Robo-Advisers Take Over the Task of Financial Planning, Find out If You ALSO INSIDE

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As robo-advisers take over the task of financial planning, find out if you ALSO INSIDE

should shift to the new option or Learn and Keep PAGE 16 stick with the traditional adviser. Tax optimiser PAGE 29 PAGE 2 Tech PAGE 30

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The Economic Times Wealth is available at an invitation price of `7/issue. To book your copy*, contact your newspaper vendor or call 022-39898090; Email: [email protected]; SMS ETWS to 58888 02 The Economic Times Wealth, July 13-19, 2015 Cover Story

As robo-advisers—online, automated platforms—take over the task of financial planning, find out if you should shift to the new option or stick with your traditional adviser.

SANKET DHANORKAR for their money. According to Corpo- rate Insight, a financial research and his invasion can’t be consulting firm, robo-advisers were stopped. They are every- managing assets worth $19 billion in where, these tech trojans, December 2014, a 21% increase since throbbing with the Net July the same year. By 2020, this figure Tpower and taking over eve- is estimated to grow to $2 trillion in the ry aspect of our lives. Smartphones and US, as per a report by global consulting watches, computers and cameras, all firm A.T. Kearney. are driven by technology that threatens While companies like Wealthfront, to overwhelm us, but at the same time Betterment and FutureAdvisor are at provides unmatched comfort and con- the forefront of this activity, it has also venience. Our financial lives are not forced industry titans, Vanguard and untouched either. From Net banking to Charles Schwab, to foray into the robo- mobile wallets, online bill payments to advisory space. booking tickets, monetary transactions However, when it comes to India, have undergone a sea change. Little can you rely on these robo-advisers to wonder then that robo-advisers are provide sound financial advice? Or is stomping in, vying for a chance to the friendly neighbourhood planner shape our personal finances as well. still your best bet to steer your finances What exactly are robo-advisers? in the right direction? We shall try to These are online wealth management find an answer to these questions by re- services that provide automated, algo- vealing how these platforms work and rithm-based advice without human in- whether they suit your needs when tervention. While such advisory servic- compared with human planners. es are still in a nascent stage in India, they have become popular across the TYPES OF ROBO-ADVISERS world, giving traditional advisers a run Currently, there are three types of advi- Cover Story The Economic Times Wealth, July 13-19, 2015 03

sory services available in the country—basic, relevant numbers to identify the best funds. advanced and evolved. Arthayantra, BigDe- Scripbox offers a ready basket of funds on TYPES OF ROBO-ADVISERS IN INDIA cisions, FundsIndia, Scripbox and MyUni- the basis of the user’s investing horizon. So, Being in a nascent stage, most robo-advisers in the country offer basic services, but verse are the prominent players in this arena. an investor with a longer time frame will be others are beginning to evolve and provide a wider range of advice. directed to a basket of four preselected equi- Basic: The first type is not a full-fledged ty funds, while a shorter time frame will robo-advisory service since it only assists in throw up a portfolio of debt schemes. It also designing a portfolio of mutual funds. has a separate basket of funds for those who Simply put, these portals use algorithms to want to invest just to save tax. The baskets recommend a basket of mutual funds and are reviewed once a year and changes sug- BASIC ADVANCED EVOLVED enable you to start investing through them. gested, if required. These schemes are recommended on the basis of internal models that crunch Advanced: Under this category, the services

WHAT IT OFFERS WHAT IT OFFERS WHAT IT OFFERS Customised mutual fund portfolio construction. Customised mutual fund Customised mutual fund portfolio construction, portfolio construction. Goal-based advice. with a ready basket of Goal-based advice. Basic life and health insurance preselected funds. coverage advice. Comprehensive financial Risk profiling and counselling (telephonic). Tax optimisation. customisation is minimal Extensive risk profiling and Expense restructuring. or not at all. customisation. Extensive risk profiling and customisation. COST COST COST FREE FREE `1,000*

* This is the fee for services provided by Arthayantra. 04 The Economic Times Wealth, July 13-19, 2015 Cover Story

FundsIndia also offers Smart Solu- tions, a tool that helps you identify ROBOT VS HUMAN the money you need to invest per We asked a 29-year-old investor to try out the services of both, a robo-adviser and a traditional financial planner. month to achieve each goal. It also Here’s the degree of difficulty and ease he experienced at various levels of the entire financial planning process. recommends a portfolio of funds to achieve this goal and helps set up an SIP mandate for this objective. It monitors this portfolio continuous- ly and recommends changes as ACCESS ACCESS needed. Apart from this, the advisory provides comprehensive fi- From a computer at home. Easy to Difficult to identify a trustworthy planner, who locate advisory firms as there aren’t will give good advice, not just sell products. nancial planning services, which too many in India. Can start planning Spend time and effort to contact the planner. are not algorithm-based and in- instantly. Cost is minimal or free. Actual start to planning may take a couple of volve one-on-one interaction with a meetings. Cost is relatively high. dedicated planner just like a traditional advisory service. BigDecisions.com is another unique portal that offers interactive ASSESSMENT ASSESSMENT tools powered by sophisticated algorithms, which help you make Sign up and register. Select the service you You fill up forms, but also discuss your life more informed decisions. These want. Fill up financial details. These help situation, goals, liabilities, risk coverage, enable users to accurately identify specify your risk profile, spending-saving financial habits and biases. The planner the sum needed to invest for a par- pattern, investment horizon and goals. takes a call on the basis of both inputs. ticular goal, the life and health insurance required, even figure out the problem of buying or renting a house . However, it facilitates the ANALYSIS ANALYSIS execution of advice through other service providers. A completely objective and detailed The analysis can be subjective and cater to break-up of each aspect of your investor’s biases, not always what is right for him. Evolved: This final category of finances and financial patterns, without It is, however, able to factor in complex scenarios robo-adviser assists in the online hidden agendas or sales pitches. and lifestage complications in the portfolio. creation of a comprehensive financial plan, not merely a customised portfolio of mutual funds. Arthay- antra is a prime players here. To generate a financial plan, the ADVICE ADVICE portal asks for relevant financial and personal details, such as age, It is cut-and-dry, but will lay out a clear The advice for starters is comparable with that of marital status, income, expenses, path to reach objectives, with specific asset the robo-adviser. However, the human interface existing assets and liabilities, and allocation and tools to invest in. It also eases the execution and offers stronger motivation. so on. It then provides a question- offers advice on tax, insurance and ways to Also, it’s easier for a person to factor in sudden naire to assess the user’s risk toler- improve cash flow. You can start execution changes in life situation or handle more ance level, specify important life and investment online, but need to be complicated portfolios. goals, identify time frames to disciplined to carry it through on your own. achieve the goals, and helps ascer- tain the corpus needed to achieve them. Based on the inputs, the program identifies the optimum asset PORTFOLIO COMPARISON allocation, recommends invest- For person aged 29, time horizon of more than 10 years and a moderate risk profile. ments across asset classes, and suggests life and health insurance cov- CURRENT ASSET ALLOCATION RECOMMENDED ASSET ALLOCATION ers as well. It also helps in linking the user’s existing investments with 1% different goals and points out if he 5% 5% is on the right track to achieve each 20% goal. Apart from this, it provides tax planning tips and suggests changes in budget to save more. EQUITY ROBO- ROBO- Given the apparent ease of finan- 41% FINANCIAL DEBT ADVISER 35% ADVISER 35% cial management, should you opt PLANNER 58% COMMODITY NO. 1 NO. 2 for robo-advisers? Before you ar- (BALANCED 20% 60% 60% 60% rive at a decision, consider these FUND FOR benefits and drawbacks. ROBO-ADVIS- ER NO. 1) ADVANTAGES This is the broad classification of This robo-adviser offers the This robo-adviser is evolved and in The traditional financial planner’s Low cost: The USP of robo-adviso- the investor’s existing asset port- basic services of mutual fund addition to asset allocation, offers recommendation is comparable with ry platforms is the significantly low- folio, where commodity is gold. portfolio construction with a comprehensive advice on goal- that of a robo-adviser, but comes er cost compared with a human ad- basket of pre-selected funds. linked investments and increasing with the reassurance of one-on-one savings to reach goals. interaction and reviews. viser. While the latter offer services for `15,000-25,000, or 1-2% of the client’s assets, a robo-adviser is bouquet grows, with platforms like FundsIndia in the asset allocation pattern, the platform as- vised an even distribution of equity and debt much lighter on the wallet. Arthay- and MyUniverse providing curated recommen- signs the top schemes available to form a portfo- schemes, with a large-cap equity fund making a antra, for instance, charges as low dations suited to the user’s risk profile. lio. MyUniverse also uses similar inputs in its bigger chunk of the equity portion. as `1,000. Others, such as FundsIn- Here’s how FundsIndia’s SIP Portfolio Design- ZipSIP platform. Those assessed as aggressive Besides, FundsIndia offers ready portfolios dia, Scripbox and MyUniverse, cur- er works. Based on inputs, such as age, investing investors, for instance, will not only be recom- tailored according to the investor’s time frame— rently charge no fee at all, relying time frame, amount of investible money and mended a higher equity allocation, but also a less than one year, 1-3 years, 3-5 years, and so on the commission earned by sell- risk profile, the system assigns a risk score to the bigger allocation to a mid- and small-cap on—or as per the life stage of the user (25-35 ing mutual funds for their cash portfolio and creates an asset allocation pat- scheme. On the other hand, those assessed with years, 35-45 years, 45-55 years, and 55 plus). For flow. BigDecisions earns its revenue tern. Then, according to the categories of funds a moderate risk tolerance are likely to be ad- an indepth, goal-based portfolio advice, from exclusive tie-ups with other Cover Story The Economic Times Wealth, July 13-19, 2015 05

service providers. Leveraging tech- is also hassle-free. Users are alerted nology allows these platforms to if there are any changes needed in IS YOUR MONEY SAFE? charge lower fees. A traditional the portfolio, which can be execut- brick-and-mortar adviser, on the ed at the click of a button. Here’s why investors need not worry on thishis front.front. other hand, has to cover the overheads of running the business. Limited bias and subjectivity: A big benefit is that it is not affected The portal does not have access to your funds; Easy interface & convenience: by biases that creep into human your account is linked to your bank account. So, when you place online instructions, the bank The robo-advisory platforms offer decision-making. A machine deter- transfers the amount directly to the fund house. a very simple interface, which mines your optimum asset alloca- When you withdraw or redeem, the money is makes using these a breeze even tion simply by considering the transferred directly to your bank account. for those who are not tech-savvy. numbers fed into it. It is unlikely to There is also a high degree of design a portfolio that is skewed to- convenience associated with a wards any favourites or direct you Investors can keep robo-adviser at every stage. Com- to invest in flavours of the season. track of their pared with the vexing problem of The robo-adviser also does not money by verifying identifying a competent and trust- succumb to emotions like greed or the authenticity of If the portal closes worthy financial planner who is fear. No matter what the market any transaction down, your not merely a salesman, the task of situation, you can depend on it to with statements investments are not locating a robo-adviser is easy con- provide logical advice. Sanjiv from the mutual affected as all assets sidering the limited number of Singhal, CEO, Scripbox, says, fund company and are held in your name (in funds, the players in the market. “Advisers being human are also service provider. folios are maintained Besides, they facilitate design, prey to biases which are often un- by RTAs like Karvy execution and maintenance of the intended. Using rule-based, algo- and CAMS) and, portfolio or financial plan from the rithmic approach offers a way to hence, protected. comfort of your home or office. eliminate such biases from creep- You can initiate your investments ing into your advice.” without a physical visit to submit All portals make use of standard security documents or meet the adviser. No asset size bias: For many you- protocols for online transactions. Scripbox, for instance, asks you to ngsters with low net worth, it is not take a printout of the application easy to find a good financial advis- form filled online at the time of er. A study by Wells Fargo—Wells registration, attach the required Fargo Millennial Study 2014—re- KYC documents and a cancelled veals that only 16% of millennials cheque, and submit these via cou- work with financial advisers. No rier at no extra cost. wonder then that Aegon found in It is also easy to keep track of in- its 2015 Retirement Readiness Sur- cess to a wealth manager, an indus- advisers can help you design a tant aspects that are facilitated by vestments. The account provides a vey that millennials were not as try that predominantly serves the portfolio and plan for goals, they traditional advisers. Arthayantra summary of all your investments, well prepared for retirement as wealthy. However, every Indian de- cannot offer value-added services claims to offer budgeting and tax shows unrealised gains or losses, older investors. This is where robo- serves access to low-cost financial like traditional advisers. Though planning services, but not estate allowing for assessment of capital advisers, with their low entry bar- advice,” says Nitin Vyakaranam, making an investment plan to meet planning as yet. At the very basic gains at any point, and also lists rier, can step in. Being driven by Co-founder and CEO, Arthayantra. goals is a key part of financial plan- level, the latter entails the creation historical transactions. Switching technology, they have no qualms ning, it is not the entire process. of a will to ensure smooth transfer between funds, rebalancing the serving investors with small bal- SHORTCOMINGS Budgeting, tax optimisation and of assets to legal heirs if an individ- portfolio and withdrawing money ances. “Very few people have ac- No holistic solution: While robo- estate planning are other impor- ual dies.

WHICH ONE SHOULD YOU OPT FOR? Consider these factors to decide the one that suits your lifestage and financial status.

OPT FOR A ROBO-ADVISER IF YOU ... PICK A HUMAN PLANNER IF YOU ...

... cannot identify a trustworthy ... are more human planner comfortable or pay a high working with an ... want to have a fee. individual than an higher degree of automated involvement ... do not have platform. in your a large sum investments. of money to invest. ... do not have ... have complicated important goals financial issues ... seek easy to be met in ... have a large like repaying a big access to immediate amount of loan or setting up portfolio future. investible money a business. management or multiple and are fine to assets. let it run on ... do not auto-pilot. have an erratic ... seek comprehensive advice on income flow. tax optimisation, debt consolidation, estate planning, etc. 06 The Economic Times Wealth, July 13-19, 2015 Cover Story

vide online, automated, algorithm- cial advice services in India can be based, wealth management ad- bridged only through the use of vice. Unlike traditional wealth technology. Robo-advisers are at KEY managers, they do not have a mini- the forefront of solving this prob- mum investment requirement for lem by delivering cost-effective, BENEFITS OF providing advice. From someone unbiased, customised, compre- AUTOMATED wanting to invest just `1,000 a hensive and high-quality financial month to those ready to put in advice to retail customers. They ADVICE several lakhs, anyone can get not only solve the problem of ac- comprehensive and customised cess to advice, but also address Robo-advisers financial advice. other important issues, such as democratise access to India has over 6.2 crore lack of transparency and excessive financial advice without households with incomes of product-centric approach, which discriminating ROBO-ADVISERS: over `5 lakh per annum. All consistently plague the financial customers on the basis these people can save mon- services industry. of assets. ey and make investments. India, with its vastness, diversity They offer cost- ENSURING However, most of the and varying levels of financial effective services wealth management and awareness, offers several chal- which are affordable financial advisory services lenges to robo-advisers. Due to for everyone. ADVICE are geared to address the their ability to increase awareness, needs of only 2 lakh high net such platforms can have a far They provide goal- worth individuals in the coun- greater impact in India than their based approach to FOR ALL try. The disparity between indi- western counterparts. They can advice, instead of viduals who get financial advice lower the barriers and bring more indiscriminate product and the rest who are subjected to retail customers to the financial selling. product sales is very wide. The markets, helping increase the problem is compounded by the market depth. Besides, service Instant advice is delivered in real time fact that there are very few quali- delivery in India will be different without having to wait obo-advisers have been a fied financial advisers. For start- from those in the developed for weeks. hot topic of discussion ers, there are only 2,500 certified markets, where they do not offer Racross the financial world. financial planners (CFPs) in the much human interface. In the Same quality of advice In the US and other developed country, making it impossible to Indian ecosystem, robo-advisers is provided consistently countries, they have made a seri- service the crores of households would need to wed technology across geographies and ous dent in the market and have that seek and need advice. with human touch points. demographics. been growing at a rapid pace. A large percentage of the Indian Robo advisory is in its infancy in Wealthfront, Betterment and Nut- population is expected to be of our country. However, the sheer Best practices from meg are some of the leaders in this working age in the next couple of scale of demand and lack of other across the world are space in the US and the UK, while decades. As the average household credible alternatives will help it delivered to customers. across the world, robo-advisers are income rises, there will be a need make it to the mainstream. For The best minds in managing close to $20 billion. for money managers and financial retail customers, this is a welcome finance can ensure that NITIN Customers too are adapting and planners to direct the retail domes- change and a sure way to start their thought process VYAKARANAM switching to these services from tic populace towards effective sav- securing their financial future with reaches the common CO-FOUNDER & CEO, traditional planners. ings and investments. The massive professional help, irrespective of man. ARTHAYANTRA Robo-advisers essentially pro- gap in demand and supply of finan- their asset size.

Lack of flexibility: A financial plan limit to the extent of customisa- more weightage in our platform.” be comfortable dealing with an interest above everything else. Au- should evolve with changing cir- tion. A robo-advisory firm typically Arthayantra claims to have hun- adviser he cannot meet. Rustagi tomated advisory platforms offer cumstances. Events like the birth has a limited number of risk pro- dreds of risk profiles based on al- believes that lack of personal inter- both in abundance.” of a child, termination of job, onset files that are used to categorise cli- gorithms that can pick 7,000 dif- face makes it a challenge. “In finan- For now, the big gap in financial of major illness or death of a family ents. These may not be perfectly ferent behavioural traits, enabling cial advice, one cannot convert advisory services will ensure that member impact one’s finances and suited to the user’s situation. For it to offer advice catering to people emotions into numbers. There is a robo-advisers get their share of at- require an immediate course cor- instance, someone nearing retire- with varying personalities and fi- need to sit across the table and dis- tention from a section of investors. rection. “A plan requires constant ment may be directed to switch in- nancial situations. cuss the personal situation. While However, as personal investment intervention as needs evolve over vestments to less risky debt instru- convenience is important, the needs evolve and assets multiply, a time,” says Mimi Partha Sarathy, ments. This may be ill-ad- SHOULD YOU PICK A quality of advice matters the traditional adviser would act as a MD, Sinhasi Consultants. vised if the person has ROBO-ADVISER? most.” better guide. The investors who Robo-advisory services are ill- sufficient cash flow in Don’t let The sheer convenience Others do not agree. Meenakshi cannot access good quality finan- premiums equipped to guide individuals the form of pension or decide cover offered by these plat- argues, “It would be wrong to as- cial advice should consider these through such changes. A tradition- interest income. choice forms at an incredibly sume that a robo-advisory plat- platforms as a starting point for in- al adviser, on the other hand, will Hemant Rustagi, CEO Page 14 low cost opens the door form is just a computer working on vesting. At a later stage, they can be in a position to hand-hold the of financial planning for ordinary investors, your finances. There is an underly- approach a financial adviser for person and navigate a potentially outfit WiseInvest Advi- who would otherwise ing human intelligence driving the more sophisticated and custom- rocky financial terrain. Srikanth sors, says, “Thumb rules are struggle to get access to platform.” ised advice. Partha Sarathy says, Meenakshi, Co-founder and COO, not applicable to everyone uni- quality financial advice. As Besides, in an industry where in- “These platforms can get you start- FundsIndia, agrees: “Such events formly. Personal circumstances Singhal says, “He is now in a posi- tegrity of advice is often question- ed on the process of financial plan- require human intervention to pro- may be different for investors with tion to do what only well-heeled in- able, automated platforms aim to ning. However, step two of the provide the perspective in handling fi- similar risk profiles.” However, vestors could.” introduce a high degree of trans- cess will require dynamic interven- nances in a changed scenario.” FundsIndia’s Meenakshi contends However, it will be difficult for parency. Manish Shah, Co-founder tion where you can engage with a that there is enough scope for cus- robo-advisory platforms to earn and CEO, BigDecisions, says, “In- financial adviser.” Limited customisation: Most tomisation. “Risk tolerance is just the customers’ trust. After all, an vestors want to take advice from robo-advisers claim to provide tai- one of the considerations for build- investor is counting on a faceless someone who is not only high on lor-made solutions based on risk ing a portfolio. The user’s age and entity to provide sound financial knowledge quotient but can also Please send your feedback to profile. While this is true, there is a time frame for investing are given advice. It will be difficult for him to be trusted to keep the consumer’s [email protected] Review Preview The Economic Times Wealth, July 13-19, 2015 07 PF withdrawals may be capped Product launches MUTUAL FUNDS Move to stop premature withdrawals will ensure social security for workers in old age. Reliance Mutual Fund has launched Reliance US Equity Opportunities Fund. he government is planning to dings. “The provision of 100% The fund aims to provide long-term capi- Tput a cap on premature with- withdrawal at any time is being HANGING IN tal appreciation by investing in the stocks drawal of provident fund (PF) mon- misused to a large extent. The idea of companies listed on US exchanges. A ey. The move is aimed at ensuring of a PF account is to ensure social THE BALANCE portion of its portfolio will be invested in debt and money social security for all in old age. security for workers in old age,” WILL AFFECT market securities. The new fund offer ends on 17 July. The Employees’ Provident Fund Central Provident Fund Commis- Organisation (EPFO) has proposed sioner K.K. Jalan said last week. Workers changing jobs Mirae Asset Mutual Fund has launched the Mirae that an employee be allowed to Meanwhile, to stem a possible Asset Prudence Fund. The scheme will invest in a com- People who tend to withdraw only 75% of the overall exodus of subscribers to the NPS, bined portfolio of equity and equity related instruments withdraw PF money kitty, instead of 100% as permitted the EPFO has proposed an increase between jobs and debt and money market instruments. The minimum under the existing Employees’ in benefits from the Employee’s De- investment is `5,000. The NFO closes on 22 July. Provident Funds Scheme, 1952, in posit Linked Insurance Scheme Those planning to use it for case of resignation from a job or for (EDLI), benchmarking it to depos- either buying a house or for paying medical bills or for children’s higher education or weddings any other use before retirement. its under the PF account. “EPFO is INSURANCE The change, once implemented, exploring options to incentivise ICICI Lombard has introduced Photo will impact working people who subscribers to keep money in PF COMING SOON CURRENT COUNT Quote, a feature on the ILInsure mobile tend to withdraw PF money be- accounts,” Jalan said. “We want to The labour ministry is Of the 13 million annual app that lets customers generate premi- tween jobs or those planning to use enhance the insurance benefits un- keen on the idea and claims pending with the um quotes while renewing their motor hence a notification to this EPFO, over 6.5 million it for either buying a house or for der EDLI to 30 times the monthly effect could be in place claims are for 100% cover—with ICICI Lombard or other insur- paying medical bills or for chil- wage as against 24 times now.” within this month withdrawal ers—by uploading a picture of their existing policy docu- dren’s higher education or wed- See Page 12 ment. The customer will receive a message with a premium quote and customer and vehicle information pre-pop- ulated. Premium payment completes the process. BANKING Govt taps into Rakhi gifts to Axis Bank has launched Touch ID, a one-touch authentication for transactions increase financial inclusion through its mobile app for customers `33k using Apple iPhone 5s and above. Cus- his Raksha Bandhan, brothers can gift tomers can pay bills, recharge mobiles crore Ttheir sisters a secure future in the form of and transfer funds with this feature. Once the customer’s Invested by fund managers fixed deposits. The government will use the fingerprint is set up on the Axis Mobile app, they can upcoming festival to propose a fixed deposit authenticate subsequent financial transactions by either in equities and equity-linked scheme which will deepen financial inclusion. using Touch ID or their mPIN. saving schemes during the The finance ministry has suggested a FD first quarter (April-June) of scheme to banks in which brothers can open ICICI Bank has upgraded its mobile banking app iMobile the current financial year. an FD of at least `5,000 for their sisters. The by enhancing the number of services on offer to 100. government will add free life and accident New services include the facility to link ICICI Bank rela- insurance schemes to these deposits. tionships using the app and make direct calls to the call A senior banker aware of the developments centre without having to authenticate oneself. says the scheme may be christened Uphaar Jim Rogers Yojana or Raksha Bandhan Yojana. The government’s idea is to keep the Jan Dhan predicts further accounts active through these schemes and Calendar also encourage financial savings in the fall in gold prices unbanked segments. Monday Monday MondayFriday JUL 13 JUL 13 JULDEC 17

“I’ve never seen this kind of Russia hosting Euro area EU, US hold BRICS summit finance TTIP quote of slump before. I don’t think till 20 July ministers’ meet negotiations the week anyone has.” DU CHANGCHUN ANALYST, NORTHEAST SECURITIES, ON THE CHINESE MARKET CRASH

round the time gold prices tumbled Ato a three-month low of `26,170 per Airlines cannot charge for first 10 gm last week, commodities expert and investor Jim Rogers said he expects 15 kg of check-in baggage the yellow metal to fall another 15-20% this year. Asked if he would buy gold as irlines will not be allowed to safe haven, he replied in the negative. “I charge domestic flyers for am not buying gold for a while, though I Achecked-in baggage weighing own gold. But if something happens then up to 15 kg. The Directorate-General I might think of buying gold again,” he of Civil Aviation (DGCA) is set to issue said in an interview. an order to the effect. “If some air- Rogers also predicted that the lows in line wants to offer flyers with no oil will continue. He said he was not check-in bag a rebate, we have no optimistic about iron ore as well. He, problem. But they will not be allowed,” said a DGCA official. however, did not rule out a buy for some lowed to charge extra for first 15 kg of Meanwhile, DGCA chief M Sathiya- of the other base metals. check-in bags. A consumer-friendly vathy is looking into recent increase Meanwhile, silver also recorded a steep move is welcome but nothing that in cancellation charges by some air- fall of `1,550 to `34,450 per kg. goes against flyers’ interest will be al- lines. 08 The Economic Times Wealth, July 13-19, 2015 Stocks Are firms with high Europe exposure in trouble? Indian investors need not be too concerned about a weaker euro impacting the earnings of companies dependant on the European economy.

SANKET DHANORKAR via exports of goods or services. Bank of America Merrill Lynch has ny could be affected by any curren- The concerns are two-fold: a weak- an “underperform” rating in the cy fluctuations amid turmoil in the ith Greeks refus- er euro will result in lower transla- stock citing slower earnings region, but analysts say this would ing to accept fur- tion of European revenues in ru- growth and earnings downgrade be off-set by the strong outlook on ther austerity pee terms. And, the possibility of a hurting the stock price. its core leisure business. Brokerage measures for an spillover impact onto other Euro- Europe is a key market for Apol- firm Sharekhan reiterates that the Weconomic bail- zone countries could affect overall lo Tyres, with 30% of its consolidat- Eurozone concerns are already out, the country stares at a split demand. Companies that have ma- ed sales attributed to the region. It factored in its stock price. “We be- from the world’s biggest monetary jor operations in Europe are main- has been the highest margin-gener- lieve the Eurozone crisis would union, the Eurozone. The ramifica- ly from the automobiles, auto parts ating geography for the company. only temporarily affect the educa- tions of a Grexit are profound, fore- and metals space. Apollo is scaling up manufacturing tion and Meininger businesses. most being the likely hit on the Motherson Sumi has the biggest capacity in Europe with a second Moreover, the outlook for leisure euro. For Indians, there is the risk exposure to the region, with 20% plant, which would further drive business remains strong.” of capital flight from our markets to of its revenues coming from Euro- up the region’s revenue share in Among commodities firms, Tata safer dollar assets. It could also cast pean subsidiaries. The company the company. Given the strong vol- Steel and Hindalco have exposure a shadow on Indian companies has a strong presence in the auto ume traction being witnessed from to Europe through subsidiaries with exposure to Europe. Will interiors and bumpers market. this geography, analysts remain Corus and Novelis, respectively. these companies feel the heat or However, analysts are not per- positive on the stock. Both are likely to be impacted due are we worrying needlessly? turbed, since Motherson mostly Tata Motors has a significant to translation of subsidiary reve- supplies to Germany—a strong presence in Europe through its JLR nues on the back of a softer euro. Stocks on the Europe radar market. “A lower translation of rev- operations, with more than 80% of At a time their domestic operations For several Indian companies, a enues when converted into rupees JLR volumes coming from this re- are also facing a slump, troubles sizeable chunk of revenues comes is possible, but a weaker Euro gion. Europe volumes have grown from Europe could put more pres- from Europe. This is either through could also help its European facto- at a robust pace for the past three sure on these stocks. A weaker operating presence in the region or ries become more competitive,” months. Analysts feel investors euro could dent earnings of some reckons an analyst from a reputed need not worry about turmoil in export-oriented businesses in the brokerage firm. the region affecting JLR. “We don’t software services space. Among IT Bharat Forge, with nearly 40% of see any major demand disruption services firms, TCS, Infosys, Tech 2015 revenues coming from Eu- for the company given the strong Mahindra and HCL Tech have a rope, is another auto parts player product pipeline and long waiting quarter-to-one third of revenues in the line of fire. Over the past few periods. Also, a possibly weaker from exports to Europe. Bank of years, the firm has relied heavily euro would benefit the company as America Merrill Lynch mentions in on exports to the US and Europe to it is a net importer,” insists Kapil its report that the impact on these counter the domestic slowdown. Singh, Analyst, Nomura Securities. firms could be marginal at around The strategy has paid off hand- Tour operator Cox & Kings is an- 2% of earnings. Considering that somely. However, the stock could other stock in the limelight, since it there is a lot of uncertainty on the remain under pressure in the near derives a chunk of its revenues future of the Eurozone, investors term owing to the impact of weak- from its education and Meininger would do well to put these stocks er translation of euro revenues. businesses in Europe. The compa- on their watchlist. Companies in the auto space will fare better

REVENUE FROM 1 WEEK COMPANY P/E CMP (`) 1YEAR RETURN EUROPE RETURN Motherson Sumi Systems 80% 52.6 514.1 1.3% 46.1% Cox & Kings 65% 49.7 269.3 14% 6.7% Tata Steel 56% -7.4 297.5 0.6% -42.1% Bharat Forge 40% 34.8 1074.0 0.3% 67.6% Tech Mahindra 31% 17.3 471.3 -2.7% -10.5% HCL Technologies 29% 18.2 938.8 0.8% 27.4% Tata Consultancy Services 28% 25.8 2619.1 1.0% 6.9% Apollo Tyres 28% 9.3 177.9 7.4% -10.3% Infosys 24% 18.3 982.1 -0.8% 17.8% Hindalco Industries 23% 23.9 107.3 -4.9% -36.5% Tata Motors 82% 8.9 431.8 0.7% -6.8%

Data as on 7 July 2015 Compiled By ETIG Database SOURCE: Bloomberg, company reports INVESTOR CONNECT INITIATIVE

ciation in the value of real estate. derstand and keep track of a Another example of being car- portfolio with simple strategies. ried away by emotions while investing is investors inclination INVESTING FOR SAVING TAXES to invest most of his money into ➜ Another common mistake SAMEER RASTOGI one asset class if that asset among most retail investors is to of Saksham Wealth class had performed well in the prefer investments which save Solutions, Delhi, recent past. Although pure in- taxes for them even if there are answered some of the vestment logic says that if an as- investment options that can give queries by Swatantra set class has outperformed oth- them better post-tax returns readers er assets classes by a substan- than the tax saving ones. “Tax tial margin, there is a high savings products should be one chance for that asset class to of the options, but it should nev- EQUITY FUNDS GIVEN GREAT RETURNS start underperforming. If it is so, er be the first option or the only Q OVER THE LONG RUN. THEN WHY DO then the common sense should option,” an official with a mutual FINANCIAL PLANNERS ASK PEOPLE NOT TO dictate one to allocate a smaller fund house said. PUT ALL THEIR MONEY IN EQUITY SCHEMES? portion in that asset class, Worse is when an investor in- Equity funds have been the best asset rather than a large portion. vests in financial products for Aclass over long term. However, in the However, most investors usually tax saving purpose only. Accord- short run equity market performance can do the opposite. ing to Sameer Rastogi of Sak- be very volatile. The performance of the sham Wealth Solutions, such an equity market is cyclical in nature. DEMONSTRATION EFFECT approach is a planning hara-kiri. Financial planners evaluate investor’s risk ➜ People are often influenced by “While government provides tax appetite and time horizon, and accordingly herd mentality. Often it happens incentives on certain instru- advise the amount of equity proportion in that a group takes some investments, investing purely to avail the total portfolio. ment decision and then that subsidy is a risky proposi- another person, close- tion for the long term,” he said. SHOULD I STOP MY SIP IN A FALLING ly associated with This leads to two scenarios of Q MARKET? the same great concern. According to Ras- Never. The basic purpose of SIPs is to group, repli- togi, firstly, they end up wasting Aaverage out market volatility. Stopping precious money and time in unde- SIPs in a falling market is contrarian to sirable and underperforming in- the original principles of SIP. Last 36 vestments. For example money years of sensex data show that equity back insurance policies are still investment made in worst times have one the worst yet most preferred delivered the best performance. In a tax saving vehicles in India. Sec- falling market, when the stocks are ondly, in the long term, their per- available at a discount, SIP helps in buying sonal balance sheet will become more units per rupee invested. Falling illiquid as it would be biased to- markets are a “sowing season”. Therefore,

ILLUSTRATION: DEBASISH SARMA wards physical assets. For exam- sow during the falling market, and reap during the booming market.

I HAVE INVESTED MY MONEY IN Q DIFFERENT FINANCIAL INSTRUMENTS BUT HAVE NO CLUE WHETHER IT WOULD HELP COMMON INVESTING ME IN THE LONG RUN. WHAT DO I DO NOW? This happens mostly in the absence of Aa written financial plan. In India, focus on financial literacy is least. Investors can be very adhoc in their approach and end up buying flavor of the season products. MISTAKES BY INVESTORS This creates a mess and the portfolio becomes directionless. Investors should strictly adhere to a goal-based investment ALL INVESTORS VETERANS AS WELL AS NEWBIES MAKE MISTAKES WHILE INVESTING. approach. They should seek help of an IT’S IMPORTANT TO LEARN FROM THEM expert financial advisor to help draw the long term financial path.

nvestors, including the best tions and not logic. Secondly, in- cates that. This is done even if ple, we have a large number of IN THE LONG RUN WE ARE ALL DEAD. I of fund managers, are prone vestments are made under peer the last person’s risk profile and old couples who have high prop- Q WISH TO HAVE SHORT TERM RETURNS. to making mistakes. Small pressure. And thirdly, a large needs for investments may be erty net-worth but insufficient PLEASE COMMENT. investors, however, mainly number of investors have this markedly different from the other bank balance to pay for their min- In 1923, renowned economist J M I because of their lack of notion that a simple investment members of the group. Here peer imum lifestyle and medical bills. AKeynes said “In the long run, we are all knowledge and understanding of solution can not be the best so- pressure plays a role in commit- “Tax saving is important, but a dead”. He said so in context of urgent need the process of investing, commit lution and they look for complex ting an investing mistake. balanced goal oriented portfolio is from government to handle the short term mistakes which are even psy- solutions even if the final out- many times more important for unemployment crisis. But 92 years later, chological in nature. On the oth- come is barely different. SIMPLE VS COMPLEX joys of life,” Rastogi said. an investor repeating the same statement er hand professional investment ➜ When a portfolio is construct- and asking for quick returns reflects greed managers mostly make analyti- EMOTIONS WHILE INVESTING ed by an investment profession- TIME AND GOAL and restlessness, a fashionable statement cal errors and rarely make mis- ➜ Owning a house is considered al, he usually prefers to keep it ➜ There are some other common from a financial hippie. The fact is that we takes due to emotional reasons. as a sign of financial success, de- simple. However, most investors mistakes also that investors live long years and are survived by our According to financial plan- spite several drawbacks for real feel that a complex portfolio is commit, financial planners and loved ones. When we are alive, we will ners, there are major areas estate as an investment product, better than a simple one for the advisors say. One of them is to have some long term goals like housing, where retail investors err while its illiquidity being the top most. long term. So they look for a not have any timeframe for an education, marriage and retirement. So, planning their investments. Although in India we do not see portfolio that would involve com- investment. Ideally all invest- buying adequate term assurance and Firstly, when investment deci- this much, but several other plex strategies, forgetting that ments should be done with a setting goals for short term and long term sions are taken based on emo- countries have witnessed depre- for them it’s much easier to un- goal and a timeframe in mind. is the responsible approach. 10 The Economic Times Wealth, July 13-19, 2015 Stocks Why China should make you worry A continued sell-off in China poses a much greater risk to the Indian market than a potential Grexit.

NARENDRA NATHAN, SANJAY KUMAR SINGH AND SANKET DHANORKAR

espite frantic efforts, the Chinese government has failed to rein in the country’s plummeting stock market. The Shanghai Compos- Dite index has plunged more than 30% from its June 5 high, effectively signal- ling the start of a bear market. The fall could have been perceived as a stock market correction in a bull market, but for the government’s panic-stricken steps. Measures such as restricting IPOs, banning investors with more than 5% stake in a company and insiders from selling stocks for the next six months, and asking insurance companies and banks to buy shares to prop up the market have only added to the sense of panic. In another retrograde step, more than 1,400 of the 2,800 stocks listed on the Shanghai and Shenzen exchanges, in a bid to prevent a further sell-off, have asked that trading be halted. These steps, at best, can only postpone the kets, including India. Just to put things in fall. Refraining from artificial props could perspective, the recent Chinese slide has Great maul of China have helped the market find its natural bot- wiped out $3.2 trillion worth of market capi- After a spectacular bull run, Chinese markets fell off the cliff last month tom sooner. The stark contrast in the value of talisation—twice the size of the entire Indian Chinese stocks listed in Hong Kong—popularly stock market. So, how scary is the ‘Chinese 3,500 17,000 known as H shares—compared to those listed Scare’ for India? 2,609 in China, reveals that the Chinese market will 3,000 15,400 correct further in the coming weeks. On a Overall impact SHANGHAI 50 With a big fall INDEX (LHS) in the Hong- one-year basis, Index H shares are up 7%, A continued sell-off in China poses a much 2,500 13,800 while those listed in China are still up 77%. greater risk to Indian market than a kong market Experts say, in the past few months, China potential Grexit. This is because the typical as well, the 2,000 12,200 panic is has seen the makings of a classic bubble. interplay between the Chinese and the 1,475 “The bubble was fuelled by easing of rules Indian stock market may not be replicated spreading to 1,500 10,600 other markets. on margin funding (buying stocks by money this time. Usually, whenever one of the two HONGKONG CHINA 11,107 borrowed from brokerages). It was driven by has experienced a slump, the other has 10,341 ENTERPRISE INDEX (RHS) retail investors who have very little knowl- benefitted from higher money flows from 1,000 9,000 9 July 2014 8 July 2015 edge of the fundamentals of investing but foreign investors. “India could suffer from were lured by the high returns, at a time outflows if the sell-off in China continues,” SOURCE: Bloomberg when real estate and bank deposits are giv- says Vinay Khattar, Head, Research, ing negative or low returns,” says V.K. Vijaya- Edelweiss. Experts say that if China coughs kumar, Investment Strategist, BNP Geojit harder, emerging markets, including India, extent.” Swapnil Pawar, CEO, Karvy Capital, mestic inflation already on the lower side, a Paribas. That bubble has now been pricked. could catch a cold. Vikas Gupta, Executive reckons that India could escape unhurt further drop in commodity prices will help Corrections tend to be very sharp when a Vice President, Arthveda Fund unless the China situation worsens. “If the reduce its import bill further and keep infla- debt-fuelled bubble bursts. Management, says, “Global investors are rout deepens, then it could subdue interest tion subdued. This will increase the room for Just when Indian markets seemed to have not nuanced enough to distinguish between in the entire emerging market basket,” he the Reserve Bank to carry out more rate cuts, shrugged off the ‘Greece scare’, they were India and China in such an event. If the says. which will boost the domestic economy. Go- greeted by the ‘Chinese scare’. And unlike value of Emerging Market ETFs declines A slump in the Chinese economy is bound pal Agrawal, CIO, Mirae Asset Global Invest- the situation in Greece, a crash of this magni- because of China, the resulting sell-off will to keep commodity prices benign, which is a ments says, “Since India is a net importer of tude in China is bound to impact global mar- also affect other emerging markets to some big positive for the Indian economy. With do- commodities, any softening in global com- Stocks The Economic Times Wealth, July 13-19, 2015 11

Adding to the slump Indian stock casualties The largest commodity consumer, China, is likely to pull down prices further. Commodity, metal and firms with a high exposure to China are feeling the heat.

CMP Return since 1-year NICKEL CRUDE OIL TIN ZINC COPPER Company PE PBV (`) 5 June return

VEDANTA N/A 0.80 146 -20.05% -50.43%

HINDALCO INDUSTRIES 22.71 0.52 102 -15.28% -40.46%

-7.22 TATA STEEL N/A 0.88 283 -8.89% -45.22% -8.06 -7.38 -9.00 TATA MOTORS 8.36 1.86 405 -8.46% -10.38%

STEEL AUTHORITY OF INDIA 11.72 0.56 59 -6.90% -33.37% The fear has started spreading JSW STEEL 11.42 0.92 849 -3.19% -28.76% to commodities Compiled By ETIG Database -18.61 market also. SOURCE: Bloomberg Data as on 8 July 2015 Compiled By ETIG Database

Metals are losing their sheen Turbulent times Platinum prices have plunged more than 6% in the past one month. China-focused funds have witnessed a sharp correction over the past month.

1,350 GS HANG SENG JPMORGAN GR CHINA MIRAE ASSET CHINA 1,233 BEES EQ OFF-SHORE ADVANTAGE 1,300 9.84% 8.37% GOLD Platimun has 1,250 been the real 1-YEAR 3.34% 1,158 casualty of RETURNS 1,200 1,223 the Chinese crash, even as 1,150 other metals too have seen DECLINE SINCE 1,100 12 JUNE * PLATINUM prices fall. 1,050 -10.97% 1,032 -13.50% 1,000 Data as on 8 July, 2015. 9 Jan 2015 8 July 2015 -17.40%

modity prices bodes well for its external def- borrowers, the slide may also be due to bilities. Earnings growth estimates for these icit.” Khattar argues, “It is definitely a big some knee-jerk capital outflows, triggered companies could be revised downward. Al- CHINA-FOCUSED positive for inflation and raises the possibil- by global events. ready, the BSE Metal Index has been the ity of more rate cuts, especially if the mon- Then, platinum, which has crashed more worst index performer on the bourses, un- FUNDS: NOT ALL soon also comes through.” than 6% during the last one month, falling to der-performing the BSE Sensex. Stocks of IS LOST a 6-year low, is getting battered on both the Vedanta, Hindalco, JSW Steel, Tata Steel and Impact on commodities fronts: low investment demand because of a SAIL will continue to feel the heat. Since most of the Chinese stocks are held by strengthening dollar and low industrial de- There is also a possibility that the Chinese retail investors in China, there is a fear that mand because of weakness in a key economy administration will devalue its currency to THE RECENT correction has already the stock market crash may impact consum- like China. Platinum used to quote at a pre- boost exports and prop up the economy. In taken a toll on the net asset values of er sentiment and further reduce the Chinese mium to gold, but now trades $126 dollar be- this event, companies from certain export- China-focused funds. However, experts advise not to panic and make sudden growth rate. China is the largest consumer low it—for 1 troy ounce (approximately 31 reliant sectors such as textiles and to some withdrawals. This is because the recent of industrial commodities and, therefore, grams). So, should investors capitalise on the extent, electronic goods, will be impacted crash has brought down valuations of this panic has started spreading to the low prices and shift from gold to plati- by cheap Chinese exports. Chinese companies listed in Hong Kong commodities market, especially num? Experts advise against such a On the other hand, benign commodity (H shares) to reasonable levels now. Investors metals. Though gold and silver move: “Platinum will continue to prices will help keep input costs for con- “The H shares, which our mutual fund have remained relatively stable should stay underperform gold, till there is a sumption-oriented companies muted. This calm and stay invests in, are trading at a discount to during this crisis, experts are still in cash global recovery in the auto sec- could aid in margin expansion in these busi- their long-term average,” says Supreet bearish on them because the Page 21 tor,” says Narne. nesses, which could drive up stock prices. Bhan, Executive Director and Head- crash may lead to a jump in the “Companies which use commodities as raw Retail, JP Morgan AMC. The price to U.S. dollar, which is bad for bullion Impact on stocks materials will benefit from lower inputs earnings (PE) multiple of the Shanghai as well. “We are neutral to bearish As stated before, firms dealing in costs,” insists Gupta. Auto, FMCG, paints, Composite Index, which reflects the on gold in the short- and medium-term. commodities are likely to suffer. Ve- chemicals and select auto parts companies Chinese companies listed on the The gold rally usually occurs when the U.S. danta and Hindalco have lost more than are likely to benefit. Automobile manufac- Shanghai stock exchange, is currently at gets into trouble. These crises will trigger a 20% and 15% respectively in the past one turers would benefit from the decline in nat- 13.3-times forward PE compared to its strong dollar and, therefore, keep gold sub- month “The slump in the Chinese economy ural rubber and crude oil prices, while 10-year average of 16.1. The MSCI dued in the coming months,” says Kishore further kills any hope of recovery in the FMCG players will get a boost from decline China Index, which includes H shares, is Narne, Associate Director, Motilal Oswal commodity prices for domestic metals in palm oil derivatives. trading at a PE of only 9.2 compared to Commodities Broker. firms,” reckons Anand Shah, Executive Di- The Chinese crisis may also impact com- its long-term average of 11.8 (as on 7 The expected weakness in the rupee, rector and CIO, BNP Paribas Investment panies that have a very high direct exposure July). According to Vishal Dhawan, chief however, may cushion domestic investors Partners. With domestic metals and mining to China, especially those entailing discre- financial planner, Plan Ahead Wealth Advisors: “Had valuations of H shares from this bearish trend in bullion. According companies already weighed down by exces- tionary spending. For example, Tata Motors been very steep, we would have advised to an ET poll of 14 market participants, Indi- sive dumping by China and huge interest has a lot riding on China. With a 25% contri- investors to exit the market entirely. But an rupee may weaken to `64.50 to a dollar burden, the situation could worsen. Lower bution to sales of its luxury car business, that’s not the case at present.” from `63.50, in the next three months. In prices will hurt profitability and further af- JLR, China is a crucial market for the compa- addition to the unhedged positions of local fect these companies’ debt-servicing capa- ny. Its sales are likely to be impacted. 12 The Economic Times Wealth, July 13-19, 2015 Retirement Should one be allowed to dip into retirement funds?

In a bid to discourage premature withdrawals from the Provident Fund, the Employees’ Provident Fund Organisation has proposed to limit the withdrawals to 75% of the balance. At the same time, the National Pension System (NPS), which used to be an airtight investment, has become more flexible and permitted withdrawals for certain specified needs. ET Wealth reached out to experts to know whether employees should be allowed to dip into their retirement savings prematurely.

Sundeep Sikka derly. When compared globally, In- ing prematurely, at least once in our Ashok Singh President and CEO, dia’s retirement assets (to GDP ratio) career, and profusely regretted doing National Vice-President, INTUC Reliance Capital Asset Management is 15% as compared to other coun- so, after frittering away the proceeds tries like US (80%) and Japan (65%). on, what then seemed vital expendi- Yes No It is with this objective that the ture, but in hindsight, turned out to EPFO has proposed restricting with- rather frivolous. To us, the cap is a Any restriction Premature drawals to 75% of the balance. The welcome development because we on the withdraw- withdrawal of core purpose of a Provident Fund ac- still have about 15-20 years to rebuild als from the Provi- retirement sav- count is to ensure social security for our Provident Fund corpus. If you dent Fund is not ings is not in the employees in old age. The Provident are 62 now, and have been reckless in in the interest of interest of inves- Fund money should be used only in the past, you may be wishing that the workers. The tors. They dire need. Investors should not treat such a cap was in effect when you money belongs to should not be al- these retirement savings as a savings were in your 30s. “It is the workers’ the workers and “The savings are lowed to dip bank account. Allowing full with- Certain professions are naturally money and they they should be meant to fund into these drawals would defeat the purpose of prone to ‘job-hopping’. Financial able to access it should have your retirement. funds, and defi- retirement savings. services, advertising and now, e- during a financial nitely not with- commerce are prime examples. Em- access to it for emergency. The They should not draw the entire ployees in these sectors will object tiding over government, be treated as a amount. The Jayant Pai to the capping because premature which has not corpus helps withdrawal is the default option for contingencies.” contributed even savings bank CFP and Head of Marketing, build financial them. Less jumpy employees, in sec- a single rupee to PPFAS Mutual Fund account.” stability and is tors such as the armed forces or the corpus, has no right to deny often the only No PSUs may be more tolerant of this workers access to their own money. support for the proposal. Having said that, I agree that with- 20-25 years in retirement. After one The proposed The proposed cap is correct in- drawals should only be allowed in ex- stops working, one’s daily expenses cap on prema- principle. Over the years, besides treme circumstances. To that end, and healthcare costs keep rising but ture withdrawal withdrawals on switching jobs, the the EPFO should set up a mechanism the income from the investments from the Provi- EPF has often been used as a quasi to assess the applications for with- does not increase. To provide a dent Fund has ‘lender-of-first-resort’. The cap will drawals. Internet connectivity has meaningful income to cover all ex- raised many compel members to seek alternate made this task easier. The worker can penses, the corpus should be suffi- hackles. This is sources of funding. It may also nudge email his application along with sup- ciently large. This makes it important “Capping partly because them to cut their coat according to portive documents. If the need is gen- to start saving early, invest regularly, withdrawals will no one likes fet- their cloth. uine and the employee is facing a and not withdraw the savings before prevent investors ters imposed The EPFO has taken several steps cash crunch, he should be allowed to the retirement age. upon them, to make Provident Fund accounts withdraw up to 100% of the amount. There is a high cost to be paid for from blowing more so in a rau- more user-friendly and portable. There is also the new rule of de- breaking this long-term saving. If you away their cous democracy The introduction of the universal ac- ducting TDS on withdrawals, which is put `5,000 per month into your re- savings on like India and es- count number (UAN) will do away also going to hurt the interest of the tirement savings and earn 9% re- pecially where with the problem of shifting the workers. There should not be any turns, at the end of 30 years the cor- frivolous money is in- money when you change jobs. The TDS on Provident Fund withdrawals. pus would be `91 lakh. However, if expenses.” volved. Your re- digitisation of records and online Investors only withdraw their Provi- the investor decides to withdraw action may differ access will make it easier for inves- dent Fund when they are in dire need even 50% of the corpus after 15 years, markedly, de- tors to check their Provident Fund of money. Taxing the withdrawal at the final corpus would be reduced to pending on whether you are 22, 42 or accounts. The decision to invest that stage will add to their problems. `65 lakh. Premature withdrawals 62. The 22-year-olds are likely to be some portion of the corpus in equi- One of the reasons that the NPS has from the retirement savings would dead against this proposal. For them, ties could result in higher returns in not taken off is that there were too deprive investors of a sufficiently retirement is an eon away and com- future. many conditions attached. The cor- large corpus. pulsory contribution to the EPF is, at The EPFO should devote time and pus could not be withdrawn before In India, there are few social secu- best, a necessary evil. To them, a cap money to explain the features and the investor turned 60. Some of these rity options and only a small seg- on premature withdrawals, is equiva- benefits of the scheme to the public conditions relating to withdrawals ment of the population is covered lent to the proverbial red rag flutter- at large. Once it is perceived as a long- have recently been relaxed but the under these options. As India ages, ing before an incensed bull. term solution, offering competitive rules need to be liberalized further. I this will put an enormous pressure A 42-year-old (like me) will see tax-free returns, Provident Fund in- firmly believe that social security for on our government to cater to the things differently. Most of us have al- vestors may resist the urge to raid the all should not merely be a slogan but healthcare and well-being of our el- ready made the mistake of withdraw- till at the first opportunity. transform into a reality. Financial Planning The Economic Times Wealth, July 13-19, 2015 13 What the Greek crisis taught us Greece should set the alarm bells ringing for the individual borrower. If you haven’t learnt already, start right now.

PREETI KULKARNI to part with your more valuable Don’t be too optimistic: Hefty possessions too. “When you are pay packages are the norm in sev- ast week’s developments deep into loans, you may lose the eral sectors today, even in the mid are not exactly all Greek items you really value due to the and junior levels. However, over- to even those who do not loans you took for items that could confidence can be your Achilles’ track international mar- have been avoided,” says Suresh heel, jeopardising your financial Lkets closely. The nation Sadagopan, Founder, Ladder7 Fi- plans. It’s best not borrow on the faces bankruptcy if a bailout deal nancial Advisories. basis of your estimation of future with EU countries, particularly Ger- Watch out for potential debt income and career prospects. 50% 700 90% many, is not reached soon. Do not traps: The future of Greece hinges “Many take loans for cars and use YOUR TOTAL EMI CREDIT SCORE PERCENTAGE OF dismiss the unfolding drama as an on existing lenders continuing their credit cards recklessly, run- OUTGO SHOULD THAT BANKS CREDIT SANCTIONED NOT EXCEED HALF CONSIDER TO BE BY BANKS TO inconsequential event in a faraway credit support. Many individuals ning up huge bills in anticipation of OF YOUR NET ‘GOOD’ BORROWERS WITH A place.Here are five lessons to learn too tend to borrow loans or use a 20% increment or a job switch TAKE HOME CREDIT SCORE OF from the crisis in Greece. credit cards to repay existing loans. that will yield better salary. They SALARY OVER 700 Don’t borrow what you can’t re- Many obtain personal loans to re- could land in trouble if things do pay: The simple thumb rule to fol- tire their high cost credit card debt. not go as per plan,” says Roongta. ANNUAL RATE OF INTEREST low while taking fresh loans is: will However, being unsecured debt, Keep tabs on credit history: CHARGED BY CREDIT CARD the cumulative EMI of all your personal loans too charge a higher Credit scores are part of the loan el- ISSUERS ON THE AMOUNT loans exceed 50% of your take- interest rate ranging from 15-25%, igibility evaluation process. Issued 39-44% OUTSTANDING home salary? “If the answer is yes, which means that total dues will by companies like CIBIL, Equifax you would be better off not bor- not shrink in a hurry. Worse, if you and Experian, credit reports con- rowing, even if it means postpon- choose to pay just the minimum stitute a record of your loans and by obtaining the reports from momentary pleasure, but a cause a ing purchase decisions,” says amount due on your credit card repayment track record. A CIBIL these companies, or at least before lot of pain when the credit card bill Harshvardhan Roongta, CEO, every month, you will avoid the de- report rates borrowers on a scale applying for a loan. lands. If the latest gadget means us- Roongta Securities. In fact, being faulter tag, but you will get entan- of 300-900, with 900 indicating a Live within your means: Nobody ing your credit card without ade- over-leveraged could result in just gled further in the debt trap. In high level of creditworthiness and has ever landed in trouble for being quate money in your account to pay temporary ownership of objects of such cases, it’s best to borrow 300 pointing to the reverse. You conservative when it comes to the bill, resist the temptation—you your desire; worse, you may have against assets and clear the loans. need to monitor your credit profile spending. Impulse purchases offer will thank yourself later.

You can still fly to Greece ...but take these precautions to avoid glitches in monetary transactions.

RIJU DAVE wished away. The banks are like- to carry a mix of cash and debit, local airlines are operational for ly to remain closed across the credit or prepaid cards. In fact, people to travel within the coun- s debt-ridden country till 14 July, as an- travel experts recommend car- try,” says Dhall. Still, make sure Greece considers nounced by the Greek govern- rying more euros in cash to tide you carry sufficient travel and new bailout pro- ment. While there is no limit on over any contingency. Says medical insurance in case you posals, it faces one the amount of cash you can Dhall: “Our advice is to carry a are stranded. Aof its worst finan- withdraw from your (foreign) substantial amount of euros, On a positive note, you are cial crises. You, on the other bank’s ATM—Greece Tourism enough to cover all likely expen- likely to strike very good bar- hand, are probably grappling Ministry has stated that restric- ditures and a bit more as a safety gains with hotels and resorts as with one of your own if you have tions on withdrawals do not ap- measure. You should also raise visitors opt out and bookings re- booked a vacation to the coun- ply to foreign tourists—it is high- the credit limit of your cards in duce. This also means that ho- try this summer. While you ly probable that the machines case there is an emergency re- tels will go out of their way to don’t have to cancel the trip will run dry. “So be prepared for quirement.” make your stay comfortable and just yet, consider these problems with dispensing of There are also reports that ensure there are no glitches. Be- cautionary steps before cash from ATMs due to long parts of the country may face sides, the weakening euro catching your flight. queues and depletion of cash,” shortages of food and medical means you could land cheaper, Greece continues says Sharat Dhall, President, supplies, so stock up on dry ra- never-before deals compared to remain depend- Yatra.com. tion and medicines to last the with last year, and shopping ent on tourism, so While you can use debit or entire trip, taking into account could be much less expensive it’s unlikely trav- credit cards at bigger hotels and any delays. If you’ve done prior too. ellers will be sub- car rental companies, smaller bookings, the main thing to wor- So if you like to spice up life, jected to severe restaurants and shops may not ry about is unplanned strikes book a ticket to Greece, but to be hardship, but the accept them or levy extra which may lead to flight and fer- on the safer side, opt for a pack- financial con- charge, or even insist only on ry delays. “So far, though, tour- aged tour instead of planning straints can’t be cash. In such a scenario, it is best ism hasn’t been impacted and your own itinerary. 14 The Economic Times Wealth, June 13-19, 2015 Insurance Don’t let premium decide your health insurance Policies with the lowest premium or those with a basket of benefits may not always be the best option for you. Here’s how you can make an informed choice.

PREETI KULKARNI here’s a checklist you need to tick young family can do with a basic baby within two years’ time, you Premium and plans before you buy health insurance. cover of `5 lakh, while a family with will be better off without the mater- Experts say one should neither fo- f you knew that getting medi- senior citizens should opt for a larg- nity cover which comes with a long cus on buying the cheapest policy cal bills reimbursed from your Your requirements er floater cover, say experts. If the waiting period and almost doubles nor one that offers a plethora of insurer is likely to fetch you The type of health insurance policy parents are too old, it may be pru- the policy premium. benefits. The emphasis should sim- half the sum compared to a you need may not be the same as dent to get a separate cover for ply be on whether a policy fulfils Icashless claim settlement, it is that of your neighbour. Your policy them, and not include them in the Limitations and exclusions your requirements. Several health unlikely that you will opt for the for- should be determined by your fam- floater plan. Then, you need to be Once you have shortlisted policies insurers have come out with pre- mer. But when it comes to selecting ily’s needs. The number of family careful when opting for a maternity based on your specific require- mium variants that offer services a policy, buyers often forget to keep members and their age is crucial to cover as part of your health insur- ment, go through the fine print to like doctors’ second opinion, vac- such crucial facts in mind. So, identifying a policy. For instance, a ance policy. If you are planning a understand the limitation and ex- cination cover, wellness benefits, clusions of the plans. Most basic etc. “Paying higher premiums for plans carry sub-limits for specific benefits you may never use is not treatments. For instance, hospital advisable,” says Laddha. Also, it is room rent restrictions. Ordinarily, not advisable to buy a high-end a `5-lakh cover could restrict the cover merely for availing tax bene- daily room rent to 1% of the sum in- fits. You can always invest in other sured. Currently, this may get you a tax-saving schemes that offer great- private room, unless you insist on er rewards. high-end corporate hospitals, and you need not stretch your resourc- Cashless hospital network es to buy a premium variant, with- According to the Insurance Regula- out a room rent sub limit. tory and Development Authority “However, if you prefer access to of India, the average claim payout high-end hospitals with better in case of reimbursement settle- rooms, then plans with room rent ments is just half that of cashless sub-limits will not work for you,” claim disbursals for the same ail- says Arvind Laddha, CEO, Vantage ment category. Even though insur- Insurance Brokers. Also, given ers dispute this, you must find out healthcare inflation, a few years about an insurer’s network of hos- from now, these room rent sub- pitals that offer cashless claim set- limits may not even suffice for the tlement. The information is usually not so high-end hospitals. “With available on the insurer’s website. such restrictions, it will become in- “Taking the reimbursement route creasingly difficult to get private could strain your finances and, in rooms. All the other expenses are extreme cases, even impact the linked to room rent eligibility, quality of treatment you choose,” bringing down your entire claim el- says Laddha. Opting for the cash- igibility,” says Mahavir Chopra, Di- less facility also saves you the trou- rector, Health Insurance and Per- ble of collating all the documents, sonal Accident, Coverfox.com. submitting them to the insurer and following up.

Insurer’s track record No co-pay health insurance options An insurer’s experience, financial strength and service record is also COMPANY PRODUCT RESTRICTIONS PREMIUM crucial. “An insurer with a lower claim settlement ratio may spell APOLLO MUNICH Optima Restore No room rent limit, no co-pay `15,054 trouble,” says Laddha. If possible, you also need to take into account solvency margins—an insurer’s abil- HDFC ERGO Health Suraksha No room rent sub-limit, no co-pay `13,607 ity to pay out claims—and premium growth registered by insurers. The BHARTI-AXA* Smart Health Insurance No room rent limit, no co-pay #For a `5-lakh `12,307 number of years an insurance com- family floater pany has been in business is also APOLLO MUNICH Easy Health - Standard No room rent limit, no co-pay 12,660 health policy ` covering a worth considering. “Its expertise in 35-year-old health insurance will be reflected in STAR HEALTH Family Health Optima Single AC Room^, no co-pay `13,876 individual, spouse the types of policies. An insurer and two kids; with a wider range of products may RELIGARE HEALTH Care, NCB Super Single private room^, no co-pay `13,398 premiums could be a better choice,” adds Laddha. vary as per the IFFCO TOKIO Swasthtya Kavach Room rent limited to `5,000 per day, no co-pay `7,033 plan variant chosen. Please send your feedback to SOURCE: Coverfox.com ^ Cheapest private room in the hospital chosen [email protected] Mutual Funds The Economic Times Wealth, July 13-19, 2015 15 “We are cautious about metals and real estate”

We are currently trading at close to a 10-year benefit from government focus on capital historical average valuation (15x 2015-16 and spending as well as the ongoing changes in 13x 2016-17 estimates), which is reasonable in the distribution channels for consumer our view. The political premium has now goods in the country. faded and the earnings reset caused by the sharp erosion in commodity prices is also Where would you avoid placing bets now? factored in. More importantly, while bench- Metals and real estate are the two sectors marking to historic valuation, one needs to that we remain cautious on as we expect con- be cognisant of the changing composition of tinuing price weakness in this sector. The the profit mix of the Sensex/Nifty. The profit former due to global overcapacity and the weight of some of the high ROE, high multi- latter due to still leveraged balance sheets, ple sectors such as consumer, automobiles, are unlikely to deliver the earnings that the pharmaceuticals and IT has almost doubled street currently forecasts, and there might be since 2007-08, while the profit share of the further negative earnings revisions. cyclical sectors (which typically trade at low multiples) such as metals and energy has To what extent will China’s inclusion in the contracted significantly. The valuations MSCI emerging market index hurt flows into therefore, are unlikely to fall to historic lows India? and may appear to be on steep compared to I believe the decision for inclusion of China A history, purely because of the greater share Shares in the MSCI EM Index is under evalua- of high multiple sectors in the index today. tion, but no decision has been made so far. Also, our understanding is that the inclusion In light of the weak March quarter show, how factor of China A shares in the MSCI Emerg- soon do you expect corporate earnings to ing Markets would be subject to positive mar- pick up? ket liberalisation developments in China and While we have seen earnings downgrades would be a gradual process. The various over the last few quarters, there is a signifi- country weight adjustments are a normal cant divergence amid sectors. The compa- process and while there are short-term flow nies which benefit from benign commodity impacts, in the long-term, the structural sto- prices have actually witnessed earnings up- ry of India remains the key driver of the allo- grades, while large parts of the downgrades cations that global investors make to India. have been driven by the materials or the energy sectors. In the next few quarters, we are Do you believe the Greece debt situation has likely to see even more divergence in earn- been allowed to drag for too long with stop- ings of companies within the same sector. In- gap measures? Is another bailout the right vestors will have to be extremely bottom up solution for the long run? in their focus, and the ability to generate al- With the events unfolding over the last few BHARAT CHANDA pha would completely depend on picking up days, we are now probably moving towards a companies that can continue to deliver posi- more longer term outcome on Greece. Post tive earnings momentum. the 5 July referendum wherein 61% of the Greek voters rejected the existing reform Has the first year of the new government pro- Do you think the clamour for further rate and restructuring plans of the EU, the risk of Toral Munshi vided enough reasons to look forward to cuts by RBI to support growth is justified? a Grexit has increased somewhat, but our Head of India Equity higher growth in the coming years? After the last rate cut, we are now expecting central scenario still remains that a deal will The focus of the government has been on a pause from the RBI. The rate cuts already be reached between Greece and its credi- Research in Private simplifying administration and improving ef- delivered are yet to be fully transmitted into tors. The Greek government has been given ficiency, the impact of which will be evident the system. Also, the risk of a pick-up in food one last chance to submit a comprehensive Banking and Wealth in years to come. We have seen positive poli- inflation, given the extreme weather condi- list of new reform and fiscal proposals to Management, cy changes in mining, defence and railways tions witnessed in several parts of the coun- support its application for a new rescue and more recently a pick up in capital spend- try, as well as the impending rate hike by the package by 10 July. In addition, a summit of Credit Suisse ing, which should support an initial recovery Fed, would limit the central banks’s ability to all 28 EU member states would meet on 12 of the investment cycle. Private capex, how- cut rates in the near term. July to discuss the new Greek proposals and While the country’s growth ever, is yet to see a significant pick up and their acceptability. The less likely event of a recovery is expected to be gradual, therefore, growth recovery is likely to be Which sectors are looking particularly at- Grexit would certainly cause short-term un- there are sectors that are already gradual. In 2015-16, we expect a GDP growth tractive from a 2-3 year perspective? certainty and volatility in financial markets, of 6.9% y-o-y and a modest acceleration to Structurally, consumers—both staples and but should be met with policy easing by ECB looking attractive for investors 7.3% in 2016-17. The most important legisla- discretionary, pharmaceuticals as well as se- and ultimately economic and financial con- seeking good returns in the long tion that can drive growth higher is the GST lect financials offer attractive growth oppor- tagion should be limited. Bill, but that still needs to go through. tunity for longer term investors. We are also term , Toral Munshi tells positive on select product companies in the Sanket Dhanorkar. How are current market valuations placed industrial sector as well as those linked to lo- Please send your feedback to with growth expectations reset? gistics, ports, railways or defence. These [email protected] 16 The Economic Times Wealth, July 13-19, 2015 Learn & Keep BUILD WEALTH IN SMALL STEPS The secret mantra for building wealth in the stock markets is simple — there is no secret mantra. All you need is discipline, patience and the courage of conviction. In this race, the slow and steady tortoise always wins over the fleet-footed hare.

If you bought one share of these blue-chips every month since July 2010, you would have accumulated:

STOCK INFOSYS HDFC BANK LARSEN & TOUBRO TOTAL

THE Average investment `2,883 per month `3,215 per month `1,492 per month `7,590 per month POWER OF ONE Number of shares 228 300 78 Invested amount `1.73 lakh `1.93 lakh `89,522 `4.55 lakh

Present value `2.23 lakh `3.26 lakh `1.42 lakh `6.92 lakh One share may seem too small an investment to make a Dividends received `10,465 `5,748 `2,330 `18,543 meaningful impact on your portfolio’s returns. But if you Net gains `61,017 `1.39 lakh `54,999 `2.55 lakh bought one share of blue-chip companies such as Infosys, Total returns 11.39% 24.81% 18.20% HDFC Bank and Larsen & 18.75% Toubro every month starting July 2010, your investment of Two 1:1 bonuses After 1:5 stock split A 1:2 bonus in July `4.55 lakh would be worth have multiplied the in July 2011, bought 2013 pushed up the `6.92 lakh today. Plus you number of shares. 5 shares a month. number of shares. If the same funds were invested in the corresponding would have also received `18,543 in dividends. We show sector funds, the gains would have been bigger: you how much you would have ICICI PRU BANKING & FRANKLIN BUILD accumulated in five years. All FUND ICICI PRU TECH FUND TOTAL FINANCIAL SERVICES INDIA FUND investments were made on the % first trading day of each 15.7 SIP amount `2,883 `3,215 `1,492 `7,590 month. is the returns of the worst Present value `3.07 lakh `3.57 lakh `1.95 lakh `8.59 lakh

performing tech Net gains `1.34 lakh `1.64 lakh `1.05 lakh `4.04 lakh fund in the past five years. Total returns 23.03% 24.80% 31.50% 23.06% Infosys has given While staggered purchases of these blue-chip stocks gave high returns, they BUT only 11.4% could not beat mutual funds. If, instead MUTUAL of buying one share every month, an equal amount was put in the best FUNDS DID `73,149 `25,469 `49,945 `1.49 lakh performing sector fund, the investment BETTER MORE THAN SIP MORE THAN SIP MORE THAN SIP MORE THAN SIPS would have yielded higher returns. IN INFOSYS IN HDFC BANK IN LARSEN & IN BLUE-CHIP TOUBRO STOCKS

are returns of Kotak PSU Bank ETF in the past five years. It earned `13,990 compared 2.75% to `1.64 lakh earned by the best fund. 18 The Economic Times Wealth, July 13-19, 2015 Family Finances

Aakash Vinod Singh, with his mother, in Mumbai.

NET WORTH OF SINGH Asset Current value (`) EPF 68,000 Stocks 25,000 Cash 11,000 Total assets 1.04 lakh

Liabilities Current value (`) Education loan 3 lakh Total liability 3 lakh

Approximate net worth -`1.96 lakh I want to know the basics of financial planning and how to build a corpus for studying further after a year.” AAKASH VINOD SINGH

Singh’s cash flow Funds needed to achieve goals

Time to Further Goal achieve Future Resources used investment Inflow Aakash’s income (years) cost (`) (`/month) Total monthly `60,000 income Emergency fund 2 2.7 lakh Cash, stocks 10,000 `60,000 Education 2 1 lakh - 7,971

Education 3 1 lakh - 3,823

Outflow Retirement 28 9.2 crore EPF 13,650* Total monthly expenses Investible surplus needed 35,444 `45,000 Additional insurance cost 4,556 Surplus Total 40,000 `15,000 Household Surplus - expenses `20,000 All the goals will start after one year when Singh has repaid his education loan. Education * Singh will need to invest `42,027 for this goal, but since he doesn’t have sufficient funds, loan EMI he can start with `13,650 from next year and increase it as per the availability of funds. `25,000 Returns assumed to be 13% for equity and 8% for debt. Inflation assumed to be 8%. A comprehensive plan has been mailed to Singh. Family Finances The Economic Times Wealth, July 13-19, 2015 19

Staggered plan will help iron out irritants Aakash Singh needs to cover his risks and will have to push back some of his goals to be able to accumulate funds for all his primary objectives in later life.

ASSET ALLOCATION RIJU DAVE SINGH’S GOOD MOVES... course, starting next year, to boost his career. He will pursue this while continuing akash Vinod Singh is clueless Boosting earning prospects with his job. For this, he wants to accumu- about financial planning. At by studying further. late `1 lakh for each year. However, Fincart EXISTING 28, this can be perceived as advises that he put off this goal by another both a shortcoming and advan- Seeking financial advice. year till he repays his loan. He will then have tage. The drawback is that he a surplus of `39,000. He can start an SIP of A Starting early with financial has a bare portfolio, with a neglible corpus `7,971 in an arbitrage fund and will be able % 11 to show in terms of savings, investments and to amass the required amount in one year. Cash planning. net worth. He doesn’t know where to invest For the additional `1 lakh he requires in the or how to reach his goals. The good thing is subsequent year, he should start another that at this early stage, it has made him seek AND THE BAD ONES... SIP of `3,823 in the same fund. This will 24% professsional advice. Another positive is help him save for the course. Equity that he is clear about his goals and wants to Not buying any life or health Singh plans to get married after he finish- be prepared to meet them. “I want to know insurance plans. es the course and is settled in his career. how one can start financial planning from When he does, he wants to save for his fu- scratch, especially if one hasn’t taken any Not saving or investing ture child’s education and wedding. For the steps till now,” says Singh. The Fincart team aggressively. former, he has estimated a need of `46.6 has taken up the task of his financial educa- lakh in 20 years, and for the latter, `1.36 tion and answering his query. It will Not aligning investment crore in 25 years. However, these goals are formulate a plan that will not only act as a with financial goals. likely to be pushed back by a couple of guideline for him but also help him secure years. To meet the education goal, he will his financial future. need to start an SIP of `6,549 in a diversified 65% a premium of `16,949 per annum. He equity fund, while for the wedding, he Debt Existing financial status should also opt for a diabetic plan worth `4 should start an SIP of `10,905 in the same Singh is salaried and stays in Mumbai with lakh for his mother, who suffers from dia- type of fund. He can start making these in- his parents, aged 55 and 60 years. He is sin- betes, and this will come at a higher price of vestments after two years, when he has gle and has no immediate plan of marrying. `27,668 a year. This will result in a total pre- built the contingency fund and amassed the In fact, he is planning to study further after a mium of `4,556 a month. Since he won’t corpus for first year’s study. RECOMMENDED year to boost his career prospects. He is cur- have enough funds to buy all these immedi- Finally, he wants to save for retirement in rently bringing in a salary of `60,000 per ately, he should consider the health plans 28 years. For this, he will require `9.25 month and is saving barely `15,000. A big after a year when he has repaid his educa- crore, and will have to start an SIP of % 100 chunk of his expenses, `25,000, goes into tion loan. `42,027 in a diversified equity fund. Howev- Cash repaying an education loan of `3 lakh that he er, he doesn’t have the required funds and, has taken. Besides this, `20,000 is used for Road map for the future hence, should start with a sum of `13,650 household expenses. Before Singh can start planning for his from next year onwards. To this, he can As for his portfolio, he has `11,000 in his goals, he should get rid of his education continue to add the increase in income and bank account, `25,000 invested in stocks loan by prepaying it in nine months. He can any funds that are freed up after the com- and another `68,000 in the EPF. However, do so by increasing his EMI from the exist- pletion of his goals. He should also consider given the loan, his net worth is currently in ing `25,000 to `35,000. This means that till reviewing his financial position after he the negative. Nevertheless, Singh wants to the loan is repaid, he will be left with a sur- completes his course, which can result in an start planning for his goals, which include plus of only `4,162 after accounting for the increase in income, and take required ac- amassing funds for higher studies next year, term plan premium. Hence, he will have to tion at that time. saving for his future child’s education and defer all his goals by one year. wedding, as well as his own retirement. Considering the fact that he has absolute- However, to begin with, the Fincart team ly no buffer for emergencies, Singh should Financial planning by FINCART will assess his family’s insurance needs and focus on cobbling together a contingency recommend changes. fund at the earliest. According to Fincart, he should have a corpus equal to six WRITE TO US Insurance portfolio months’ expenses, which will amount to FOR EXPERT Singh has not secured either his life or `2.7 lakh. For this, he should assign his cash health though he has been planning to buy holding of `11,000 and stock value of ADVICE a term plan. Hence, Fincart suggests that he `25,000. Besides this, he should start in- Looking for a professional to analyse purchase a `1 crore term plan immediately, vesting the surplus of `4,162 in a short-term your investment portfolio? Write to us and it will cost him `10,056 a year in terms debt fund to build the emergency corpus. at [email protected] with of premium. To make up for the shortfall, he will have to ‘Family Finances’ as the subject. Our As for a medical policy, he should consid- invest another `10,000 for 16 months in the experts will study your portfolio and offer objective advice on where and how much er buying health insurance worth `3 lakh same fund. you need to invest to reach your goals. for himself and his father, which will invite Next, Singh wants to do a two-year 20 The Economic Times Wealth, July 13-19, 2015 Financial Planning

Paper THE MONEY QUESTION Work Should one give a child pocket money or start a savings account? DigiLocker Sohail’s son is 10 and wants pocket money. The government has launched a digital As parents, Sohail and his wife feel that giv- locker system—DigiLocker—which acts as a dedicated and secure personal stor- ing him pocket money would help him learn age space of up to 1 GB, linked to a per- money management. They want to follow son’s Aadhaar number. It can securely the usual practice of parents giving their store e-documents and one can digitally e-sign documents using this facility. The children pocket money and telling them to e-documents can be shared easily with meet their expenses with that, in turn edu- registered requester agencies or govern- cating them about saving, budgeting and ment departments. The DigiLocker will minimise the use of physical documents dealing with money. However, Sohail’s advis- and provide authenticity of e-documents. er recommends a savings bank account for It will provide secure access to govern- the child to educate him about money. Sohail ment-issued documents. It will also wants to know if such accounts are indeed reduce administrative overheads of government departments and agencies. helpful in teaching children about finance?

bank account can take money lessons much far- Portal ther than pocket money and enable better man- To sign up for the DigiLocker service, agement of personal finances as an adult. A one can access the following portal: bank account may be able to take away the https://digitallocker.gov.in Adrudgery of writing down accounts, and replace it with review and tracking that can be exciting to a child. Tracking the account balance and finding it increasing or decreasing is likely to not only get young children excited, but Valid Aadhaar may also help them introspect about their spending and saving habits. The pocket money can be credited to his account A valid Aadhar number is a prerequisite to register for the service. It is also on a monthly basis, along with any gifts or earnings. Moreo- recommended to have your mobile ver, he will be able to see how money can be put to work by number registered in the UIDAI keeping it in a bank account and how it earns interest income. (Aadhaar) records for easier registration. The minor-operated bank accounts come with various checks and balances that the parents can put in place. In order to keep a tab on spending, daily and monthly spending limits and withdrawal limits can be set on debit cards. Sohail Sign up and his wife can choose the account depending on how much There are two options for authentication— transaction limit they want their child to be exposed to and OTP and fingerprint. OTP can be used only make the spending limit known to him. They can also check if your mobile number is registered with the passbook or an online account summary of their child UIDAI. On entering OTP and clicking on the fortnightly to understand where and how much has been “Validate” button, the user is taken to Set spent. They can take him through the schedule of charges be- username/password page to complete fore opening the account and explain the situations when sign up. For fingerprint option, you will these can be levied. They should tell him about the need to have to put your thumb impression on the maintain a minimum balance. All these would inculcate a fingerprint device. If the fingerprint is valid, sense of monetary discipline in the child. then the user is taken to Set username/ Children of Sohail’s son’s age can start saving their cash in- password page to complete sign up. flows into these account which keeps their money safe, provides interest and allows them to withdraw money up to a limit through a debit card. Such savings accounts will prove to be the stepping stone for discussions on investment options and Upload documents other financial concepts, which can be gradually introduced Once the registration process is over the coming years. completed, the user can upload documents under ‘My Documents’ section. Important identity, age proof documents, examination certificates (SSC, HSC, Graduation etc) can SMART THINGS TO KNOW: Claiming LTA deduction be uploaded from the user’s local machine to the digital locker. Based on the document type selected, the user needs to fill in the other details relevant to the 1 2 3 4 5 document. On successful upload, the document will be listed under ‘Uploaded LTA can be claimed as The deduction is Travel has to The tax rules provide for If the employee does Documents’ section. a deduction from tax- limited to the extent be undertaken a deduction only in not use their exemp- able income where of actual travel within India respect of two journeys tion during any block, the employer provides costs incurred by only. Overseas performed in a block of the exemption can be LTA to employee and the employee. The destinations four calendar years. The carried over to the next leave application has total cost of the hol- are not covered blocks are decided by block and used in the Points to note been made for a holi- idays is not covered, for deduction. government. They are calendar year immedi- Each file to be uploaded should not day either individually only the travelling 2010-2013, 2014-2017 ately following that be more than 1MB in size. or with family. cost is covered. and so on. block. The file format for upload documents can be only pdf, jpg, jpeg, png, bmp The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta. and gif file. Financial Planning The Economic Times Wealth, July 13-19, 2015 21 Investors, keep quiet and stay in cash The crisis in China is bound to have an impact on India and the rest of the world. Ordinary investors should count the small blessings and ride out the storm with calm, says Uma Shashikant.

e like change even as we secretly love the comforts of the status quo. Strange are the ways of change—it Wcomes using different tac- tics each time. When it comes with huge force, as with war, it breaks status quo and enables a fresh start. Seeds of a crisis creep in, beginning innocuously and then gaining momentum, ruthlessly altering status quo, catching us unawares. The meltdown of the Chinese market is a full-blown crisis, which can impact investors worldwide. The Chinese markets ran up in the last 15 months, with unprecedented participation by locals (3 crore new trading accounts were opened since January 2015). The opening up of margin trading, or the facility to borrow from finance companies to buy stocks, fuelled this bubble. Frenzied buying of IPOs ensued even as simple households turned stock speculators, many mortgaging homes to buy stocks and turn rich. The collapse of this bubble is playing out now, with the markets having lost more than 30% and falling. We are also seeing the most aggressive market intervention by any government, to stall the falling stock prices. After proclaim- ing just two years ago that China would in- creasingly allow market forces to work free- ly, the government is now claiming that the sell-off in its markets is harmful, and unsuc- cessfully clamping down on sellers. In a crisis, people will sell whatever they can. Se- lective bans simply extend the sell-off to other assets. After losing face in trying to limping revival. Japan’s revival rode on Chi- The US is best placed for this turnaround in but not entirely prevent depreciation. calm its markets, it is unknown how China nese imports and the Eurozone and Ameri- its economic growth, but is also not moving Those who think that gold is the asset to would react to the fury of its people who ca pinned their hopes on export of capital at a pace it would have liked. At a time when run to in a crisis should remember the fol- overestimated its government’s might. goods to Asia, especially China. If China’s it likes to push its own exports, its currency lowing: Gold has been accumulated since China’s market crash will bring into the capital investment machine comes to a halt has become the safe haven of global inves- 2009 and is over-weighted in most portfoli- open several weaknesses in our intercon- due to its capital market crisis, the deflation- tors, leading to a sharp appreciation in the os and therefore more likely to be liquidat- nected world. Commodity prices have been ary pressure on the world will be huge. dollar. As the Chinese crisis deepens, it can ed than further accumulated. In an envi- falling and are likely to get worse. The im- The crisis in the Eurozone and the mat- only expect more inflow of global capital. ronment of appreciating dollar and falling pact on commodity-based economies such ters in Greece pale in comparison to the size How do these events affect Indian inves- commodities, gold is more likely to fall than as Australia, Russia and Latin America, can and impact of the Chinese collapse. But tors? We should desist getting smug. Global rise. be intense. The collapse of commodity pric- these events only point out the fragilities of crises will impact our economic growth and To ask about where to invest is foolhardy. es will hurt Latin America the most, due to the global economy that is ill-prepared for corporate profitability anyway. Yes, we are Asset classes across the board will fall when already existing vulnerabilities—low growth another shock. If Greece does not exit, the an importing nation that will benefit from global investors scramble for liquidity. Cri- rates and falling exports. Tough times call Eurozone will see resources being spent on low commodity and oil prices. Yes, we are ses like these will spread across the world, for decisive action, which these govern- bad debts, than on economic revival. If domestic consumption-driven and do not and alter status quo in a manner we cannot ments are unable to make, given the low Greece exits, and the Euro still survives with export much. Yes, we have a decisive gov- imagine. Staying calm is better than ventur- popularity of their leaders. A full-fledged one more round of steep depreciation, the ernment that can act in a crisis. But a global ing into the storm with bravado. It is a bless- commodity crisis is staring at us. member nations do not have a world with crisis will channel itself through a demand ing to still have a job, income and a democ- Low economic growth in the Asian econ- growing demand for its exports to make the for liquidity. Investors will liquidate risky as- racy. There are times when investors omies, including India, is old news. China most of the fall. Nor is it clear how Greece sets when uncertainty increases. A sell-off should be quiet and stay in cash. These are has been slowing down from its awe-induc- will pull itself out of the brink. The scary sto- in Indian equity and debt markets is very those times. ing growth rates, and so have the rest of the ry of other weaker Euro members such as It- likely as the Chinese story plays out. This Asian economies. In the aftermath of the aly, Portugal and Spain facing the heat will put the rupee under pressure. We do global financial crisis in 2008, Asian export- should Greece exit, will have to be dealt not earn the dollars we need for our im- ing nations faced a serious fall in demand with. ports, but depend on global capital to fill the for goods. In a role-reversal, they turned Global economic revival cannot be engi- gap. An astute RBI has built reserves aggres- The author is Chairperson, Centre for Investment Education into importers of capital goods from devel- neered by liquidity alone, but needs revival sively and delayed the interest rate cuts. It is and Learning. oped countries, thus helping the latter’s of investment and consumption demand. in fighting position to defend the currency, 22 The Economic Times Wealth, July 13-19, 2015 Smart Stats In Mutual funds 23 This Loans & deposits 26 smart stats Section Alternate investments 27 ET WEALTH TOP 50 STOCKS Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result of this exercise is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt. Fast Growing Stocks RANK PRICE ` GROWTH%* VALUATION RATIOS RISK RATING Top 5 stocks with the highest expected revenue Current Previous Stock Revenue Net Div Downside Bear No. of Consensus % growth over the previous year. Rank Rank Price Profit PE PB Yield PEG Risk Beta Analysts Rating Oil India 1 1 421.80 26.10 38.49 9.85 1.19 2.44 0.24 1.21 0.76 41 4.59 Indiabulls Housing 68 Sobha 2 2 374.85 24.45 42.20 15.40 1.51 1.89 0.36 1.79 0.94 29 4.76 LIC Housing 52 ONGC 3 4 298.70 6.62 53.29 14.07 1.43 3.05 0.27 1.28 1.14 47 4.40 J Kumar Infra 39 LIC Housing 4 5 452.20 52.26 41.71 16.39 2.90 1.03 0.39 1.57 1.52 48 4.54 JK Cement 35 South Indian Bank 5 3 24.25 18.21 56.20 10.66 0.91 2.49 0.19 1.31 0.93 22 4.00 CESC 6 6 567.20 23.99 245.43 36.89 1.26 1.41 0.18 1.73 1.02 30 4.10 JK Lakshmi 34 NIIT Tech 7 7 384.65 15.32 91.11 20.97 1.77 2.35 0.20 1.59 0.35 29 3.90 See revenue column in the adjacent table. PGCIL 8 9 137.00 24.77 35.23 14.24 1.87 1.45 0.60 0.88 0.73 44 4.66 Tata Motors 9 10 397.80 16.78 44.71 9.26 2.30 0.49 0.22 1.37 1.14 55 4.75 JK Cement 10 11 623.55 34.61 89.91 30.62 2.72 0.48 0.34 1.48 1.04 26 4.68 Least Expensive Stocks JK Lakshmi 11 8 336.35 34.35 68.50 38.42 2.96 0.60 0.50 1.62 0.73 31 4.74 The 5 stocks with the lowest forward PE. PTC India 12 12 70.45 16.33 35.59 8.12 0.68 2.85 0.25 1.69 1.67 19 4.68 Power Finance Corp 5.65 Jagran Prakashan 13 14 121.00 24.25 30.94 16.38 3.34 2.53 0.55 1.09 0.43 23 4.61 PTC India 8.12 Grasim Industries 14 13 3,516.65 18.77 47.24 18.58 1.40 0.60 0.36 1.04 1.21 32 4.50 Chambal Fertilizers 8.26 Oriental Bank 15 16 179.30 11.38 164.05 10.87 0.39 1.89 0.07 2.06 1.87 19 3.68 Tata Chemicals 16 15 442.55 6.95 70.18 19.05 2.05 2.28 0.27 1.14 1.20 15 4.67 Tata Motors 9.26 Yes Bank 17 21 799.80 29.02 29.78 16.35 2.88 1.13 0.62 1.45 1.44 59 4.38 Oil India 9.85 Coromandel International 18 18 238.30 14.88 41.09 17.07 3.12 2.66 0.30 1.26 0.43 17 4.18 See PE column in the adjacent table. Hindalco Industries 19 19 104.00 8.47 224.50 24.96 0.56 0.98 0.11 1.73 1.42 39 3.67 IL&FS Transportation 20 20 140.95 21.84 11.21 9.87 0.61 2.80 0.41 1.54 0.73 18 4.39 HSIL 21 25 341.70 19.05 77.97 26.65 1.88 0.87 0.40 1.58 1.41 17 4.65 Best PEGs State Bank of India 22 24 267.75 15.09 27.22 11.87 1.25 1.31 0.47 1.28 1.48 58 4.36 Top 5 stocks with the least price earning to growth ratio. Cadila Healthcare 23 22 1,901.40 24.42 97.23 33.73 9.13 0.48 0.35 1.26 0.60 43 4.02 CESC Crompton Greaves 24 23 180.95 10.45 144.31 23.87 2.98 0.67 0.18 1.83 1.13 41 4.00 Hindalco Industries Indiabulls Housing 25 26 620.85 68.13 26.61 11.38 3.35 5.54 0.52 1.37 1.25 11 4.64 Prestige Estates 26 29 240.20 30.54 55.57 26.73 2.39 0.61 0.48 1.83 1.38 24 4.17 0.11 0.18 IndusInd Bank 27 28 893.00 33.31 82.76 26.08 4.41 0.39 0.76 1.13 1.16 57 4.32 Escorts 28 30 130.90 13.02 102.21 20.66 0.89 0.45 0.21 1.79 1.58 10 4.60 0.07 0.14 Cox & Kings 29 NR 266.95 0.40 357.63 43.31 1.75 0.38 0.14 1.51 0.85 14 5.00 0.18 Maruti Suzuki 30 36 3,935.65 22.45 39.15 31.24 4.89 0.30 0.77 0.88 0.70 59 4.66 Oriental Crompton Greaves Cotton 31 42 127.65 10.55 100.67 37.63 3.82 1.54 0.27 1.33 0.85 17 4.06 Bank Cox & Kings Greaves DB Corp 32 33 331.95 15.72 29.50 19.41 4.77 2.33 0.67 1.10 0.51 22 4.82 Power Finance Corp 33 38 257.05 24.45 9.95 5.65 1.05 3.41 0.57 1.84 1.70 33 4.12 See PEG column in the adjacent table. Magma Fincorp 34 27 90.50 16.50 40.92 10.31 0.98 0.87 0.41 1.73 1.58 10 4.90 Chambal Fertilizers 35 39 58.35 2.82 21.88 8.26 1.08 3.27 0.37 1.50 0.90 11 4.55 Hero MotoCorp 36 32 2,604.75 13.65 33.39 21.96 7.94 2.35 0.66 1.07 0.40 58 3.93 Income Generators Top 5 stocks with the highest dividend yield. DLF 37 35 116.85 20.65 63.25 38.71 0.72 1.72 0.52 2.63 1.09 26 3.27 HDFC Bank 38 41 1,074.05 28.84 21.25 24.26 4.25 0.75 1.08 0.79 0.78 60 4.62 Indiabulls Housing | 5.54 J Kumar Infra 39 31 786.30 38.96 51.36 24.50 3.17 0.49 0.57 1.67 1.12 15 4.27 Power Finance Corp | 3.41 Ramco Cements 40 43 339.95 16.12 85.83 33.31 3.12 0.29 0.39 1.35 0.65 24 4.26 Chambal Fertilizers | 3.27 Glenmark Pharma 41 48 1,037.15 27.24 133.10 59.42 9.41 0.20 0.46 1.39 0.84 34 4.26 ONGC | 3.05 Motherson Sumi 42 45 502.60 25.78 95.44 51.61 13.39 0.50 0.54 1.40 0.89 32 4.31 PTC India | 2.85 Ultratech Cement 43 40 3,103.05 24.94 62.03 40.43 4.46 0.29 0.63 1.26 1.06 53 4.08 Mahindra & Mahindra 44 17 1,264.00 10.45 33.60 23.97 2.91 1.09 0.66 1.23 0.94 49 4.12 Dividend stocks are considered Godrej Properties 45 47 248.85 33.35 48.42 25.78 2.67 0.79 0.58 1.18 0.96 19 3.26 safe stocks during a downturn. Kalpataru Power 46 37 268.45 15.10 82.88 34.57 1.87 0.57 0.41 1.87 1.38 19 4.37 Figures indicate what an investor can earn as dividend for every Tech Mahindra 47 44 474.30 23.12 19.27 17.05 3.71 1.06 0.75 1.45 0.41 57 3.77 `100 invested. Axis Bank 48 49 571.70 24.71 19.62 18.07 3.01 0.69 0.88 1.32 1.60 63 4.60 Unichem Laboratories 49 34 209.35 18.36 56.34 25.19 2.19 0.98 0.45 1.56 0.86 13 3.77 IRB Infrastructure 50 NR 227.60 33.20 16.88 14.04 1.85 1.73 0.96 1.72 1.51 33 4.21 * The figures under this head are for expected growth. NR: Not in the ranking. Data as on 9 July 2015. Source: Bloomberg Least Risky Top 5 stocks with the lowest downside risk. expected to show growth in revenue, net weight to net profit growth and 10% to higher, the better) and 10% to Methodology profit and EPS (earnings per share) in the growth in EPS (the higher, the better, consensus rating (a composite rating Hero in the next four quarters. The final two for each parameter). Growth is calcu- based on the recommendations by all Grasim MotoCorp The four filters used to arrive at filters were that the companies should lated by comparing the ’consensus analysts who track a stock. Again, the Industries 1.07 the Top 50 stocks have made profits in the past four quar- estimate’ for the next 12 months with higher, the better). 1.04 Only traded stocks: Of the about 7,000 ters and have a positive net worth. the historical 12-month values. 4. ... and so do the risks. listed stocks, only actively traded stocks Rating rationale 2. ... but only at reasonable valuation. Total weight: 10%. Two kinds of risks were considered. Having arrived at the final stocks uni- Total weight: 40%, which comprises were considered. A 5% weight was PGCIL Only big stocks: Only companies with verse, we ranked them using the follow- 10% weight to PE ratio, 10% to PB assigned to downside risk and bear 0.88 Maruti an average market capitalisation and ing four principles. ratio, 10% to PEG ratio (the lower, the beta each (the lower, the better, in Suzuki revenue of over `1,000 crore were con- A percentile rating (on a 1-100 scale) is better, for all three parameters) and both cases). 0.88 sidered. given to each parameter and the com- 10% to dividend yield (the higher, the Only well tracked: We picked stocks posite ranking is arrived at using the better). HDFC that are tracked by at least 10 analysts. weighted average of these parameters. 3. Analysts’ views matter... Bank The ranking methodology has been developed 0.79 Only profitable and growing: We 1. Growth is the key... Total Weight: 20%, which comprises by Narendra Nathan. A detailed explanation considered only those stocks that are Total weight: 30%, which comprises 10% weight to the total number of of the methodology is available at See downside risk and bear beta columns 10% weight to revenue growth, 10% analysts covering the stock (the www.wealth.economictimes.com in the adjacent table. Smart Stats The Economic Times Wealth, July 13-19, 2015 23

LAGGARDS & LEADERS Taking a long-term view of fund returns, here is a list of 10 funds in each category—five leaders (worth investing) and five laggards FUNDS 100 (that may be a drag on your portfolio). ETW LAGGARDS LEADERS BEST FUNDS TO BUILD YOUR PORTFOLIO Equity: Large cap 5-year returns ET Wealth collaborates with Value Research to identify the top-performing 100 funds 7.21 15.35 across 10 categories. Equity funds and equity-oriented hybrid funds are ranked on 3-year HSBC Dynamic Fund ICICI Pru Focused Bluechip Equity Inst. returns while debt-oriented hybrid and income funds are ranked on 1-year returns. 8 14.92 IDFC Imperial Equity Fund UTI Equity Fund 8.08 14.41 HDFC Large Cap Fund ICICI Pru Focused Bluechip Equity Reg. 8.17 14.04 Sahara Super 20 Fund UTI Opportunities Fund VALUE NET RETURNS (%) RESEARCH ASSETS EXPENSE 8.21 12.75 FUND RATING (` cr) 3-MONTH 6-MONTH 1-YEAR 3-YEAR 5-YEAR RATIO Sundaram Select Focus Fund L&T India Large Cap Fund Equity: Large Cap IDBI India Top 100 Equity Fund 155.57 -3.2 7.9 26.76 23.57 — 2.84 24% The 3-year UTI Equity Fund 4,195.95 -4.04 3.32 20.73 23 14.92 2.2 return of IDBI Equity: Large & Mid cap 5-year returns Axis Equity Fund 1,735.22 -3.29 0 15.28 22.61 12.18 2.32 India Top 100 is DWS Alpha Equity Fund 97.87 -3.44 4.36 21.43 21.98 10.79 2.86 the highest in its 4.92 16.61 category. Religare Invesco Business Leaders Fund 37.00 -4.15 5.95 23.46 21.98 11.97 3.02 JM Core 11 Fund BNP Paribas Equity Fund DWS Alpha Equity Fund 97.87 -3.43 4.37 21.44 21.96 10.8 2.86 6.22 16.52 L&T India Large Cap Fund 368.29 -2.77 5.12 21.89 21.72 12.75 2.76 Sundaram Growth Fund Mirae Asset India Opportunities JP Morgan India Equity Fund 257.50 -3.59 5.05 21.95 21.58 12.6 2.56 ICICI Prudential Focused Bluechip Equity Fund 8,889.91 -4.05 2.14 15.94 21.57 14.41 2.19 8.44 16.38 Kotak 50 Regular Plan 732.59 -3.38 5.25 22.96 21.19 11.57 2.61 Sahara Growth Fund Franklin India Prima Plus Fund UTI Top 100 Fund 835.55 -5.19 4.26 21.64 20.97 12.65 2.62 8.55 15.81 SBI Magnum Equity Fund 1,414.45 -4.15 3.2 20.43 20.25 12.13 2.42 SBI Contra Fund ICICI Pru Indo Asia Equity Fund Inst. UTI Mastershare Fund 3,065.84 -5.98 2.7 19.53 20.2 12.07 2.3 8.83 15.8 Tata Pure Equity Fund 824.09 -2.75 4.83 18.75 19.78 11.43 2.63 Franklin India Bluechip Fund 6,294.83 -2.59 4.89 20.98 19.04 12.24 2.2 Goldman Sachs CNX 500 Fund ICICI Pru Indo Asia Equity Fund Reg. L&T Indo Asia Fund 261.63 -3.44 5.54 17.88 18.96 12.09 2.54 UTI Opportunities Fund 5,330.34 -6.05 -0.66 13.37 18.82 14.04 2.18 Peerless Equity Fund 56.43 -0.57 5.8 19.28 18.71 — 3.13 Equity: Multi cap 3-year returns ICICI Prudential Top 100 Fund 1,653.76 -7.6 -2.77 6.63 18.61 12.57 2.36 16.48 34.76 Equity: Large & Mid Cap Principal Dividend Yield Franklin India High Growth Companies SBI Bluechip Fund 1,938.83 -2.4 8.84 27.17 26.93 14.63 2.39 27% Franklin India Flexi Cap Fund 2,605.05 -3.1 4.22 28.53 26.76 15.11 2.31 The 3-year return 16.9 32.54 of SBI Bluechip SBI Magnum Multiplier Fund 1,481.35 -1.45 9.7 29.26 26.75 14.19 2.47 Birla Sun Life India Reforms L&T India Value Fund Fund is the highest Franklin India Prima Plus Fund 4,223.68 -2.54 5.2 32.24 26.57 16.38 2.29 in its category. 17.58 28.8 Kotak Select Focus Fund Regular Plan 2,666.89 -2.74 3.05 28.45 26.51 15.09 2.24 Birla Sun Life Asset Allocation Birla Sun Life Advantage Fund Mirae Asset India Opportunities Fund 1,078.35 -2.85 5.27 23.31 26.44 16.52 2.4 18.02 27.21 BNP Paribas Equity Fund 720.71 -3.1 7.52 26.71 25.74 16.61 2.62 Birla Sun Life Dividend Yield Plus Tata Ethical Fund Birla Sun Life Long Term Advantage Fund 297.43 -3.38 2.08 22.35 25.69 14.04 2.79 Birla Sun Life Frontline Equity Fund 9,023.78 -2.93 3.97 19.8 24.73 14.31 2.21 18.03 26.34 Birla Sun Life Top 100 Fund 1,529.26 -2.84 2.11 18.44 24.56 15.24 2.47 HDFC Core & Satellite BNP Paribas Dividend Yield Fund Religare Invesco Growth Fund 135.42 -3.48 7.23 26.23 24.53 14.15 2.78 ICICI Prudential Indo Asia Equity Fund 155.91 -3.93 4.37 20.35 24.2 15.8 2.71 HSBC India Opportunities Fund 480.14 -4.05 3.03 20.12 23.36 14.36 2.63 Equity: Mid & Small cap 3-year returns Edelweiss Diversified Growth Equity Top 100 Fund 85.10 -3.15 6.44 22.96 22.98 14.23 2.85 14.39 42.85 Equity: Multi Cap Sahara Star Value Fund SBI Small & Midcap Fund Franklin India High Growth Companies Fund 2,593.08 -3.29 4.15 39.09 34.76 18.89 2.45 35% L&T India Value Fund 234.58 -1.78 6.9 30.97 32.54 17.56 3.03 The 3-year return of 19.74 40.38 Franklin India High Templeton India Equity Income SBI Magnum Midcap Fund Birla Sun Life Advantage Fund 447.69 -2.5 7.05 29.83 28.8 13.54 2.77 Growth Companies Tata Ethical Fund 304.85 -3.32 7.49 26.77 27.21 15.55 2.97 Fund is the highest 20.42 40.35 in the multi-cap BNP Paribas Dividend Yield Fund 142.41 -0.66 8.85 28.48 26.34 15.56 2.82 HSBC Progressive Themes Franklin India Smaller Companies L&T India Special Situations Fund 949.19 -2.15 5.23 24.98 24.83 15.23 2.53 category. 20.85 38.29 Mirae Asset India-China Consumption Fund 35.14 -5.95 2.06 24.02 24.27 — 2.77 Sundaram Equity Multiplier DSP BlackRock Micro Cap Fund Equity: Mid & Small Cap 22.27 37.77 SBI Magnum Midcap Fund 972.47 1.58 12.08 43.87 40.38 21.69 2.54 Motilal Oswal MOSt Shares M100 ETF Mirae Asset Emerging Bluechip Fund Franklin India Smaller Companies Fund 2,187.35 -4.04 3.68 36.5 40.35 21.86 2.45 DSP BlackRock Micro Cap Fund 1,972.31 -2.52 9.33 49.65 38.29 20.44 2.41 Mirae Asset Emerging Bluechip Fund 729.38 -0.31 8.56 40.61 37.77 — 2.5 Hybrid: Equity oriented 5-year returns UTI Mid Cap Fund 2,902.11 -2.05 5.85 40.23 37.57 20.5 2.36 Reliance Small Cap Fund 1,571.00 -2.62 -0.77 31.66 37.32 — 2.49 JP Morgan India Mid and Small Cap Fund 451.22 -1.98 9.47 39.31 37.05 20.87 2.54 6.37 16.5 Canara Robeco Emerging Equities Fund 473.77 -1.2 7.72 40.54 36.68 22.46 2.93 LIC Nomura MF Children Fund ICICI Prudential Balanced Fund BNP Paribas Midcap Fund 304.40 2.02 11.18 38.23 35.47 21.77 2.83 6.78 16.34 Franklin India Prima Fund 3,516.09 -2.71 4.32 36.77 35.36 19.57 2.31 Sundaram Balanced Fund Tata Balanced Fund Religare Invesco Mid N Small Cap Fund 423.81 -3.7 4.91 33.21 34.64 21.41 2.74 8.65 15.88 Religare Invesco Mid Cap Fund 109.15 -3.45 4.74 34.64 33.37 20.44 3.06 LIC Nomura MF Unit Linked Insurance HDFC Balanced Fund SBI Magnum Global Fund 1,992.32 -3.02 7.35 37.08 33.04 19.91 2.4 L&T Midcap Fund 325.45 -3.1 5.53 34.5 32.98 17.31 2.89 9.28 14.54 HDFC Mid-Cap Opportunities Fund 9,980.24 -2.59 3.17 31.08 31.7 20.75 2.28 DWS Equity Income Fund ICICI Prudential Balanced Advantage ICICI Prudential Value Discovery Fund 9,416.54 -5.03 4.71 27.83 31.58 19.39 2.23 9.35 14.16 LIC Nomura MF Balanced Fund Franklin India Balanced Fund Annualised returns in % as on 9 July 2015. 24 The Economic Times Wealth, July 13-19, 2015 Smart Stats

ETW FUNDS 100 Top 5 SIPs

VALUE NET RETURNS (%) Top 5 equity schemes based on 10-yr SIP returns. RESEARCH ASSETS EXPENSE FUND RATING (` cr) 3-MONTH 6-MONTH 1-YEAR 3-YEAR 5-YEAR RATIO Canara Robeco Emerging Equities Fund Equity: Tax Planning 22.35 Axis Long Term Equity Fund 5,129.74 -4.87 5.64 33.35 33.49 21.58 2.46 ICICI Prudential Value Discovery Fund Reliance Tax Saver Fund 4,448.14 -5.47 -0.09 25.35 29.87 18.25 2.45 22.31 IDFC Tax Advantage (ELSS) Fund 345.83 -2.74 11.26 31.93 28.77 16.51 2.88 Sundaram Select Midcap Fund BNP Paribas Long Term Equity Fund 391.28 -1.68 8.55 31.14 27.91 17.35 2.89 21.28 Birla Sun Life Tax Plan 263.20 -4.37 5.64 31.11 27.79 15.82 3.06 Religare Invesco Tax Plan 244.56 -2.99 6.42 29.18 27.44 16.14 2.87 UTI Mid Cap Fund 21.19 DSP BlackRock Tax Saver Fund 1,110.41 -2.7 3.93 22.35 26.17 13.95 2.64 SBI Magnum Global Fund Franklin India Taxshield Fund 1,728.93 -2.59 4.97 32.12 26.08 17.1 2.43 20.19 Edelweiss ELSS Fund 57.75 -2.59 7.9 27.88 25.29 14.24 2.85 ICICI Prudential Tax Plan 2,625.19 -4.75 0.8 15.66 24.7 14.6 2.48 SIP: Systematic investment plan % annualised returns Tata Tax Saving Fund 217.93 -4.19 6.1 27.34 24.51 14.98 2.74 As on 9 July 2015

Equity: Infrastructure Franklin Build India Fund 457.39 -2.95 5.13 43.58 36.88 19.48 2.92 % Top 5 MIPs Religare Invesco Infrastructure Fund 46.99 -6.35 4.16 26.1 26.57 10.53 3.05 37 The 3-year return Top 5 MIP schemes based on 3-year SWP returns. Kotak Infrastructure and Economic Reform Fund 146.21 -0.67 6.05 26.38 24.62 11.12 2.61 of Franklin Build Birla Sun Life Infrastructure Fund 821.94 -3.07 1.84 18.05 23.14 8.9 2.51 India Fund is the Franklin India Monthly Income Plan highest in its Canara Robeco Infrastructure Fund 110.64 -3.66 6.56 25.18 21.38 11.1 2.99 13.10 category. DSP BlackRock T.I.G.E.R. Fund 1,599.52 -3.35 5.55 20.17 21.23 8.36 2.37 ICICI Prudential MIP 25 Hybrid: Equity-oriented 12.96 SBI Magnum Balanced Fund 1,836.76 -2.2 4.72 24.41 25.72 13.9 2.48 UTI MIS Advantage Fund Tata Balanced Fund 3,267.77 -3.64 7.01 26.45 24.81 16.34 2.45 12.85 L&T India Prudence Fund 420.47 -2.11 5.76 23.87 24.17 — 2.93 IDFC Monthly Income Plan ICICI Prudential Balanced Fund 2,035.14 -2.19 1.47 19.2 23.51 16.5 2.46 12.71 Franklin India Balanced Fund 458.14 -1.33 4.94 28.35 22.61 14.16 2.95 SBI Magnum Monthly Income Plan Birla Sun Life 95 Fund 1,456.18 -2.5 2.06 21.7 22.25 13.75 2.58 12.41 HDFC Balanced Fund 3,854.30 -2.75 1.95 19.61 22.24 15.88 2.07 ICICI Prudential Balanced Advantage Fund 6,272.44 0.19 4.79 15.75 19.87 14.54 2.34 SWP: Systematic withdrawal plan % annualised returns As on 9 July 2015 Debt: Income Birla Sun Life Dynamic Bond Fund 14,198.51 1.15 4.07 12.84 10.27 9.49 1.36 ICICI Prudential Long Term Fund 633.96 -0.1 2.33 12.65 11.96 10.21 0.94 13% Franklin India Dynamic Accrual Fund 1,098.63 1.97 5.07 11.28 9.06 8.31 1.65 The 1-year return Mid & Small Cap Franklin India Income Builder Fund 1,770.19 1.43 4.14 11.08 10.28 9.69 1.94 of Birla Sun Life Dynamic Bond Fund Tata Dynamic Bond Fund 885.91 0.28 3.14 10.95 10.56 8.98 1.81 Cash Holdings is the highest in its Franklin India Income Opportunities Fund 4,509.06 1.83 4.54 10.6 10.09 9.19 1.67 category. 28.85 Franklin India Corporate Bond Opportunities Fund 8,589.57 1.93 4.55 10.5 10.2 — 1.8 UTI Dynamic Bond Fund 681.35 0.64 2.79 10.3 10.32 9.64 1.07 JP Morgan India Banking and PSU Debt Fund 430.10 1.56 4.29 10.1 — — 0.55 20.30 ICICI Prudential Regular Savings Fund 5,313.29 1.87 4.54 10.05 9.3 — 1.78 DWS Banking & PSU Debt Fund 729.56 1.61 4.51 10.04 — — 0.57 UTI Income Opportunities Fund 850.48 1.85 4.37 10.03 — — 1.7 11.07 IDFC Super Saver Income Fund 3,376.92 1.41 3.88 9.94 8.84 8.64 1.02 9.09 8.93 HDFC Medium Term Opportunities Fund 3,502.10 1.84 4.42 9.89 9.64 9.15 0.28 Reliance Regular Savings Fund 5,585.10 1.95 4.36 9.82 9.5 8.63 1.8 BNP Paribas Bond Fund 105.57 1.42 3.64 9.56 8.81 8.62 1.44 ICICI Prudential Banking & PSU Debt Fund - Regular Plan 2,718.17 1.42 3.94 9.21 9.13 — 0.33 PPFAS Long Escorts DWS Mid Escorts DSP Black- ICICI Prudential Banking & PSU Debt Fund - Retail Plan 2,718.17 1.42 3.94 9.21 8.72 — 0.33 Term Value Leading Cap Fund Growth Rock Micro IDFC Banking Debt Fund 1,273.77 2.1 4.45 8.91 — — 0.32 Fund Sectors Series 1 Fund Cap Fund Fund All equity funds, including balanced equity funds, sorted on 3-year returns; all others ranked on 1-year returns % as on 31 May 2015

Returns as on 09 July 2015 Assets as on 30 June 2015 Did not find your fund here? Rating as on 30 June 2015 Log on to www.wealth.economictimes.com for an exhaustive list. Expense Ratio as on 31 March 2015

Methodology EQUITIES (figures over the past three years) Debt: Ultra Short Term: The Top 100 includes only those funds that have a 5- or Large-cap: More than 80% assets in large-cap companies. Lowest Expense Ratio 4-star rating from Value Research. The rating is determined Large- and mid-cap: 60-80% assets in large-cap by subtracting a fund’s risk score from its return score. The companies. result is assigned stars according to the following 0.125 distribution: Multi-cap: 40-60% assets in large-cap companies.

Top 10% Mid- & small-cap: At least 60% assets in small- and mid-cap companies. Next 22.5% 0.080 Tax planning: Offer tax rebate under Section 80C. Middle 35% (Not covered in ETW Funds International: More than 65% of assets invested abroad. Next 22.5% 100 listing) Bottom 10% Income: Average maturity varies according to objective. Gilt: Medium- and long-term; invest in gilt securities. Fixed-income funds less than 18 months old and equity funds 0.013 0.007 less than three years old have been excluded. This ensures Equity-oriented: Average equity exposure more than 60%. 0.002 that all the funds have existed long enough to be tracked for Debt-oriented aggressive: Average equity exposure consistency of performance. Given the focus on long-term between 25-60%. Principal Principal Principal HDFC Union investing, liquid funds, short-term funds and FMPs are not Retail Bank CD Debt Opp. Float- KBC Ultra part of the list. For the same reason, we have considered only Debt-oriented conservative: Average equity exposure less Money Fund Conservative ing Rate Short than 25%. Manager Plan Income Term the growth option of funds that reinvest returns instead of Fund Debt offering dividends that increase the NAV of funds. Arbitrage: Seek arbitrage opportunities between equity Despite these rigorous filters, the list includes 2/3 funds of and derivatives. % expense ratio charged annually. As on 31 March 2015. each category to maximise choice from the best funds. The Asset allocation: Invest fully in equity or debt as per Methodology of Top 100 funds on www.wealth.economictimes.com fund categories are: market conditions. Mutual Funds The Economic Times Wealth, July 13-19, 2015 25

FRANKLIN INDIA BLUECHIP Long-term wealth creator

ET Wealth collaborates with Value Research to analyse top mutual funds. We examine the key fundamentals of the fund, its portfolio and performance to help you make an informed investment decision.

HOW HAS THE FUND PERFORMED?BASIC WHERE DOES THE The fund has emerged a winner over a 10-year period, beating its FACTS FUND INVEST? benchmark and category by a wide margin. DATE OF LAUNCH Growth of `10,000 vis-a-vis category and benchmark 1 Dec 1993 Portfolio asset CATEGORY Debt & cash Fund style Equity allocation Fund 6.82% box TYPE `52,392.33 Growth Blend Value Large Cap 5.91% MID CAP AVERAGE AUM Category `6,389.85 cr `39,643.36 BENCHMARK S&P BSE Sensex Index 94.09% CAPITALISATION Small Medium Large Equity LARGE CAP INVESTMENT STYLE 93.18% Index WHAT IT `38,362.48 The fund is purely large-cap focused and follows a COSTS blend of value and growth investment styles. NAVS* `10,000 GROWTH OPTION July 2005 May 2007May 2009 May 2011 May 2013 July 2015 `358 Top 5 sectors in portfolio (%) DIVIDEND OPTION As on 8 July 2015 `41.94 Financial 28.62 The fund has delivered far superior returns compared to the Technology 11.64 benchmark and peers over the past decade. MINIMUM INVESTMENT `5,000 Energy 10.03 MINIMUM SIP AMOUNT Automobile 8.36 `500 Healthcare 7.78 Fund EXPENSE RATIO (%)^ Annualised performance (%) S&P BSE Sensex Index The fund’s portfolio is skewed towards Category average 2.20 the financial services sector. EXIT LOAD 1% for redemption 20.51 18.86 17.88 within 365 days 16.45 Top 5 stocks in portfolio (%) 13.64 12.64 *As on 8 July 2015 HDFC Bank 7.77 9.42 10.68 8.23 ^As on 31 Mar 2015 Infosys 6.01 5.90 2.97 ICICI Bank 5.35 1.51 Bharti Airtel 4.60 IndusInd Bank 6 month 1 year 3 year 5 year 4.10 As on 8 July 2015 The fund has outperfomed the category and The fund portfolio holdings exhibit susbtantial benchmark across time periods. deviation from benchmark index.

Yearly performance (%) HOW RISKY IS IT? Fund Category CNX 100 37.22 35.81 29.89 Standard deviation 13.82 13.43 12.73 26.79 25.70 27.41 FUND MANAGERS Sharpe ratio 0.86 0.81 0.76 8.98 Anand Radhakrishnan Mean return 18.68 17.60 16.41 7.06 5.92 (above) and Anand Vasudevan 4.08 2.53 0.68 TENURE: 8.17 YEARS AND 4.33 YEARS Based on 3-year performance data. 2012 2013 2014 2015 Education: Radhakrishnan is a B.Tech, CFA, and PGDM from IIM Ahmedabad. The fund has a slightly better risk-return As on 8 July 2015 profile than peers. The fund has had bouts of underperformance Vasudevan is a B.Tech from IIT Madras, over the past few years. PGDBM from IIM Calcutta and Masters in Finance from London Business School Source: Value Research. All data on this page as on 30 June 2015, unlesss specified.

This fund has built an impressive managers in the country, and backed agnostic and frequently contrarian in may struggle at times to catch up SHOULD track record over the years, show- by a stable investment team with nature. Its strict focus on quality, with peers in a rising market. This casing its ability to deliver across solid research capabilities and robust well-established stocks helps the fund is a good option for investors YOU market cycles. The fund is steered by in-house processes. The fund man- fund keep its head above the water looking at a pure large-cap play over BUY? one of the most seasoned money ager’s bets are highly portfolio- during market downturns, although it an entire market cycle. 26 The Economic Times Wealth, July 13-19, 2015 Smart Stats LOANS & DEPOSITS ET Wealth collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator.

Top five bank FDs Cheapest personal loans Cheapest auto loans Interest rate (%) What `10,000 Tenure: 1 year compounded qtrly will grow to INTEREST RATE (%) INTEREST RATE (%) RBL Bank 9.10 10,942 DCB Bank 8.60 10,888 ICICI Bank 11.99 - 20 Bank of Baroda 10.25 2 LAKH Karnataka Bank 8.60 10,888 Bank of India 5 LAKH Punjab & Sind Bank ` 12.95 - 14.95 ` 10.25 Lakshmi Vilas Bank 8.60 10,888 Andhra Bank 8.50 10,877 IDBI Bank 13 - 14 Canara Bank 10.25 - 10.30

Tenure: 2 years Punjab National Bank 13 - 16 State Bank of India 10.25 - 10.30 RBL Bank 9.10 11,972 Central Bank of India 13.45 Punjab National Bank 10.25 - 11.50 DCB Bank 8.70 11,878 LOAN AMOUNT: 11 12 13 14 15 16 17 18 19 20 21 22 LOAN AMOUNT: 910111213141516171819 Karnataka Bank 8.60 11,855 Lakshmi Vilas Bank 8.60 11,855 Andhra Bank 8.50 11,832 Tenure: 3 years Cheapest home loans RBL Bank 9.00 13,061 10 YEARS 20 YEARS Karur Vysya Bank 8.75 12,965 Interest Interest Cheapest education loans DCB Bank 8.70 12,946 Up to `75 lakh rate (%) rate (%) Lakshmi Vilas Bank 8.60 12,908 State Bank of India 9.75 State Bank of India 9.75 Bank of Maharashtra 8.50 12,870 ICICI Bank 9.90 ICICI Bank 9.90 HDFC Bank 9.90 9.90 Tenure: 5 years HDFC Bank 9.90 9.95 - -13.50 10 - Axis Bank 9.95 Allahabad Bank 9.95 12.95% RBL Bank 9.00 15,605 12.50% Central Bank of India 9.95 Bank of India 9.95 10- Karur Vysya Bank 8.75 15,415 11.55% DCB Bank 8.70 15,378 Above `75 lakh Bank of Maharashtra 8.50 15,228 State Bank of India 9.75 State Bank of India 9.75 9.95 IndusInd Bank 8.50 15,228 ICICI Bank 9.90 ICICI Bank 9.90 HDFC Bank 9.90 HDFC Bank 9.90 Allahabad Bank 9.95 Allahabad Bank 9.95 United Central Bank of Dena Bank of Top five senior citizen bank FDs Bank of Bank of India Bank Baroda Interest rate (%) What `10,000 Axis Bank 9.95 Axis Bank 9.95 India India Tenure: 1 year compounded qtrly will grow to These are average rates for the entire tenure. RBL Bank 9.60 10,995 DCB Bank 9.10 10,942 Karnataka Bank 9.10 10,942 Lakshmi Vilas Bank 9.10 10,942 Andhra Bank 9.00 10,931 Minimum Maximum Tax Postal deposits Interest (%) Features Tenure: 2 years invt. (`) investment (`) benefits RBL Bank 9.60 12,089 Single 4.5 lakh 5-year tenure, monthly returns NIL Monthly Income Scheme 8.40 1,500 DCB Bank 9.20 11,995 Joint 9 lakh 5-year tenure, monthly returns NIL Karnataka Bank 9.10 11,972 Recurring Deposits 8.40 10 No limit 5-year tenure NIL Lakshmi Vilas Bank 9.10 11,972 Savings Account 4.00 50 No limit `10,000 interest tax free NIL Andhra Bank 9.00 11,948 5-year NSC VIII Issue 8.50 100 No limit No TDS 80C Tenure: 3 years 10-year NSC IX Issue 8.80 100 No limit TDS applicable 80C RBL Bank 9.50 13,253 Karur Vysya Bank 9.25 13,157 Time Deposit 8.40 - 8.50 200 No limit Available in 1, 2, 3, 5 years 80C DCB Bank 9.20 13,137 Senior Citizen Saving Scheme 9.30 payable quarterly 1,000 15 lakh 5-year tenure, minimum age 60 80C Lakshmi Vilas Bank 9.10 13,099 Kisan Vikas Patra 8.70 1,000 No limit Can be encashed after 2.5 years NIL Bank of Maharashtra 9.00 13,061 Public Provident Fund 8.70 500 1.5 lakh pa 15-year term, tax-free returns 80C Tenure: 5 years RBL Bank 9.50 15,991 Sukanya Samriddhi Yojna 9.20 1,000 1.5 lakh pa For girls below the age of 10 80C Karur Vysya Bank 9.25 15,797 DCB Bank 9.20 15,758 Bank of Maharashtra 9.00 15,605 Home loan base rate (%) Base rates are reference rates for all floating-rate home loans. IndusInd Bank 9.00 15,605 As on 9 July 2015

9.95 9.95 9.95 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 9.85 9.90 Top five tax-saving bank FDs 9.70 9.70 9.70 Interest What `10,000 Tenure: 5 years and above rate (%) will grow to RBL Bank 9.00 15,605 Karur Vysya Bank 8.75 15,415 BANK HDFC State ICICI Axis United Alla- Bank of Central Andhra Bank of Bank of Canara Corpora- Dena IDBI Punjab Bank Bank of Bank Bank Bank of habad India Bank of Bank Baroda Maha- Bank tion Bank Bank Bank National DCB Bank 8.70 15,378 India India Bank India rashtra Bank Bank of Maharashtra 8.50 15,228 IndusInd Bank 8.50 15,228 INTEREST RATE (%) Cheapest Your EMI for a loan of `1 lakh Allahabad Bank 9.95 - 13.95 TENURE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS gold Central Bank of India 10.95 - 11.95 @ 8% 2,028 1,213 956 836 772 loans Syndicate Bank 11.50

@ 10% 2,125 1,322 1,075 965 909 Punjab National Bank 11.50 - 12.50 @ 12% 2,224 1,435 1,200 1,101 1,053 State Bank of Mysore 11.85 910111213141516171819 @ 15% 2,379 1,613 1,400 1,317 1,281

Use this calculator to check your loan affordability. For example, a `5 lakh loan at 12% for 10 years will translate into an EMI of `1,435 x 5 = `7,175 All data sourced from Economic Times Intelligence Group ([email protected]) Non-traditional Investments The Economic Times Wealth, July 13-19, 2015 27 Alternative investment returns monitor The scope and attractiveness of alternative investments is increasing. Here’s a weekly tracker of returns from such investments. But don’t compare these with returns from traditional investments since the proportion and purpose of alternative investments is vastly different.

Diamond Index Precious Metals Index Wine Index Coin Index 146.84 1,776.22 271.07 9 July 2015 9 July 2014 9 July 2014 14,800 14,500 9 July 2015 132.12 265.25 9 July 2014 9 July 2015 1,522.89 9 July 2014 9 July 2015

1 WEEK 0.83% 1 WEEK -0.4% 1 WEEK 0.1% 1 WEEK -1.33%

1 YEAR - 1 YEAR - 1 YEAR 1 YEAR CHANGE 10.02% 14.26% 2.19% 2.07%

Overall Diamond Index is based The S&P GSCI Precious Metals The Liv-ex Fine Wine 50 Index The Krugerrand Coin index on actual transactions from 20 Index comprises gold (91.33%) and tracks daily price movement of the represents the denomination of a different market players and silver (8.67%) and provides a bench- most heavily traded commodities in 22 carat gold bullion coin weighing reflects price movements in the mark for investment performance in the wine market. It includes only the one troy ounce that is listed for global diamond market. The the precious metals commodity 10 most recent vintages and is trading on the Johannesburg Stock index is updated daily. markets. It is updated daily. updated daily. Exchange. Penny stocks update Penny stocks as a recommended non-traditional investment? Not exactly. ET Wealth neither has the expertise nor does it recommend investing in such stocks. But since the relatively ‘low’ cost of investment attracts some investors to penny stocks, we provide a weekly snapshot of this most volatile and uncertain type of stock investing.

Top Price Gainers Top Volume Gainers

Stock Market price 1-week (%) 1-month (%) 1-month 1-month Market cap Stock Market price 1-week (%) 1-month (%) 1-month 1-month Market cap (`) change change average volume average volume (` crore) (`) change change avg volume avg volume (` crore) (lakh) change (%) (lakh) change (%)

Alps Inds. 4.46 45.75 151.98 0.29 51.39 17.44 Mah.Ras.Apex 7.13 -4.93 -24.15 0.01 4,442.85 10.09 Genus Paper 4.75 25.66 137.5 0.45 74.09 122.12 Atharv Ent. 1.63 15.6 12.41 3.14 4,116.83 13.86 LN Inds. 4.6 24.32 101.75 0.4 -68 46.78 Timbor Home 6.3 17.76 21.62 0.63 3,256 10.07 Sh.Laksh.Cot 7.76 90.2 101.56 0.13 -27.61 22.09 Amit Intl. 9.31 13.54 49.68 0.44 2,166.51 17.64 Syncom Form. 6.11 21.96 99.67 29.62 122.57 477.01 Rajlaxmi Ind 3.97 0 9.67 8.12 1,739.85 123.07 Country Cond 4.06 45.52 93.33 0.23 -30.4 31.51 Jain Studios 5 -2.72 -16.25 0.01 1,496.79 14.3 South. Onlin 6.04 28.78 82.48 0.59 372.73 35.63 Nagarjuna Oi 4.67 -8.61 22.89 3.58 1,011.99 199.97 Goldstn.Tech 6.82 47.94 73.54 0.04 5.41 12.81 Rathi Graph. 8.5 6.65 -17.95 0.01 960.37 13.97 Megasoft 8.3 46.38 71.13 0.82 410.29 36.74 Nakoda 0.55 -12.7 -60.14 3.11 947.92 16.5 Escort Fin. 5.73 27.33 66.09 0.17 327.52 23.06 Picturehouse 8.41 -6.76 -3.33 0.11 718.12 43.94 Top Price Losers Top Volume Losers

Nakoda 0.55 -12.7 -60.14 3.11 947.92 16.5 Secund.Healt 2.53 -11.54 -26.24 1.64 -64.9 21.19 Vandana Knit 3.13 -6.57 -45.28 2.58 -17.78 33.49 Interworld D 0.62 8.77 5.08 2.6 -60.94 29.66 Birla Cotsyn 0.06 0 -40 33.27 138.99 16.01 Yantra Nat.R 0.06 0 0 9.47 -58.09 37.68 Farmax India 0.34 -15 -33.33 1.24 42.09 18.16 KSS 0.22 -15.38 -15.38 36.34 -54.81 45.75 Metkore Allo 3.5 -16.27 -32.04 2.52 86.35 24.66 3i Infotech 4.64 -5.31 15.42 24.74 -53.78 284.17 PMC Fincorp 5.82 -7.18 -31.12 3.65 29.06 140.15 Karuturi Glo 2.72 16.74 19.3 6.97 -44.71 220.24 Rasoya Protn 0.24 -11.11 -29.41 41.48 29.31 41.01 Ankit Metal 2.65 -3.64 10.42 1.12 -40.61 32.35 Secund.Healt 2.53 -11.54 -26.24 1.64 -64.9 21.19 Aadhaar Vent 0.16 -15.79 33.33 27.19 -37.69 25.14 Luminaire Te 0.58 -20.55 -25.64 25.87 -36.49 17.05 Jagran Produ 0.16 -15.79 -11.11 2.56 -36.87 11.41 VHCL Inds. 1.14 -13.64 -18.57 1.45 58.77 29.34 Luminaire Te 0.58 -20.55 -25.64 25.87 -36.49 17.05

The stocks have been selected using the following filters: Price less than `10, one-month average volume greater than or equal to 1 lakh and market-capitalisation greater than or equal to `10 crore. Data as on 9 July 2015. Source: ETIG Database and Bloomberg 28 The Economic Times Wealth, July 13-19, 2015 Pick of the Week Vedanta: Reasonable valuations The recent price crash has led to a fall in valuations, making it an attractive buy.

lobal commodity prices have been under pressure ture will help Vedanta allocate capital to the highest-return Fundamentals for some time. The turmoil arising out of the sharp projects across the portfolio. In addition to the merger, or- Gfall in the Chinese stock market has only severed ganic growth is also picking up. Vedanta is increasing its Actual Consensus estimate the situation (see page 10 for its impact on Indian mar- production of zinc and aluminium businesses and is also 2013-14 2014-15 2015-16 2016-17 kets). Naturally, companies in the commodity business ramping up its power business. Revenues (` cr) 66,152.41 73,709.50 77,483.55 86,954.41 have been at the receiving end. For instance, in the past After the recent 20% cut in price, analysts are getting Operating profit (` cr) 13,509.49 14,885.39 23,660.77 28,673.57 one month, Vedanta has seen its bullish on the counter mostly because Net profit / loss (` cr) 6,298.51 15,645.77 5,239.59 6,890.93 stock plummet by more than 20%. of favourable valuations. For instance, EPS (`) 21.46 52.77 17.46 24.49 Though weak commodity prices Vedanta holds 64.92% in Hindustan will continue to be an overhang on Analysts’ views Zinc and its market value works out to Valuation Dividend this counter, investors should not ig- 23 be `43,000 crore, higher than the cur- PBV PE yield (%) nore positive developments in the 4 Buy rent market capitalisation of the Ve- Vedanta 0.76 N/A 2.95 company, most importantly, the danta Group, which is valued at just Coal India 6.12 19.19 4.96 Sells merger of its cash-rich subsidiary, `42,000. Possible triggers for the NMDC 1.40 7.02 7.52 Cairn India, with itself. The boards of counter are the acquisition of the cen- MOIL 1.20 9.46 3.53 Vedanta and Cairn India have already tral government’s stake in Hindustan approved the merger and the entire Zinc, winning bauxite mines in auction process is expected to be completed and completion of the proposed Cairn Latest brokerage calls by end of 2015-16. This merger is will 3 India merger. Reco date Research house Advice Target price (`) increase Vedanta’s earnings per share. Hold 08 July ’15 Elara Securities India buy 240.00 03 July ’15 Axis Capital buy 219.00 Also, Cairn India, as of March 2015, Selection Methodology: We pick the 17 June ’15 Goldman Sachs Buy 258.00 had a cash balance of more than stock that has shown the maximum in- 15 June ’15 Credit Suisse outperform 253.00 `16,000 crore, and this merger will crease in ‘consensus analyst rating’ in 15 June ’15 Phillip Securities buy 235.00 help reduce the debt on Vedanta’s bal- A fall of more than 20% in valuation the past one month. Consensus rating 15 June ’15 IDFC Securities outperform 281.00 ance sheet. and the merger of its cash-rich is arrived at by averaging all analyst The share price fall in Cairn, due to subsidiary Cairn India with itself has recommendations after attributing the fall in crude prices, is also working made analysts bullish on the counter. weights to each of them (5 for strong Relative performance 108.37 out in favour of Vedanta and it will buy, 4 for buy, 3 for hold, 2 for sell and Market price: `139 have to issue less number of prefer- 1 for strong sell) and any improvement ence shares to Cairn shareholders. in consensus analyst rating indicates that the analysts are This merger will simplify the group structure further getting more bullish on the stock. To make sure that we 47.16 and, therefore, is consistent with the stated strategy of Ve- pick only companies with decent analyst coverage, this danta Group. It will also result in a diversified portfolio of search is restricted to stocks that are covered by at least 10 100 metals and minerals and help Vedanta reduce earnings analysts. You can see similar consensus analyst rating volatility and have stable cash flows. Since each commodi- changes during the past week in the ETW 50 table. ty usually moves in a separate cycle, a centralised struc- —Narendra Nathan 9 July 2014Sensex Vedanta 9 July 2015

Performance of Vedanta compared with the Sensex. Figures are normalised to a base of 100. Source: ETIG Database & Bloomberg What experts advise BUY Stock Research house Advice Market Target price* (`) price (`) Comment

Reiterate 'buy'. The concerns around asset quality are overblown. Yes Bank Bank of America ML Buy 801 1,100 With nearly 3-times increase in distribution in the last five years, the bank is well-placed for a faster growth in market share. Initiate coverage with a 'buy'. A leading cement manufacturer in the Star Ferro and Cement Anand Rathi Buy 156 238 North-east, with a consolidated capacity of 3.4 million tons and 23% market share, it is a niche player in the North-east’s growth story. Maintain 'buy'. Expect double-digit growth in same store sales in the Shoppers Stop IIFL Buy 393 500 first quarter. Improving sales mix, cost control and reduction in contribution from new stores should support Ebitda margin expansion. Retain 'buy'. Persistent Systems acquired 100% of the stock of Rgen Persistent Systems Prabhudas Lilladher Buy 621 910 Solution in the U.S. Inorganic endeavour continues to be key to its growth strategy. Retain 'buy'. It has signed an agreement with the largest U.S. youth Arvind Nimal Bang Buy 283 354 specialty retailer, Aeropostale and is expected to set up 30 standalone stores and 25 shop-in-shops of Aeropostale over the next three years. Retain 'buy'. Sobha reported 11% increase in new sales volume in the Sobha Developers Axis Capital Buy 373 500 first quarter of 2015-16. It is looking to launch group housing project at its Gurgaon location to revive sales in that geography.

SELL * Market price as on 9 July Stock Research house Advice Market Target price (`) price (`) Comment

Retain 'underweight'. The problems in overseas businesses continue. Crompton Greaves J P Morgan Underweight 181 135 In 2014-15, for the first time in 10 years, the company also reported an operating cash flow loss. Taxation The Economic Times Wealth, July 13-19, 2015 29

TAX OPTIMIZER Take tax-free perks Sudhir Kaushik of Taxspanner.com advises readers on how to restructure their income, investments and expenses to optimise their tax.

INCOME FROM EMPLOYER ajiv Mohan Verma, 58, is a businessman and receives salary from the two companies in which he is a director. His total INCOME HEAD CURRENT SUGGESTED annual income of `86.24 lakh also in- ACTIONS TO TAKE cludes rent from property and interest Basic salary 72,30,000 36,15,000 R on fixed deposits. More than 27% of this goes into Special allowance 0 16,14,000 Let company buy tax. But some smart rejigging can reduce his tax lia- a car and include bility by more than `8 lakh. Contribution to PF 0 4,33,800 EMIs, fuel and driver salary in Verma should get his company to pay for his con- Car maintenance & fuel reimbursement 0 2,16,900 CTC. veyance and transport needs. It can buy a car on Car lease rental 0 6,00,000 lease and include the EMIs in his compensation package. Similarly, the maintenance costs and driv- Medical reimbursements 0 15,000 Seek reim- er’s salary should also be added to his salary pack- Phone bill reimbursements 0 36,000 bursement of age. The taxable value of these perks is only these expenses `39,600, but they can cut his tax by over `3 lakh. Books and periodicals 0 24,000 against actual Next, Verma should opt for the Provident Fund. If NPS (under 80CCD2) 0 3,61,500 bills. his company puts `4.3 lakh in the PF, he saves `1.34 Leave Travel Allowance 0 1,00,000 lakh in tax. Similarly, if the company puts 10% of his basic salary in the NPS under Sec 80CCD2, he saves Annual gifts 0 5,000 This tax free another ` 1.11 lakh. However, both these measures perk can be ` Taxable value of perks 0 39,600 availed once in will mean a reduction in his take-home income by 8 a block of two lakh. Verma should also include other allowances TOTAL 72,30,000 72,30,000 years. that are tax-free on submission of bills. His phone, medical and newspaper bills can save him `23,000 in tax. Another `31,000 can be saved through the INCOME FROM OTHER SOURCES Avoid tax ineffi- leave travel assistance (LTA). cient FDs. Use Verma should avail of the new tax deduction un- Interest on deposits 6,50,000 0 debt funds to der Sec 80CCD1b for investments in NPS. He should Rental income 7,44,000 7,44,000 defer tax. also avoid tax inefficient fixed deposits. Debt funds can help defer the tax, saving him almost `2 lakh. TOTAL 13,94,000 7,44,000 VERMA’S TAX

TAX SAVING INVESTMENTS TAX ON TAX ON TAX ON OTHER CAPITAL CURRENT (`) SUGGESTED (`) SALARY Maximum INCOME GAINS deduction has Contribution to PF 1,25,000 1,25,000 been reached. CURRENT Life insurance 25,000 25,000 `19.99 lakh `3.62 lakh Nil NPS (Under Sec 80CCD1b) 0 50,000 `23.61 lakh TOTAL 1,50,000 2,00,000 SUGGESTED Invest in this new tax saving `13.78 lakh `1.61 lakh Nil option. WRITE TO OTHER DEDUCTIONS US FOR `15.39 lakh CURRENT (`) SUGGESTED (`) Additional HELP deduction for investing in NPS Paying too much NPS contribution (through employer) 0 3,61,500 under Sec tax? Write to us 80CCD2. at etwealth@ timesgroup.com with Medical insurance under Sec 80D 25,000 25,000 ‘Optimise my tax’ as TOTAL TAX SAVED the subject. Our experts will tell you how to `8.22 lakh TOTAL 25,000 3,86,500 reduce your tax by rejigging your pay and PER YEAR investments. Denotes suggestion to increase Denotes suggestion to reduce 30 The Economic Times Wealth, July 13-19, 2015 Technology

USE A DIGITAL CAMERA AS A WEBCAM There are a few digital cameras available that come with a built-in webcam function. This feature can usually be found in connectivity settings of the camera. Just connect the camera to your computer using a USB cable and start the webcam function—you can then access the camera like a standard webcam in apps like Skype or Google Hangout. Canon camera users also have the option of using a software called Ex- traWebCam (US $10). Head to www.extrawebcam.com to view the list of supported cameras as well as to download and try a free demo before pur- chasing the program. It gives a live viewfinder function as well as lets you record videos and do remote monitoring with motion detection. USE BROWSER TO MANAGE ANDROID PHONE DO MORE Whenever a notification arrives on your WEBCAM AS A phone, you tend to stop doing everything else to check it. However, you can use your com- SURVEILLANCE puter’s web browser to view notifications of WITH your phone as well as reply or manage the noti- CAMERA fications from your computer. Get the free Air- Droid app for your Android phone—it lets you Every laptop today comes with a built-in manage your phone on any computer via a webcam. Alternatively, you can purchase a EVERYDAY web browser. You simply need to open http:// webcam for a desktop for a few hundred ru- web.airdroid.com in your browser and scan the pees. What you don’t know is that you can QR code to connect the phone. The browser very easily set up your webcam to act as a window will instantly show details about your surveillance camera or as a baby monitor. phone as well as let you manage contacts, You will need to go to www.yawcam.com and GADGETS apps, storage and multimedia files. You can download the free Yawcam software. It lets send and receive messages, transfer files from you use your webcam for continuous live vid- Other than their primary functions, most phone, install or uninstall apps, change ring- eo streaming, as well as to take snapshots at everyday gadgets can be used for other tones or take a screenshot of your phone’s dis- pre-defined intervals. There is also the fea- play. Alternatively, you can use the Pushbullet ture of setting up the camera to function on work too. Karan Bajaj shows you how to app and its browser extension to keep an eye motion detection or at a scheduled time. You on all notifications. can even set it to upload the photos automati- get the most out of your devices. cally to a server to access it remotely. For security, you can password protect the software and even hide it in Windows so that no one can detect and stop it. CONVERT YOUR SMARTPHONE, TABLET INTO A MEDIA PLAYER

Almost all smartphones offer excellent multimedia capabilities. While some come preloaded with support for multiple audio-video formats, you can install apps to get the same functionality on others. Even today, most people watch movies on their TV via a DVD/Blu-Ray player, home theatre system or by plugging in a USB drive. Now, you can easily use your smartphone as a media player for your TV.

WIRED MEDIA PLAYBACK WIRELESS MEDIA PLAYBACK You can connect compatible tablets and smartphones to a The newer internet-connected smart TVs today are DLNA com- TV to output in full HD resolution along with audio. A num- patible. DLNA (Digital Living Network Alliance) is a standard ber of phones now come with MHL port that lets you con- that allows interoperability between different multimedia de- nect the phone directly to the TV with an MHL-HDMI cable. vices. Connect your phone and TV to the same network and Some phones/tablet also have a micro-HDMI port to con- then you can seamlessly stream content from the phone to the nect with the TV. Once connected, you will see a mirror of TV using third party apps such as PlayTo for Android or Media: your smartphone screen on the TV. Open the media player Connect for iOS. Alternatively you can get a HDMI dongle such app and watch movies on the big screen. For Apple devices, as Chromecast or Teewe 2 to stream content stored on your a Lightning HDMI adapter will be required. hand-held device to your TV over the WiFi network. Your Feedback The Economic Times Wealth, July 13-19, 2015 31

Readers’ response, online and in print, to ET Wealth stories has been THE ECONOMIC TIMES overwhelming and enlightening. We pick some that add information FROM and perspective to our articles from previous issues. wealth THE WEB Monday, July 13-19, 2015 Buy house to live in, not as investment www.wealth.economictimes.com This is in reference to the cover story, ‘10 questions to ask before you buy a house’. It is unfortunate that people are not buying property to live in, but rather acquiring them as investments. The day people will stop treating real estate as an investment, the market will crash to 50% of the current price. BEST OF ARCHIVES Simantad66847, Mumbai Four things to check in a company FD: Checking a company’s credit history, financials, Stay on rent and watch to live in but as an investment. mote speculation in the residential promoters’ background and liquidity can help house prices slide Subhash, Mumbai real estate market. Housing is a ba- you make the right choice. The cover story, ‘10 questions to ask sic need. Therefore, the govern- What’s stopping you from buying a house: before you buy a house’, was very Head for MFs instead ment should strongly discourage From high prices to delayed projects, the barriers informative. It very clearly tells the The cover story, ‘10 questions to ask speculation in this segment. Why is buyers have to overcome are many. We tell you prospective homebuyer to wait. By before you buy a house’, was ex- black marketing of food wrong, how to surmount the key ones. continuing to stay on rent, you can tremely informative. It was espe- when the same practice is allowed put builders under pressure. They cially helpful for people dithering in real estate? With the number of How to handle tricky office relationships: will soon have no option but to between deciding to purchase a apartments lying incomplete or un- Relationships at the workplace can be quite bring down house prices and that house or start a systematic invest- sold due to low demand from end complex. But you can take steps to make your too in a year’s time. Sitting on in- ment plan in a mutual fund. I will users increasing, such speculative life easier. ventory that has been building up now start on that SIP. arrangements will only lead to the for the last four years amounts to Abhinav Singh, New Delhi biggest bubble in real estate. stupidity. It is time to teach the un- VP, Bengaluru All these stories are available at scrupulous builders a lesson. They No retirement for some www.wealth.economictimes.com have been conning homebuyers all The Learn and Keep section, ‘Indi- For crooks only these years now. It is time to make ans ready for retirement’, is rele- It is surprising that there has been them taste their own pudding. vant for those living in urban areas. no crackdown on the fractional LEARN & KEEP Prospect Buyer, Mumbai In rural India, people can’t even ownership scheme mentioned in think of retiring. They will have to the story, ‘How to own property for Is there a leak in your ` Wake-up call for work till the end of their lives. just 5 lakh’. If you collect money budget: ‘Where did all prospective buyers Abdul Rahman, Madikeri from several people it becomes a my money go?’ If you’ve The cover story, ‘10 questions to ask collective investment subject to asked this question often before you buy a house’ was su- Stop speculation regulation. This works for small enough, it’s time you perbly written. I hope this will serve The kind of schemes mentioned in crooks working in government of- prepared a budget. If you as an eye-opener for those who are the story, ‘How to own property for fices, not for honest tax payers. do have a budget, you’re bent upon acquiring real estate, not just `5 lakh’ are those which pro- Tokru, Mumbai probably not sticking to it. INDIANS SCORE HIGH ON WEALTH INDEX Discretionary spending is set to rise in the coming year, reveals the Visa Affluent Study 2015.

`15lakh is the annual household income of affluent Indians. 64% USA: Is the most 34 years Indians consider children’s favoured destination Is the average age of India’s education ‘extremely (followed by the UK and affluent population, younger important’, giving the Australia) for sending 8 out of 10: Respondents believe than those in most Asia highest priority to family, kids for higher education their personal and household income Pacific countries. followed by health and because of ‘good future will increase (the highest in the work-life balance. job opportunities’. region) in the next 12 months.

`19,151 62% Is the amount that affluent Indians keep aside for discretionary spending Respondents say their 1/3rd 84%: Respondents plan to every month. discretionary spending—fine Respondents have bought leave heirlooms (jewellery, dining, holidays, designer clothes, an art piece in the past year, watches, paintings, cars, etc) The Visa Affluent Study 2015 was conducted across affluent consumers in with 2/3rd buyers in the jewellery, donation—will increase Australia, China, Hong Kong, Indonesia, Japan, South Korea, Singapore and India. for their children, the highest in the coming year. In India, the consumer base was 500. 25-35 year age group. in the Asia Pacific region.

The Economic Times Wealth, published by Bennett, Coleman & Co. Ltd. exercises due care and caution in collecting the data PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co Ltd by R.Krishnamurthy at The Times of India Building, Dr. D.N. Road, Mumbai 400001. Tel. No.: (022) 6635 3535, before publication. In spite of this, if any omission, inaccuracy or printing errors occur with regard to the data contained in this 2273 3535. Fax: (022) 2273 2544 and printed by him at (1) The Times of India Suburban Press, Akurli Road, Western Express Highway, Kandivli (E), Mumbai-400101 . Tel. No.: (022) newspaper, The Economic Times Wealth will not be held responsible or liable. The content hereof does not constitute any 28872324, 28872931, Fax: (022) 28874231. (2) The Times of India Print City, Plot No.4, T.T.C. Industrial Area, Thane Belapur Road, Airoli, Navi Mumbai-400708. Tel No.: (022) 2760 9999, form of advice, recommendation or arrangement by the newspaper. The Economic Times Wealth will not be liable for any Fax: (022) 2760 5275. direct or indirect losses caused because of readers’ reliance on the same in making any specific or other decisions. Readers are EDITOR: Babar Zaidi (Responsible for selection of news under PRB Act). © Reproduction in whole or in part without written permission of the publisher is prohibited. All rights reserved. recommended to make appropriate enquiries and seek appropriate advice before making any specific or other decisions. RNI No.: MAHENG/2014/57046. VOLUME 02 NO. 28 32 The Economic Times Wealth, July 13-19, 2015 Last Word The art of sound business This Delhi-based startup helps artists monetise their work by taking care of their marketing needs.

VINAY DWIVEDI and merchandise unique designs,” he says. mouth publicity, has helped drive business. This allows amateur artists to bypass their Postergully currently has about 850 artists on rtists usually find it hard to sell limitations, and the limitations of bulk art/ board. Their designs, employed in various their work. Often, it is a result of artist websites, while allowing them to culti- forms, have resulted in some 50,000 kinds of inadequate sales and marketing vate their own followers and make sales. Sev- artwork, and the company has sold close to 5 skills. Spotting a business op- eral artists on the platform have attracted lakh items till date. The startup’s prospects Aportunity in the unorganised lakhs of followers. “Since artists now have to have also brought in investors. Funding and art market, Bharat Sethi, 25, a Delhi universi- focus only on designing, and promotion via mentoring platform GSF India helped raise ty economics graduate, founded ecommerce their social network, those who do it well, seed funding of close to `25 lakh in January startup Postergully. It allows artists to just fo- end up raking anywhere between `50,000 to 2014. In another round in June this year, the cus on being creative while Sethi and his `2.5 lakh a month,” says Sethi. Postergully’s company raised close to `1 crore from a team take care of business. “As buying afford- 2014-15 gross revenue stands at `3 crore. It clutch of investors. able art on the Internet has gained traction sells products across 20 categories, ranging “Our vision is to grow our authentic com- over the past few years, we too wanted to from phone cases to art prints and from munity, that has few means to monetise its catch on this wave and give easy access to In- home décor to clothing. artwork, manifold,” says Sethi. The company dian artists and designers,” says Sethi. Sethi, who is confident of almost trebling is looking to add more than a million designs The company, which was incorporated in the revenue to `8 crore in 2015-16, says the and products in the next two years. It is look- July 2013, has seen interest soar in its offer- first six months were a trial by fire. “I was in a ing to expand to footwear, furniture, kitchen- ings and is currently clocking more than 2.5 full-time job and I had launched something ware and upholstery in the next 12-18 lakh unique visitors every month. Of this, not knowing the consequences of working months. By end of 2015-16, Sethi also plans to some 3% actually buy at Postergully. “Our without an operations team, customer care, get into licensing and commissioning of art- customer acquisition cost is less than `60,” packaging guys and design team. It was abso- work and designs. This will provide the com- adds Sethi, who, while working as a trade an- mand, and sells it to customers. Artists and lutely insane,” he says. Over time, on-the-job pany with an added revenue stream. “It will alyst at a strategy consultancy firm, invested designers, on their part, just upload their learning and a committed team of five helped be like being the Getty Images of art,” he says. `1 lakh from his savings to start the business. original designs at Postergully for customers Sethi restore sanity to business operations. Sethi has come up with a novel business to choose from. “Our curated marketplace Direct branding, exclusivity of product line model. His company manufactures the goods enables artists and designers who hold origi- and scalability of a marketplace/Just-In-Time Please send your feedback to on behalf of the artists, depending on de- nal visual content to seamlessly contribute inventory model, coupled with word-of- [email protected]