Keep It Simple Strategy (“K-I-S-S”) Ideology in Personal Finance

I share my personal recorded presentation, for my session,only, so actual presentation in Webinar may differ ,but only ,to very limited degree.

Keep It Simple Strategy

Dr. Rajanikant V Gajjar MD Anaesthesia (1988) Bharuch, Gujarat .

• NISM Certified in Investment Advisory Level 1
• NISM Certified in Retirement Planning
• NISM Certified in Mutual Fund Distribution

My blog address: rkhgajjar.wordpress.com Mobile No: 98241 33073

Email: rkhgajjar@hotmail.com

Discussion Points

Outlines                            

This includes rules that are BASIC & FUNDAMENTAL, not to be violated at any times & always to be followed.

 OUTLINES                                      

1. The funds required or likely to be required in immediate 2-3 years must be in short term debt funds or bank FD, NO Second thoughts about it.
2. Options explored in strategy are in a pair, one a Volatile & another a Stable fund.
3. Rebalancing as per planned Strategic Allocation is Mandatory irrespective of moods of Investor or Mr. Market
4. KISS Strategy is GOAL Based, so, Smart Goal must be defined.
5. Specific & Significant, Measurable & Meaningful, Attainable & Action oriented, Realistic & Relevant, Time Bound & Trackable.
6. Financial Independence is ULTIMATE GOAL.
7. Investible funds are equally
8. (50% each) divided between Volatile & Stable funds every time.                               

Options

Discusses 3 Simple Strategic Options.

Opted for Equity Savings Fund (EQSS) as Stable Fund instead of Debt funds because of favorable tax treatment on redemptions with EQSS as compared to Debt category due to latest budget changes on long term capital gains with respect to pure Debt Category.

EQSS & ELSS are opposite poles, not at all similar.

 OPTION 1/3                                      

A pair of Aggressive Hybrid Fund (VOLATILE) & Equity Savings Funds (STABLE).

Aggressive Hybrid has 65-80% Equity exposure, rest in Debt, Highest Equity Exposure in Hybrid Category with in built rebalancing every 30days – VOLATILE FUND

Equity Savings Funds,65% Equity, but pure unhedged equity being less & rest in Hedged Equity or Arbitrage opportunities, Equity Savings is at bottom of volatility measures in Hybrid category. –STABLE FUND.

This is Active Investment Strategy Option.

Rebalancing to be done as & when a pair of funds, either rise to 60% weightage or fall to 40% weightage of total portfolio, in such a way that strategic 50% allocation is rebalanced again.

OPTION  2/3

Either a BSE Sensex (50%) Or NSE Nifty 50(50%),or both with equal weight (25% each) is selected as VOLATILE Fund.

Equity Savings Fund continues be a choice for STABLE FUND.

Again Both funds get favorable tax treatment on Capital Gains on rebalancing.

Rebalancing to be done as & when a pair of funds, either rise to 60% weightage or fall to 40% weightage of total portfolio, in such a way that strategic 50% allocation is rebalanced again.

This is Passive Investment Strategy Option.

OPTION  3/3 : National Pension Scheme

NPS Tier 1 to be used for Retirement Goal & NPS Tier 2 for all other Life Goals.

Only Two asset classes selected, EQUITY (VOLATILE) & CORPORATE BONDS (STABLE), with equal 50% weightage , so as to carry out rebalancing as done in previous 2 options .NPS permits 4 such changes in a year.

Active Option is selected so that rebalancing can be done at optimum times.

This is an Investment plan with lowest expense ratio of 0.0982%, that means if one invests even 10 lakh rupees only 982 rupees are charged as expenses.

 OPERATIONS                                      

Continue to invest 50% of investible funds in both funds, regularly or as & when funds available.

Value total portfolio as per market NAV at least once in a quarter.

Define percentage-based weightage of both funds in valuation portfolio.

If a fund has risen to 60% weightage or fallen to 40% weightage, rebalance in a way that strategic 50% weightage to both funds is achieved again.

Aim is to do  Rebalancing as per  Percentage in Valuation & not time bound Rebalancing.

It nullifies market & investor moods’ bias on investments strategy.

As Simple As That ,Sir

Outcomes  (1/2)                            

This is Simple, Sustainable & Strong Strategy to create Wealth.

Also identified as Triple S Wealth strategy.

 OUTCOMES (2/2)                                      

As one does not need to make selections again & again, it is Simple.

As it is Simple, it is Sustainable for decades.

As it is sustained over decades, it becomes Strong enough to fulfil majority of financial goals.

In Investments or Individual LIFE, Consistency creates Character or Quantum of Wealth.

This Triple S strategy stays with you in Ups & Downs of Wealth Creation. In fact Ups & Downs, only, make it Strong.

In ‘The Intelligent Investor’- A Bible in Investing, Benjamin Graham recommends 50% stocks and 50% bonds allocation for the typical retail investor, who, cannot spare the time for deeper investigation into security selection and tactical asset allocation.

 ONLY FOR HANDHOLDING (1/2)                                      

There are many portals that publish list of Mutual funds, worthy of investments ,like , Value Research Online , Morning Star , Economic Times Wealth ,ET money, Money Control & many more.

Select a portal whom you trust & select funds in categories identified in options.

I share Value Research Online MAY-23 issue recommendations, only as example, not as recommendation.

These selected funds ,if consistently underperform with peers in category or benchmark indices for consecutive number of years ,they definitely need re- evaluation & change if required.

But,

Do avoid rapid  & frequent  changes, allow enough incubation period as well.

 ONLY FOR HAND HOLDING (2/2)                                      

• ICICI PRUDENTIAL EQUITY & DEBT
• KOTAK EQUITY HYBRID
• EDELWEISS AGGRESSIVE HYBRID.

EDELWEISS AGGRESSIVE HYBRID

• ICICI PRU EQUITY SAVINGS
• KOTAK EQUITY SAVINGS
• EDELWEISS EQUITY SAVINGS.
• Index funds are to be selected on basis of High AUM & Low Expense Ratio & Low Tracking Error, it being a simple job, so they are not identified .

 ORIGINAL VIEWS 1                                      

• A guide is required definitely, but pleasure lies in doing it on your own.
• All mutual funds investments to be done in D,G,O, mode.
  • D for Direct Plan,
  • G for Growth,
  • O for Only Open-Ended Mutual Funds,
• Equal Allocation (50% EACH) between volatile & stable funds as Strategic Allocation has proved to be more beneficial in studies. Following article is shared for reference.
• https://freefincal.com/benjamin-grahams-50-stocks-50-bonds- strategy-india/

 ORIGINAL VIEWS 2                                      

• I have not invested in any of schemes identified in this presentation nor evaluated them in details, but I do follow KISS ideology as a policy.
  • This is Fill It, Shut it & Forget it Style Strategy.
  • Simplicity Is Ultimate Sophistication.
  • Minimalism makes miracles in Money Management as well.
  • Patience, Discipline, Faith (PDF) are MUST to succeed in Personal Finance.
  • GOAL BASED INVESTING & ITS ALIGNED ASSETS ALLOCATION is THE KEY.
  • NEGOTIABLE & NON NEGOTIABLE GOALS TO BE PURSUED DIFFERENTLY.

Thank You!!!

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