19 Jul

Do REITs deserve a place in your portfolio?

 

Real estate investment trusts are like mutual funds, where money is pooled from investors and units are allotted to them, which represent ownership in real estate assets. REITs invest in income-generating real estate properties. These income-generating real estate properties can be residential buildings where flats are rented, commercial office spaces, warehouses, hotels, shopping malls, airports, etc. In India, as of now, only commercial REITs are allowed to do business.

Speaking about India specific, a REIT will raise money from investors and either acquire a developed property or develop a property on its own. Later on, this property is rented to different tenants, which are predominantly corporate entities. The rent collected is then distributed to the unitholders after deducting all the necessary expenses.

Each REIT has a sponsor who acts as a trustee for the unitholders and owns the property on behalf of the unitholders. The day-to-day activities concerning the properties such as choosing the right tenant, negotiating the lease terms with the tenants, maintenance of the properties, etc are handled by a management team (REIT Manager) appointed by the sponsor.

Let’s look at some advantages of considering REITs as an investment:

  • Direct exposure to real estate requires a large amount of investment, whereas, REIT units are available at a low-ticket size. Over and above that, an investment through REIT provides diversification benefits, which is difficult to achieve by directly owning properties.
  • REITs are highly regulated and are required to distribute at least 90% of the net distributable cash flow to the unitholders. It is also mandatory for a REIT to have at least 80% of its portfolio invested in fully developed properties. This eliminates execution risk to a large extent.
  • The dividend distributed by the REIT is often tax-free in the hands of the unitholder. This may not always hold as it depends on the REITs ownership structure.
  • As REITs distribute more than 90% of their net distributable cash flow to the unitholders, a REIT acts as a hybrid instrument with regular dividend pay-out and capital gains due to share price change.
  • REITs also provide stability to your portfolio as a REIT’s stock price does not fluctuate much because it is valued based on the value of real estate assets it is owning, and real estate prices generally fluctuate less than stock prices.

Although there are no specific disadvantages of having a small exposure to a REIT, here are certain difficulties a REIT, as a business, can face, which will eventually affect the unit price and NDCF:

  • Recently in the COVID period, most companies chose work from home over going to the office. In such a situation, there can be lease cancellations or uncertainty about future lease renewals.
  • Any economic slowdown results in MNCs laying off employees and in the worst-case scenario, exiting the country. REITs lose business when office spaces are kept vacant for a long period.

These are larger economic issues that will be faced by any other business along with a REIT.

In India, we currently have 3 listed REITs and while the Nifty 50 index is down 6% year to date, the REITs are up from 8.5% to 10.5% for the same period. Investors’ interest has come back to REITs with the opening up of the economy and higher occupancy levels of the office spaces. The only limitation here is that of limited options as there are only 3 REITs and 1 International REIT Fund of Fund in India. This significantly limits the choices for investors.

Source: Tradingview

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Real estate , 0 Comments Read more...
18 Jul

What if Stock Market Remains Closed Forever!

Mr. Jeremy Chia suggests that long-term investors shouldn’t bother even if the stock market remains closed forever. He says that even if we are never able to sell our shares, a truly good investment bought at the right price should still pay off over time. How? Let’s read:

An investor can’t sell the shares if the stock market will remain closed forever. Yet, the investor will remain entitled to future dividends of the company. The goal of a long-term investor shouldn’t be simply to sell off an asset at a higher price to a buyer. It should be to hold an asset for its cash flow creation capability.

Many companies are in different phases in their lifecycles. If a company is growing rapidly, it may not pay dividends. After some time, once it matures and it starts building up excess cash. It can then start paying dividends to its shareholders. But one has to remain patient for that. If the stock market remains closed forever, these patient shareholders will eventually start receiving dividends. These dividends will eventually exceed what they paid to buy the shares.

Therefore, an investor should invest in a stock after checking the following:

  • How much cash flow can the company potentially generate?
  • Can I receive back what I paid for buying the stock by simply collecting the cash flow over the years?
  • Will I eventually get more than paid for even if no one offers to buy the stock in the future?

If an investor has paid too much for the stake in the company, the investment may not pay off. Even a high-growth company may not generate enough cash to reward such a shareholder. In today’s market, many investors have bought a stock hoping to sell it to a “greater fool” at a higher price. They don’t buy it to benefit from the cash flow of the stock and are unlikely to make back their capital.

 

Source: thegoodinvestors.sg

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Investment articles 0 Comments Read more...
16 Jul

This week in a nutshell (11th July- 15th July)

Technical talks

NIFTY opened the week on 11th July at 16,136 and closed on 15th July at 16,049. It made a loss of 0.5% during the week. The index is trading above the 10DMA level of 16,020 which might act as a support. On the upside, the 20DMA level of 16,557 might act as a resistance. The RSI (45), and MACD turning downward suggests a further possible downside.

Among the sectoral indices, ENERGY (+2.5%), Pharma (+2.3%), and REALTY (+2.2%) led the gainers, whereas IT (-6.3%), BANK (-1.3%), and FINANCIAL SERVICES (-0.9%) led the losers during the week.

Weekly highlights

  • The US indices closed the week in the red as investors worried that inflation and rising interest rates may adversely affect the overall demand and performance of businesses. The S&P 500 was down by 0.9%, Nasdaq 100 by 1.2%, and Dow Jones by 0.2%.
  • Israel will sell Haifa Port, a major trade hub on its Mediterranean coast, to winning bidders Adani Ports of India and local chemicals and logistics group Gadot for USD 1.2 bn. Gadot and Adani made it to the end of a two-year tender process. Adani will hold a majority 70% stake and Gadot will hold the remaining 30%.
  • The government has offered 10 blocks for finding and producing oil and gas under its Open Acreage Licensing Programme (OALP). ONGC, Oil India, and GAIL won a total of 6 blocks out of the 10 blocks by the 7th round of OALP. The government expects an investment of USD 600-700 mn in the 10 blocks.
  • The Murugappa Group will launch an electric three-wheeler brand called Montra by September and invest Rs 2,000 mn in the segment. The company will manufacture Montra three-wheelers at its Ambattur facility in Chennai. The initial capacity for three-wheelers will be around 75,000 units per year and the company will have distributions at around 40 locations.
  • Exports in June were up by 23.5% to USD 40.1 bn while the trade deficit increased to a record high of USD 26.2 bn, both YoY, mainly due to a jump in gold and crude oil imports. Crude oil, coal, and coke imports doubled to USD 21.3 bn, and USD 6.76 bn on a YoY basis. Gold imports too were up YoY by about 183% to USD 2.74 bn.
  • Exports of finished steel from India more than halved in June on a YoY to 0.64 mn tonnes following the levy of a 15% duty on all outbound shipments by the government in its efforts to increase domestic supplies and curb inflation.
  • The inflation in the US was up 9.1% YoY in June, which was the highest increase in 41 years, whereas India’s WPI inflation eased down to 15.2% from 15.9% on a YoY.
  • FII (Foreign Institutional Investors) were net sellers of shares worth Rs 59,160 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 21,730 mn this week.

Things to watch out for next week

  • With results season picking up, quarterly numbers are to be watched out for. IT companies like TCS, Mindtree, LTI, and LTTS have already reported earnings that were a mixed bag. Kotak Mahindra Bank and ICICI Bank are set to report earnings next week. While the provisions are not expected to be a big surprise, there could be an impact of MTM losses on banks’ earnings. Commentary from HUL would help understand the impact of inflation on margins and rural-urban demand.
  • We expect the markets to remain volatile as investors show sentiments of fear guided by news related to the macro-economic aspects like supply-related constraints, and rising inflation.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By #WeekInANutshell, Uncategorized 0 Comments Read more...
14 Jul

The Impact of Rupee Depreciation

The rupee has been on a downward spiral since January 2022 (-6.28%) leading to negative market sentiments. It settled at a fresh low of ₹79.64 on 13th July, 34 paise away from ₹80.    Rising crude oil prices, a strengthening Dollar Index, and huge amounts of FII (Foreign Institutional Investors) outflows in Indian markets are the primary reasons for the depreciation of the rupee.

Source: Trading View

What does the depreciation of a currency exactly mean?

Currency depreciation is the loss of a currency’s value in terms of its exchange rate versus other currencies. It specifically refers to currencies with a floating exchange rate, which is a system in which the value of a currency is determined by the forex market based on supply and demand. For example, if the value of 1 USD changes from ₹75 to ₹80, the change will be termed ‘depreciation’ of the rupee.

How does this impact import?

India, as a net importer, relies heavily on imported goods to meet its needs. Imported goods become more expensive due to depreciation in the value of the rupee leading to inflationary environments. India imports 80% of its crude oil and this has a multiplier effect on the prices of fuel – diesel, petrol, and cooking gas – which are already high.

Industries like oil and gas, paints, food, and beverages that depend on imports for their raw material needs suffer when the currency depreciates. Elevated commodity prices tend to dent the profitability of these companies. Industries usually pass on these elevated prices to customers to reduce the hit on profitability.

How does this impact export?

From a revenue perspective, industries like Pharma and IT benefit when the currency depreciates as companies earn more rupees while exchanging dollars. Pharma companies with subsidiaries outside of India tend to report higher consolidated margins because higher cost inventory translates into lower operating expenses.

Current Account Deficit widens

Current Account Deficit (CAD) is a measurement where a country’s imports of goods and services exceed its exports. A depreciating currency coupled with elevated commodity prices tends to inflate the CAD due to expensive imports and force the central bank to dip into its forex reserves to finance the deficit. India’s CAD widened to a record high of $25 billion in June from $24 billion in May. On a quarterly basis, the gap increased 122.8% in the June quarter to $70 billion from $31 billion in the year-ago period.

Source: RBI Website

 How does the RBI intervene?

When the value of a country’s domestic currency tumbles, the central bank intervenes by selling its foreign reserves, causing capital outflow. This aids in curtailing the arresting in the value of the domestic currency. According to the RBI’s Weekly Statistical Supplement, the RBI sold $5 billion in foreign exchange reserves during the week of July 1, 2022, reducing the overall reserves to $588 billion.

 

Source: RBI Website

Inflation, combined with currency depreciation, has a double-whammy effect on the economy and consumers. Many Central Banks around the world, including the RBI, have raised interest rates to combat inflationary pressures in raw materials and other commodities. This is also expected to help moderate the Rupee’s value decline. The RBI has also announced a slew of policies aimed at increasing forex inflows while maintaining overall macroeconomic and financial stability.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Macroeconomic , , 0 Comments Read more...
09 Jul

This Week in a nutshell (July 4th to July 8th)

Technical talks

NIFTY opened the week on 4th July at 15,727 and closed on 8th July at 16,220. During the week, NIFTY was up 3.1%. The index has breached the 100-week moving average on the weekly chart with RSI at 46. Immediate support for the index stands at 15,881 and resistance at 16,308.

Among the sectoral indices, PSU Bank (+6.6%), FMCG (+5.7%), and Realty (+5.0%) were the gainers during the week with no sector in the red.

Weekly highlights

  • Wall Street started the week on a positive note as investors kept their focus on the growth trajectory of the US economy. US Markets were subdued for a day as investors awaited minutes from the Federal Reserve’s meeting.
  • However, Wall Street ended higher after the release of the Fed minutes, which showed officials agreeing that the inflation outlook had deteriorated and expressed concern over lost faith in the Fed’s ability to stem it. The Fed at that meeting hiked rates by 0.75 percent for the first time since 1994.
  • Fed officials also indicated that a hike of 50-75 bps would be likely at the July meeting to control inflation.
  • US markets ended the week flat as Treasury yields jumped following a stronger-than-expected U.S. jobs report, which suggested the Federal Reserve may push further interest rate hikes to cool the economy and slow inflation.
  • Strong data from the U.S. Labor Department, which reported the United States added more jobs than expected in June, indicated a recession was not yet imminent amid persistent job growth and gives the Fed scope to deliver another large interest rate increase later this month.
  • Coming to the Indian market, the Nifty gained ~3% this week as Indian stocks witnessed buying interest during the week supported by positive cues from global peers, declining FIIs selling, falling commodities, and crude oil prices. However, depreciation in the Indian rupee remained a concern for the investors.
  • Government officials stated that they are trying to address volatility in the Indian rupee that has tumbled to record lows against the dollar in recent weeks. The rising trade deficit and investors retreating from the domestic share markets led to a fall in rupee value.
  • Even RBI announced several measures to improve foreign flows into the country to support the rupee.
  • The monthly trade deficit has been rising for the past few months. The trade deficit was up 62% YoY in the month of Jun-22.
  • Brent crude futures extended gains at the start of the week as a strike in Norway is expected to disrupt oil and gas output, fanning tight supply worries. The prices slipped later as fears of a potential global recession spurred concerns about oil demand.
  • The government is taking steps to curb inflation. It directed edible oil manufacturers to cut prices of imported cooking oils by up to Rs 10 per liter within a week and maintain a uniform MRP of the same brand of oil across the country. As the global prices have declined by 10 percent in the last week the price cuts should be passed on to consumers.
  • Cooling Oil prices coupled with the progress made by the Monsoon has now set the stage for the first-quarter earnings.
  • The foreign institutional investors (FIIs) remained net sellers for the week as they offloaded equities worth Rs 22,184 mn. However, domestic institutional investors (DIIs) purchased equities worth Rs 39103 mn during the week gone by.

Things to watch out for next week

  • The Indian Inflation data along with the result season will set the tone for the market in the upcoming week. D-Street will be interested to hear the management commentary about the future earnings growth trajectory.
  • The markets globally will be majorly influenced by the inflation numbers of the USA which hasn’t shown any signs of deceleration. Further, the USA’s Producer Price Index (PPI) and jobless claims are something the global markets will keep a track of.

 

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By #WeekInANutshell 0 Comments Read more...
08 Jul

Bear Markets- A test of Investors’ Emotions

 

During a bear market, your portfolio’s value is falling. You are receiving news highlighting the harsh realities of the stock market. It can become tough to escape the negativity that one feels. It is not just an uncomfortable experience; negative emotions affect one’s ability to make rational decisions.

There are 3 ways in which emotions can materially affect an investor during a bear market:

  • Emotions can affect rational decision-making: Emotions may impact rational decision-making and lead us to irrational decisions. Elements that affect investors in such cases are powerful images and stories that amplify the emotional response. Fear and sense of increased risk will be increased due to anxiety and panic of other people.
  • Emotions can lead to short-term decisions: Severe negative emotions make investors vulnerable and drastically reduce their decision-making time. Acting rapidly to respond to strong emotional cues is clearly a natural instinct many times. But it impacts their ability to withstand tough periods in the market or to invest for the long term.
  • Emotions can make us ignore probabilities: In a bear market, one’s fears increase by the stories of how much worse things will get. Provoked emotions make one far less sensitive to changes in probability. The ability to reasonably assess the probability of future developments gets severely reduced. The strength of feeling outweighs the strength of evidence.

 How to reduce the influence of emotions?

  • An investor should remove oneself from the emotional stimulus. Turn off the financial market news and check the portfolio less frequently. Long-term investors should not do things that would provoke a short-term emotional response.
  • One should never make in-the-moment investment decisions. These are likely to be driven by how one feels at that specific point in time. One should always step away and hold off from making a decision. Reflect on the decision with a calm state of mind.

These aren’t solutions as one cannot disconnect oneself from the impact of emotions on investment decisions. However, one must be aware that the negative feelings of stress, anxiety, and fear that one experiences during a bear market. These may encourage some of the worst behavior and one must do the best to avoid/reduce them.

 

Source: behaviouralinvestment.com

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Investment articles 0 Comments Read more...
07 Jul

Is there any easy way to pick quality stocks?

After completing your education, you started working and realise a portion of your earnings needs to be invested in equity markets to earn returns. One glance at the media, and you realize equity investing is just too complicated. How to understand the financial jargon, the never-ending ratios?!

You don’t need to have a very high IQ to make money in equities. But you certainly need to understand the basics of accounting to understand the business.

You must first identify a business.  A look around your house will give you different investment ideas. Start with your daily cup of tea or coffee, and you will find several businesses which you will understand.

Once you have identified the business, you can have a look at the information published by the company – website, annual reports, and corporate presentations to understand the business.

Once you have a fairly good idea of the factors that influence the business, you come to the financials. The Holy Trinity of Profit and Loss Statement, Balance Sheet, and Cash flow statement. Each of these will tell you different information. The profit and loss statement will help you understand how the company makes money, its expenses, and its profitability. The balance sheet will explain how well the company is utilizing the funds invested by shareholders, and the cash flow will answer the most basic question – does the business generate free cash for shareholders?!

Analysts can derive any number of ratios from these statements which can be difficult to interpret. Understanding the basic ratios to compare two companies within a sector is critical. One search on Google can help understand some of the basic ratios.

In addition to the financials several qualitative factors aid decision-making.

  1. Management: The management will lead the company to achieve its goals and generate shareholder wealth over a long time. The information about the education and experience of management is available on the corporate websites. A LinkedIn search will help gather additional information about the previous experiences of the key managerial personnel.
  2. Promoter holding: Investors might prefer companies that have a promoter’s wealth tied to its success. There have been several cases where companies run by people who don’t have a financial interest in them have been mismanaged.
  3. Other factors such as a moat or competitive advantage of a company, demand for the products, or bargaining power with suppliers are some other factors that help understand a company better.

If you are someone who simply does not have the time to study accounting, it does not mean that you should not consider equity investing. You can hire SEBI registered Research Analysts who will do all the work and advise stocks that you can consider investing in.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Investment articles , 0 Comments Read more...
04 Jul

Week in a nutshell (27June-1July)

Technical talks

NIFTY opened the week on 27th June at 15,926 and closed at 15,752 on 1st July. The lower Bollinger Band level of 15,370 might act as a support, while, on the upside, the 16,250 level might act as a resistance.

Among the sectoral indices, FMCG (+2.8%), REALTY (+1.6%), and HEALTHCARE (+1.1%) were the gainers during the week. OIL&GAS (-4.2%) was the only loser.

Weekly highlights

  • All of the major US indices ended the week on a volatile note as oil prices rose and fell throughout the week. S&P 500 closed the week marginally higher at 3,825 and Nasdaq at 11,129.
  • WTI crude oil and Brent crude closed flat at -0.3% after fears that the US economy would enter a recession, resulting in lower oil demand.
  • Accenture reported 3QFY22 earnings, with revenues exceeding expectations at US$16.2 billion. According to the leadership, cost optimization, along with growth, is now the focus area for clients. However, it lowered its fiscal forecast due to a negative foreign exchange impact and rising inflation.
  • According to official data released on June 30th, output in India’s eight core infrastructure sectors increased by 18.1% in May, compared to 16.4% the previous year. This suggests that the economy is gradually returning to normalcy.
  • Japan’s factory activity growth slowed in June, with the PMI falling from 53 to 52, as supply disruptions, exacerbated in part by China’s strict COVID-19 curbs, hurt manufacturers, keeping the economy underpowered and with few catalysts to spur a robust recovery in the short run.
  • US consumer spending data was released on June 30th, showing that US consumer spending rose less than expected in May as motor vehicles remained scarce and higher prices forced cutbacks on purchases of other goods, indicating that the early recovery in economic growth was a losings steam.
  • On June 29, India’s Cabinet approved a plan that would allow local crude producers to sell oil to private companies, boosting revenue for state-run producers such as ONGC and Oil India. The decision will take effect on Oct. 1, and existing conditions for selling crude oil to government-run companies will be waived, according to a government statement, adding that exports will be prohibited. Reliance Industries’ share price tanked more than 7% Friday after the government levied an additional tax on crude oil.
  • FII (Foreign Institutional Investors) net sold ₹ 68,350 mn and DII (Domestic Institutional Investors) were net buyers this week. DIIs bought shares worth ₹ 59,250 mn.

Things to watch out for the next week

  • On Monday the labor markets will be in the spotlight next week, with the June nonfarm payrolls report due on Friday.
  • The 1QFY23 result season kicks off with IT major TCS reporting earnings on Friday.
  • The International PMI surveys, which track business sentiment in the United Kingdom and the eurozone, will be released on Tuesday, while the meeting minutes from the FOMC’s most recent policy meeting, held in mid-June, will be available on Wednesday.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By #WeekInANutshell , , , 0 Comments Read more...
30 Jun

Monsoon – One of the key growth drivers of the Indian economy?

Southwest monsoon arrives early in the mainland of India and it covered many Indian states and union territories but many of those states have received deficit rainfall in early June.

But wait, why does it matter to us, how the excess or deficit rainfall is going to affect the Indian economy and Investors?  So, let’s discuss

In India, the monsoon season starts in June and lasts till September. India receives more than ~70% of rainfall in this period. India is an agrarian economy and more than half of the workforce is engaged in agriculture and the allied sector. The farm sector also has a double-digit contribution to India’s GDP.

*LPA – Long Period Average

Here is the equation – Good monsoon = Good farm output = Strong consumer demand and vice versa

The monsoon has a direct relationship with the agricultural and allied sectors. Approximately half of India’s total food output is contributed by Kharif crops that are largely dependent on monsoon. A good monsoon season accelerates the farm output and boosts the income of the farmer community. This improves the spending power of rural areas which leads to strong demand sentiments. There is a hidden part of the above equation which is “Inflation”. Normal monsoon and bountiful harvest keep inflation under control since food contributes ~45% in the consumer Price Index (CPI). That is why a normal monsoon is a crucial factor for the inflation.

If we record deficit and a drought-like situation, it will directly weaken the farm production and lowers the income of the farmers. This reduces the consumption demand. At the same time, we get a hit from inflation as lower food production accelerate the food inflation. The government may have to spend towards import of food and adversely impacts the overall economy.

Sectors that have a large exposure to monsoon –

  • Consumer –India’s rural market contributes a significant share of the revenue of the Indian companies. Many Indian consumer companies are expanding their reach and significantly stepping up direct distribution in rural markets. The normal monsoon will improve the purchasing power of the rural population and may revive the sluggish rural demand and drive revenue growth.
  • Automobiles and farm equipment – Tractor companies have a direct relationship with the monsoon. A good monsoon improves the farmers’ spending capacity for better farm equipment. This will effectively result in better crop yields. Major Indian 2W makers derive ~50% of their revenue from the rural areas. This demand is again dependent on the agricultural growth.
  • Agro chemicals and fertilizers – Agrochemicals and fertilizers business directly depends on farmers’ income and agricultural growth. Companies derive their major revenues during the monsoon period. As the good monsoon sentiments enable farmers to spend more on crop care protection chemicals and fertilizers.

In the short, we need a normal monsoon for the smooth economic activity, especially in rural areas, So, let’s hope and pray for a good and normal monsoon every year.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By Agro chemicals, Auto, Consumer, FMCG 0 Comments Read more...
30 Jun

Money related fears and how to conquer them

 

Mr. Hemant Beniwal says that ‘fear’ is a constant emotion among people that is brought up by money. This emotion influences our financial decisions. Following are the 5 most common money related fears and how one can overcome them:

1) Fear of losing all the money: Many people work hard to earn money and save it. But some end up losing money due to bad investment decisions. Losing all of their money is something that people scared of. Instead of having irrational fears, it is better to take small steps toward managing money. One can take help from professionals to invest the money. By doing this, one can become more confident of the investment decisions and not make big mistakes/losses.

2) Fear of never having enough money: People are always worried of outliving their created wealth, and that they will never have enough money considering medical expenses of old age. One should make a financial plan for one’s retirement goals and also consider the money needed to sustain the lifestyle and other goals post retirement. One should then work on executing the financial plan and review it regularly so that enough money is retained.

3)  Fear of making mistakes while managing one’s money: People are very scared to lose their hard-earned money, and hence let it lie idle in the savings account to avoid making bad investment decisions and avoid losing money. One should take steps to increase one’s investment knowledge, and first start with zero or low-risk investments and then riskier (volatile) investments. Help from financial planners can be used to match investments with the risk-taking ability from an emotional and financial perspective.

4)  Fear of financial identity theft: A lot of money-based transactions are done using of debit, credit cards, etc. which leads to the fear of account getting hacked or credit card duplication. This is not irrational and cybercrime cases are increasing. Don’t share usernames and passwords of online accounts with others, regularly check financial statements, update your contact number and address with the bank, and don’t click suspicious links. This can help you control the security of online financial transactions.

5) Fear of talking about money: People fear of losing money if they talk about it. They may feel that others have too much or too less in their comparison. But it is important to talk about money with trustworthy people like one’s parents, life partner as they may have gone through many situations at different stages of life. It is important to have frank and open discussions with one’s financial planner as it will make the financial plan realistic and help in achieving financial objectives.

Source- 6 Common Money Fears and how to Conquer them by Hemant Beniwal (https://www.tflguide.com/)

1) Many times, we have our own mental picture about saving money and using it. We should discuss it with more experienced individuals, read more articles on money management that can help in getting a better clarity about the mental picture.

2) We must not accept the status quo, neither must we be under the impression that we already understand everything that is there to understand about managing money. Keeping an open mind and a learning attitude can help us in taking better monetary decisions.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Investment articles 0 Comments Read more...