Let me start by putting in my disclaimers. I do not read too many other blogs, but once in a while a friend / reader / student sends me a forward and I read it.

These are perhaps not very palatable, and is bluntly on your face kind of observations, but as usual, Kalli Valli (see Google, Arabic word).

1. When you are selecting a term insurance plan you should look at the policies issued by LIC : Amazing reason to do so. This is because LIC has the best claim settlement ratio.

My view: Height of innumeracy. Comparing a company which settles 750,000 policies in a year and one which settles 645 policies in a year is height of foolishness.

Most people do not have a clue about how many term policies LIC has issued, and how many it settles. More importantly if you REALLY want to compare you must compare data of all the companies for the past 10 years (or say 14 years).

ONLY WHEN the numerator and the denominator are reasonably near each other can the ratios be compared. Basic mathematics and abc of ratio analysis.

If you do not know this, please do not blog nonsense.

2. A successful blog is one which has many hits: Hits are caused by SEO – and I have stayed away from anybody trying to increase my ‘hits’. I am happy with my students, friends, customers, friends of children, reading my blog. If I am not rated high, Kalli valli again.

3. The method of calculating commissions and how it impacts your total return is completely immaterial. What matters is what IRR you are generating on your weighted portfolio. If you have NEVER COMPUTED this, do not micro manage each investment and feel miserable. If you do, welcome to misery land.

4. If your Mutual fund portfolio adviser cannot improve your return by 1% by asset allocation / other strategies, it is time to change him anyway. Trail commission is about 0.40%. If he can get you that additional 1% p.a. he is worth it, if he does not, get a guy who can.

5. Personal financial planning is not as complicated as brain surgery, but it is not as simple either. Complications arise because it is REALLY PERSONAL, not because it is financial. So if you do not know yourself, and you do not respect your planner, sure go direct. You deserve it.

6. Personal financial planning is about the planner knowing YOU, not how well he fills the goddamn form.

7. If your planner cannot tell you (or will not tell you) that your idea deserves a place in hell, EVER, he is either not knowledgeable or he is not understanding ‘personal’. Finance? well most people claim to understand finance, right?

8. People take anecdotal examples and extrapolate over long periods of time and markets. This is perhaps the worst form of advisory that one can do. What worked for me in the past may not work for me in the future.

9. Hdfc, Hdfc bank, Hero Honda – have all given brilliant returns from 1979, 1994 and 1985. Now my portfolio has NIL of Hero Honda, insignificant numbers of Hdfc bank, but with lots of Hdfc. Different markets, different strategies. If you do not know that Cut paste does not work in the markets, be careful of cut paste advisers.

10. If you were invested in Technology exactly before the bust, in Infra at the peak (2007), Fmcg during 2003 to 2007, and recently again in Infra, please index your portfolio, and go to sleep. Stop buying those newsletters which come to you at a price. I get a few of them free, and they stink.

11. Many websites/ blogs which claim to educate are actually run by people who want to either sell a product or a service. I have nothing against that, but it is not easy for you to know whether it is a sales pitch or an education effort.

Learn to find out the difference….

http://www.subramoney.com/2013/05/bad-financial-advice-heard-from-planners/

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  1. Subra Sir,

    You have always said good things about HDFC twins.
    May I know, why you have suddenly changed your mind on HDFC bank ?
    Is it because it is over-priced, less attractive w.r.t to ICICI and Axis OR is something brewing inside HDFC bank.

    Your views are highly appreciated.

  2. I have NEVER had the same view about Hdfc and Hdfc bank. I always liked the parent better…but feel that the steepness of the growth in the bank is over. Parent still has upside with the sale of the insurance arm, etc.

    Anyway my views are fleeting. I take positions fast and furiously. So do not hold an investing position in the bank, but do hold it in the parent. On a particular day I could still have a trading position on the bank – albeit a short term position.

    Also in a post like this, it is just an example. If you base your positions on the EXAMPLES that i give, God bless you.

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