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Gyaan of the week
Term Plans are Life Insurance Policies where the payout is made on the death of the insured. However, unlike hybrid Insurance – Investment products (Read: LICs, Endowment Plans, and so on), one does not get any payout if the insured survives the term of the plan.
Life Insurance like any other insurance should be taken only to protect against the risk of absence of income. If you have anything which is dependent on your earning capacity and your income, you need to protect the risk of going missing in case you pass away due to an untimely event. And hence, we find it very silly to buy 100-year term policies.
Here’s the list of curated readings for you this week:
- Needs, Wants and why We Always Feel Unfulfilled – 100+ years ago you would have been happy just to have abundant food, shelter and clothing. But our wants slowly turned into needs. Good healthcare and education were relatively rare for older generations, but today they’re necessities. And so the hamster wheel keeps spinning and we keep putting more and more needs on the wheel. Read here.
- It’s difficult to outperform the market– Just 17% of listed companies in India had market capitalization greater than 2500 Crores. Small companies, while attractive to investors for the chance to get onto the train before the long journey starts have a very high failure rate. The attraction towards these smallcaps though is massive like in a lottery, there will always be a few winners and stories of how someone made it rich keep others in the fray. Read here.
- Where Zerodha invests its cash – With our own funds, we invest in bank FDs, Government bonds, and have a long-term stock portfolio. We neither leverage (borrow to trade more) nor trade any leveraged products like F&O, which can lose more money than the capital at stake. This is to ensure there is no risk due to our treasury operations to the business. Our portfolio currently has exposure of 33 percent to bank FDs, 32% to stocks, 13% to Government Securities, 9% to tax-free bonds, and 13% to Gold bonds. Read here.
- Stocks ki Baat – Caplin Point Laboratories– In the 1st edition of Stocks Ki Baat, we talk about a Pharma company engaged in manufacturing and sourcing of APIs, finished formulations, R&D, and clinical research. The company has a unique business model, with above 80% of the sales being generated from LATAM countries. Read here.
- Analysis of Godfrey Phillips– Makes for an engaging read on the complexities of the Cigarette industry in India. Read here.
- How often is the market down in consecutive years– The last time the US stock market posted a string of bad years was in the 2000-2002 bear market when each year it fell more than the previous year. From an investor psychology standpoint, a prolonged bear market is probably more difficult to stomach than a severe crash that ends in short order. Read here.
- Grim situation of COVID in China- Dozens of hearses queued outside a Beijing crematorium on Wednesday, even as China reported no new COVID-19 deaths in its growing outbreak, sparking criticism of its virus accounting as the capital braces for a surge of cases. Read here.
- Bank of Japan shocks global markets with bond yield shift – The Bank of Japan caught markets off guard by tweaking its yield curve control policy to allow the yield on the 10-year Japanese government bond to move 50 basis points either side of its 0% target. Read here.
- Additional spending unlikely to strain fiscal math – In spite of the supplementary demands for grants, the government seems to be in a sound position on the fiscal deficit front in the current fiscal because of tax buoyancy. Read here.
- India cenbank cannot prematurely pause rate tightening cycle – MPC minutes – “A premature pause in monetary policy action would be a costly policy error at this juncture,” Governor Shaktikanta Das wrote in the minutes of the policy meeting released by the Reserve Bank of India on Wednesday. Read here
- Shruti shares her experience of being invited to judge a competition at her alma mater. Difference was, I was on the other side of the table this time. Judging 20 teams for an interesting simulation that they had been a part of. Read the linkedin post here.
- We talk about the benefits of Gold Bonds. We believe that SGB is a great way to take gold exposure. And gold can be an effective diversification tool in your portfolio. Read the linkedin post here.
Check out CAGRwealth smallcase portfolios here.
That’s it from our side. Have a great weekend ahead!
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The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.