right investment calls. Ask all the questions you need to to build trust in your Advisor’s intent and competence; but once you do, take the plunge and hand over the steering wheel in toto, for best results.


If only we had a Rupee for every time that a Financial Plan crumbled in the face of indisciplined investing! 

Things like – stopping and starting your systematic investments, making futile efforts at timing the market, redeeming your Goal-Based Investments to fund short term ‘wants’ while sacrificing long term ‘needs’ – all constitute acts of indisciplined investing that lead to great consternation for an Advisor who is as invested in your long term goals as you are. 

Being a disciplined investor allows your Advisor to frame and execute a robust Financial Plan that leads to the achievement of your goals in the long run.


Remember, even a great Advisor’s efforts will amount to nothing if you suffer from investment ADHD (Attention Deficit Hyperactivity Disorder). 

An NFO here, a short-term gamble there… and before you know it, you’ll have a scattered portfolio of Financial Assets that are beyond repair. The best Advisors will expect you to follow a goal-oriented approach to your investments. 

That involves sitting down together and mapping your goals, prioritizing them, and then aligning your current as well as future investments to them. Your goals are firmly in place, your Advisor will have a much higher chance of succeeding if you stay focused and keep your ‘eyes on the prize’!


Last, but not least – great Advisors expect your time and commitment. That involves making time for important discussions such as periodic goal reviews and portfolio reviews. Once discussed and agreed upon, your Advisor will expect you to be swift with change executions as well. 

A lack of responsiveness on your part can result in your missing out on tactical entry opportunities as well as important, time-bound exit recommendations during tempestuous market cycles such as the one we witnessed when we first started grappling with COVID-19. When your Advisor calls, do make sure that you answer!

Source: FinEdge

Term Insurance Premium set to rise up to 40% from December 2021 | Know why?

Term insurance policy premiums are set to hike anywhere between 25 percent to 40 percent as reinsurers tightened underwriting norms in the wake of the Covid-19 pandemic. The extent of the premium hike will, however, vary from one insurer to another. The new rates will come into effect from December.


Covid-19 death claims in Q1 were hig­her than the cumulative claims in the entire FY21. As per the report, post pandemic’s second wave, Life insurers have so far shelled out Rs 11,060.5 crore to settle Covid-related death claims. 

As of October 21, life insurers settled a little over 130,000 Covid-19-related dea­th claims. About 140,000 Co­vid-related claims have been made so far, amounting to Rs 12,948.98 crore, of which 93.57 percent by volume and 85.42 percent by value were settled, a Business Standard report stated.

Following the claims burden, Munich Re, the largest reinsurer for the Indian insurance market, is set to hike its rates for underwriting portfolios of pure protection plans by up to 40 percent. 

Effect of a surge in claims post Covid-19 second wave

The worsening mortality experience for life insurers in the country accentuated by the pandemic has prompted reinsurers to re-evaluate their prices on term plans. Munich Re has intimated to insurance companies, whose risks it is covering, about a price hike. 

The global reinsurer has communicated its decision about increasing rates, according to a senior executive of a private life insurance company.

About 8-10 insurance companies have been informed about the move, sources told Business Standard. 

As Reinsurance rates hiked by up to 40% and Premiums are likely to increase by 30%, depending on age, sum assured and quality of life of the individual.

“The reinsurer has increased its rates for term policies by 30 to 40 percent across various companies. This will lead to an increase in the premium rates by 25-30 percent,” an executive said.

Apart from increasing reinsurance rates, the German multinational insurance company has also tightened underwriting standards.

This is the second time reinsurance rates have been hiked in 2021.07-Oct-2021. In March, the rates were raised by 4-5 percent. In June last year, there was a steep hike of 20-25 percent.

Life insurance companies in India have received four to five times Covid-related death claims in FY 2021 as compared to the last fiscal year, which has resulted in huge losses for them. Following this, Insur­ance firms are engaged in discussions with the reinsurer on the quantum of the hike.

Source: IndiaTV

6 Reasons that make sense to get Health Insurance

The rising cost of medical expenses, access to good medical facility and hospitalization costs can be financially strenuous. Therefore, getting a health insurance cover for yourself and your family can provide the added protection you need in times like these.

Apart from the obvious benefit of having the financial confidence to take care of your loved ones, a health insurance plan is extremely useful when it comes to beating medical treatment inflation.

1. To fight lifestyle diseases

Lifestyle diseases are on the rise, especially among people under the age of 45. Illnesses like diabetes, obesity, respiratory problems, and heart disease, all prevalent among the older generation, are now rampant in younger people. Some contributing factors that lead to these diseases include a sedentary lifestyle, stress, pollution, unhealthy eating habits, gadget addiction, and undisciplined lives. 

While following precautionary measures can help combat and manage these diseases, an unfortunate incident can be challenging to cope with, financially. Opting for Investing in a health plan that covers regular medical tests can help catch these illnesses early and make it easier to take care of medical expenses, leaving you with one less thing to worry about. 

2. To safeguard your family 

When scouting for an ideal health insurance plan, you can choose to secure your entire family under the same policy rather than buying separate policies. Consider your aging parents, who are likely to be vulnerable to illnesses, as well as dependent children.

Ensuring they get the best medical treatment, should anything happen to them, is something you would not have to stress about if you have a suitable health cover. Research thoroughly, talk to experts for an unbiased opinion and make sure you get a plan that provides all-around coverage. 

3. To counter inadequate insurance cover

If you already have health insurance (for example, a policy provided by your employer) check exactly what it protects you against and how much coverage it offers. Chances are it will provide basic coverage. If your current policy does not provide cover against possible threats – such as diseases or illnesses that run in the family – it could prove insufficient in times of need. 

And with medical treatments advancing considerably, having a higher sum assured can ensure your every medical need is taken care of financially. But don’t worry if you cannot afford a higher coverage plan right away. You can start low and gradually increase the cover. 

4. To deal with medical inflation

As medical technology improves and diseases increase, the cost of treatment rises as well. And it is important to understand that medical expenses are not limited to only hospitals. 

The costs for doctor’s consultation, diagnosis tests, ambulance charges, operation theatre costs, medicines, room rent, etc. are also continually increasing. 

All of these could put a considerable strain on your finances if you are not adequately prepared. By paying a relatively affordable health insurance premium each year, you can beat the burden of medical inflation while opting for quality treatment, without worrying about how much it will cost you.

5. To protect your savings

While an unforeseen illness can lead to mental anguish and stress, there is another side to dealing with health conditions that can leave you drained – the expenses. You can better manage your medical expenditure by buying a suitable health insurance policy without dipping into your savings. Some insurance providers offer cashless treatment, so you don’t have to worry about reimbursements either. 

Your savings can be used for their intended plans, such as buying a home, your child’s education, and retirement. Additionally, health insurance lets you avail of tax benefits, which further increases your savings. 

6. Insure early to stay secured 

Opting for health insurance early in life has numerous benefits. Since you are young and healthier, you can avail of plans at lower rates and the advantage will continue even as you grow older. Additionally, you will be offered more extensive coverage options. 

Most policies have a pre-existing waiting period which excludes coverage of pre-existing illnesses. This period will end while you are still young and healthy, thus giving you the advantage of exhaustive coverage that will prove useful if you fall ill later in life. 

A health insurance policy is an essential requirement in today’s fast-paced lifestyle. Protecting yourself and your loved ones from any eventuality that could leave you financially handicapped is a must.

6 Financial Lessons from Diwali

Diwali is one of the most awaited festivals in India. This is one festival, which keeps all of us busy with making arrangements, buying crackers, sweets, and gifts for everyone. Not everyone is aware that this festival also brings to us, the 6 most important Financial Planning Lessons of life.  

Let’s see what they are!

1.  Safety First

All of us enjoy fireworks and we also take all the needed measures to keep ourselves and our families safe. The same planning has to be implemented concerning one’s financial health.

Also, when we burst crackers, we take utmost care and children always burst them under adults’ supervision. Likewise, one also has to take the advice of a financial advisor before making any investment in schemes. Several schemes look attractive but they turn out to be a disaster in the long run.

The same also applies to trading as well. Never follow anyone when they ask you to invest in a particular stock. Do your research before investing in any stock. This is similar to how we trust ourselves when it comes to choosing and burning firecrackers. 

2.  Advanced Planning
People plan for the festival of Diwali well in advance. Everyone plans for the kind of gifts they need to give their family and friends, the sweets to make, the kinds of crackers to burn, shopping for clothing, house renovations, and so on. Similarly, one needs to plan and invest early to reap better benefits.  By early investments, one can also generate good returns with compounding. So, we not only need to plan early for Diwali but we also need to plan for our investments.

One also needs to be extra cautious when investing and it is important to have a very detailed financial plan, planned well in advance before making a safe and lucrative investment. Always choose an expert financial advisor.

3.  Have a Goal When Investing
Gifts for family and friends during Diwali are bought as per their taste, age, and preferences. Likewise, one has to have different goals of Financial Planning at various stages of life. One needs to have a goal when investing and these help you sail through some difficult situations without disturbing your regular cash flow. 

4.  Get Rewarded with Variety
We all choose various varieties of crackers for Diwali and similarly one also needs to properly diversify the investments in one’s portfolio. By this, investors will reap the benefits that are offered by different financial institutions. A well-balanced portfolio will provide you joy and benefit at the same time.

Also, crackers are classified into hazardous and non-hazardous categories and we give the less risky ones to the kids. Likewise, when investing, we need to choose the schemes that are less risky or riskier by considering various other factors.

5.  Prepare For Emergency
Whenever there are a lot of firecrackers to be burnt, fire extinguishers are kept handy to avoid any accidents that might occur. When planning any investment, one also needs to have a backup by choosing the right insurance policy as it helps to deal with any uncertainties that might come up. Being prepared with an insurance cover will be of help when unplanned losses occur.

Also, we never purchase crackers from unknown brands and similarly one should never invest in any unpopular scheme. Just understand the risk before you invest in any scheme.

6.  Clean up your portfolio on a timely basis
Like people clean their houses and offices before Diwali and give away the things that are no longer needed, investors also need to follow a similar approach with their investments. Check the investment portfolio thoroughly to make sure that it has all for your financial goals and any unseen and unplanned expenses. One also needs to exit from the schemes that are not performing well.

The festival of Diwali teaches us all many money management lessons. Apart from those mentioned above, this festival also has a lot to teach us when it comes to financial planning. So, this is the time to plan your finances well and to have a sparklingly safe and financially planned Diwali. 

Source: Motilal Oswal