Choosing between fixed-income and market-linked investment avenues

Sunil Dhawan, Economic Times, 20/6/2016, source: http://economictimes.indiatimes.com/your-money/choosing-between-fixed-income-and-market-linked-investment-avenues/tomorrowmakersshow/52829574.cms

As an investor, one always wishes for the best returns from investments without any risk of losing money. However, it is common knowledge that there doesn’t exist any such investment product. In reality, risk and returns are inversely related, i.e. with more risk come higher returns and vice versa.
The decision to choose between the two is fairly simple. For a goal that is still a few years away, the reason to take risk might still exist while for goals

that need attention within a few months or years, it could really be a risky venture.
For investors, the choice between fixed-income investments and market-linked investments becomes more pronounced when it comes to meeting goals. Let’s see what they are and how different investment avenues may be put to use while chasing goals.
Fixed-income investments: Interest-bearing investments such as bank fixed deposits, company deposits, post office small savings

products and bonds are popular among fixed-income investors. They come with a fixed return and a pre-decided maturity period. They, therefore, belong to the debt-asset class. According to Vivek Karwa, Certified Financial Planner, Investment Adviser & Portfolio Manager, "You should be investing in these only when the requirement is fixed and certain in the near future since you need a sure shot cash flow and can’t risk any volatility."

The principal amount invested is fairly safe in such products. They, however, fail to generate high real returns, i.e. returns adjusted to inflation are low in such fixed-income investments. For example, if the return generated from them is 7 per cent while inflation is 6 per cent, the real return will be around 1 per cent. At the most, such instruments help in preserving capital and providing a regular flow of funds to meet monthly household requirements.

Market-linked investments: When returns depend on the performance of the underlying asset, which could be equity or debt, it is the case of market-linked investment. Returns, therefore, are neither fixed nor assured. Equity shares, mutual funds, Ulips, NPS are all examples of market-linked investments. As they are high-risk products, the potential to generate high return is also there.

Role of market-linked investments: As fixed income investments generate low real returns, it is imperative for an investor to look at equities. Karwa says, "In case you are young and have no responsibilities in the near future and can afford risk taking, then investing in fixed income securities will not take you anywhere. Keep in mind that post taxation you may not even beat the inflation."

Market-linked investments, especially those made in equities as the underlying asset class, are more likely to deliver high real returns. For this to happen, the holding period of equity should be long enough to ease out the volatility associated with equity. The more away the goal to be achieved is, the more reliance can be placed on equity-backed investments. Karwa says,

"Every product has its own cycle with its underlying factors changing. Proper investing based on time cycle and risk can help you beat inflation and give you real growth. If you have a horizon of 3+ years, then go with market-linked products. You will surely require some expert advice here." Be it one’s child education, marriage or one’s own retirement, equity plays an important role in creating a decent corpus even with smaller amount of regular savings.

Taxation: While choosing an investment product, taxability of the specific investment is equally important. The interest income from most fixed-income investments such as bank deposits, post office time deposits, NSC, KVP and bonds is fully taxable as per the income tax slab of the individual. The post-tax return from them therefore is much less than what they offer. Although interest is taxable, the 5-year tax-saving bank fixed deposit and post office 5-year time deposit qualify for tax deduction under section 80C of the Income Tax Act, 1961. PPF and tax-free bonds yield tax-free return while the former also gets tax advantage under section 80C.

Equity-oriented investments such as equity mutual funds, Ulips and NPS are more tax-friendly. The gains after holding them for a longer duration are tax-free except in NPS wherein it is partially taxable. Equity-linked savings scheme (ELSS), a variant of equity mutual fund, provides exposure to equities, gives tax-exempt return and even helps in reducing one’s tax liability under section 80C. Ulips offer similar benefits and in addition, provide protection through life insurance.

Conclusion: For an investor chasing long-term goals, it is important to make the best use of both the worlds. Both fixed-income and market-linked investments have a role to plan in the process of wealth creation. While market-linked investments help in navigating the volatility and in the process generate high real return, the fixed income investments help in preserving the accumulated wealth so as to meet the desired goal. In times when interest rate is on the down side, choosing between fixed and market-linked investment avenues should not be so difficult.

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Why create emergency fund before starting to invest?

By Sunil Dhawan, 30/5/16, Economic Times

Source: http://economictimes.indiatimes.com/why-create-emergency-fund-before-starting-to-invest/tomorrowmakersshow/52501654.cms

One of the few initial steps in the financial planning process involves taking care of unforeseen risks. Besides getting protected through health and life insurance, one needs to create a corpus so as to meet any other financial risk. Unless one has a proper emergency fund in place, starting to invest for long-term goals may be futile. Let’s see why and how to create such an emergency fund.

Why create an emergency fund: As the name suggests, emergency situations arrive uninformed and also need immediate action. There could be a setback to one’s earning capacity due to a temporary disability or there could be job-loss running into a few months. Even a medical emergency may crop up at a time when the claim is taking time for settlement or the ailment itself may have a waiting period. In all such cases, one may have to arrange funds to tide over the situation. Whether it’s meeting the household expenses for over a month or honouring commitment towards loan EMIs, certain cash outflows are sacrosanct.

Emergency fund is not for meeting your planned goals, but only to act as a safety net.

The cost of not maintaining emergency fund: In the absence of an emergency fund, one may have to either borrow from friends, relatives or take a personal loan and service it by paying interest. If the requirement is huge, one may even have to pledge gold to tide over the situation. If none of these work, one is left with no other option but to break one’s existing investments. Doing this, one not only jeopardizes the long-term goals for which the funds were earmarked, but also dents the power of compounding.

How much fund?: Although, there’s no fixed rule as to how much of emergency cash one needs, but as a thumb rule, three to six months’ household expenses can be one’s emergency fund. The amount should give you the confidence to combat financial emergencies in your household. Vivek Karwa, Investment Advisor & Wealth Creator, VRIDHI.co.in, has an interesting observation. According to him, "Instead of following the rule blindly, consider your work profile and the insurance cover you have. If your job is very safe and you are amply covered with health and disability cover, then it would be fine if you hold just a month’s expense as emergency fund. In extra ordinary situations your existing investments may come to rescue. If you are not in a safe job, then holding six months’ money is also ideal. Whatever said and done, get a health insurance cover since that’s one biggest factor."

Where to park the emergency savings: As the requirement to access the funds may arise anytime, park the funds earmarked for emergency needs in liquid assets. For better management, one may keep half of the fund requirement in savings account or a sweep-in fixed deposit while other half can be put in short term or liquid mutual funds. A liquid mutual fund invests in debt instruments such as treasury bills, commercial paper and call money market that have short maturities. The returns are therefore stable and less volatile. Their objective is to preserve the capital, have liquidity and a decent tax-efficient return especially after three years of holding it.

How to build emergency fund corpus: There are two ways to go about creating such a fund. In the first approach, somehow manage to earmark the necessary amount equal to six months of expenses towards emergency funding. This would mean cutting down on some discretionary expenses till the time adequate buffer is created. The other way is not to be so aggressive in the approach, rather start putting aside regular contributions from one’s take-home pay towards such an emergency fund. The idea is to build up such an emergency fund soon so that other goals of life are taken care of early. Karwa says, "If you are looking at investments which are risky and also have lock-ins, then it’s advised strictly to first create an emergency corpus and then invest since you will have no access to your own wealth if the need occurs before the lock-in period gets over. In other cases, you can very well go simultaneously."

Conclusion: Youngsters may need to consider creating such a fund more seriously. As one grows up, liabilities increase, situations change and therefore addressing the concern of dealing with emergencies might take a back seat. And, once you feel confident of its adequacy, avoid any temptation to dip into it, to gift your spouse that new gadget.

(Readers are advised to consult their tax advisor for detailed advice.)

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Is Investing in Markets a Gamble?

I Want To Invest In Equity Market But My Family Thinks It Is Gambling

By Vivek Karwa

source: http://adviceadda.com/article/583-i-want-to-invest-in-equity-market-but-my-family-thinks-gambling

Q: Iam Sawaan from Bengaluru aged little less than 36 years and want to plan for my Retirement at age 60. Iam confused about investing. Iam working in a good mnc pharma company in a demanding technical area and sure will have demand for my services till I retire. I can invest Rs.5000 a month with an increase of around 12% to 15% till I retire.

I have heard from lot of experts that equity markets can give good returns but my family members say that it is gambling. If I invest, some scam or bad news may arrive which can erode all my capital. Should I choose fixed deposits over equity market? Can I invest in Sensex or investing in individual companies is necessary? Can I invest every month? Please ask the best expert in your panel to solve my confusion.

Answer:

Hi Sawaan,

Your case is not typically different from many others. I find no fault, with the fallacy in the thinking of your family members, since they have been brainwashed that equity markets are a source of gambling. Let’s leave alone the common people who spread wrong news, since I consider it’s not their fault. Many of the learned politicians and academicians think that markets destroy wealth!

People who talk like this basically don’t want the public to be self dependent. If society remains dependent on them they can rule over us forever. And sorry to say most of the academicians who speak in this tone, be a school teacher or be a premier business school professor are just theoretical.

Iam myself a trainer, and know few souls who teach Portfolio Management and off record mention that they invest only in FD’s! I just tell them: Sir by faking your knowledge you are fooling yourself and not the students! At some point of time people (just like you Sawaan) will learn the truth. I would in fact suggest that anyone having doubts in the area of Personal Finance should call or write to us, we experts get mental satisfaction in helping others.

O.K. Let’s come back to the point of you investing Rs.5000 a month for nearly 24 yrs from today with an increase of 12-15% yearly. Let’s cut down the rhetoric of Anti-Market people and talk some facts and numbers.

Your question made me do some Fact Finding which Iam happy to share with you and the public at large. With these Fact’s people can reconcile their wrong thinking and come to an understanding what they have been missing, rather, what they have lost by not practising what they have been preaching!

Since you have little over 24 years to go, also you had asked if you can invest in Sensex (I call it Index… Sensex or Nifty), Yes you can invest in an Index through an ETF (Exchange Traded Funds) or an Index Mutual Fund, I have taken the Sensex closing data from Jan’1991 till date. Assumption is, had a person started around 24 yrs back with same time frame as yours. Next assumption is: he started investing Rs.1000 a month. Not considering any increase for our easy calculation purposes. Check the table below on how he would have kept on accumulating Sensex units over the period.

During the period he would have invested totally Rs.2.91 Lacs and value of the same would be approximately Rs.16.70 Lacs today. That’s phenomenal isn’t it? During the period had you hired a good adviser who could have guided you to do little adjustments, he would have enhanced your returns further! Had the investor chosen Fixed Deposits instead of the Index the value in his hands, post tax would be peanuts! At 7% post tax returns FD would have fetched just Rs.7.36 Lacs. The returns out of Index investment is totally Tax Free! Meaning you can enjoy whole of Rs.16.70 Lacs yourself!

Show this data to anyone who curses the market! During this period we have seen worst of scams, and worst of news as well. We just require discipline in market during ups and downs.

Your next query was on investing in Index or Stocks! You can choose any. As said earlier you can choose to invest in Index through ETF’s. Index itself has delivered very good returns till now, though it is considered to be safest among the equity investments.

Had you invested in one of the popular diversified equity mutual fund (name not mentioned purposely to avoid marketing it) you would have generated Rs.46+ Lacs today! During the period had someone invested in good quality individual stocks on monthly basis, he/she could have earned few crore of Rupees by now! Again not being stock specific since I don’t have the exact figures available right now with me.

So clear all your doubts on the equity markets. Choose a good adviser who can guide you buy good quality companies month after month! Be a Disciplined Investor. In Mutual Funds they are called Systematic Investment Plans or the SIP, I would term investing monthly in direct stocks as Systematic Wealth Creation Plan or the SWC. Honestly, I have coined the word SWC myself! So don’t wait, start investing today! Happy Fearless Investing.

Rgds

Vivek Karwa

Office Mobile: (+91) 9551-06-08-08

Table

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Good Savers but Bad Investors

Traditionally our money management matters have been handled by 3 sets of people, besides ourselves

Deepali Sen, Mint 21/2/2014

source: http://www.livemint.com/Money/bESDJ6wZFUE1bVAguBecQI/Good-savers-but-bad-investors.html

All Indians are doctors just as all of us are financial planners. Well, one can safely replace “all” with “nearly all”. We improvise on generic medication when our family members are hit by minor medical ailments. Similarly, we assume that money management is mostly about choosing investment products, which, in turn, is all about tracking past performance of these products; something that can be easily done. It is common to see people following financial advice originally meant for their friends (which could have been given by an investment adviser), not halting to ponder that this advice could be pertinent to their friend but may be altogether inappropriate for oneself.

My experience suggests that while most of us set aside a decent portion from our income as savings, we put most of our money in risk-averse products. We are good savers, but not good investors. The good news is that we follow this Hindi quote in spirit, chaadar ke bahar pair nahin nikalna chahiye (stay within your means); the bad news is that we think that containing risk is the best way to grow our money. Our fixation with guaranteed returns is high, owing to which we end up earning sub-standard returns on our investments. Inflation robs more from us than our investments earn for us. The balance between risk and return is sorely lacking. It gets tough to understand that risk and returns are two sides of the same coin. At times, the biggest risk we take is the risk of sub-optimal returns.

Our financial planning matters have mostly revolved around keeping aside surplus money in a “fictitious box”. Money from this box gets used for various needs and goals as and when they come knocking at our doors. This box could contain fixed deposits (FDs), illiquid and low-return fetching insurance policies, some long-term bonds, investments in Public Provident Fund and Post Office Monthly Income Scheme, and some stocks that were considered bluechip at the time of purchase. Other than these financial assets, we would have also bought physical gold and land or residential property.

Traditionally our money management matters have been handled by three sets of people, besides ourselves. The first being the insurance agent, who is more often than not our dad’s friend or a friend’s acquaintance, followed by an investment adviser, who either works independently or is associated with a bank, and the third character is the loan processing officer.

We are obviously the most involved as we have the complete know-how of the dynamics of our cash flows, our goals and our behavioural relationship with money. However, we aren’t organized enough to have our needs listed down, quantified, prioritized and effectively matched with the respective source of funds. We are the hub to which these spokes attach.

The first person, the insurance agent suggests child plans for our kid’s education, annuity plans for our retirement, money back policies for our various goals, or maybe a unit-linked plan to capture the incumbent growth in the equity markets. These products are suggested with an eye on the concessions available under various sections of the Income-tax Act and the fact that we could be getting some chunk of money after a block of certain years. Usually we end up paying hefty premiums for illiquid and low-return products. And, with the sum assured being low, we stay under-insured.

The second character, the investment adviser, concerns herself with allocating surplus funds in various products such as stocks, mutual funds (mostly equity-oriented), bonds and FDs. If two clients approach her for planning two very different goals such as kid’s higher education five years down the road and purchase of a bigger car a year later, she is likely to suggest similar products to both of them. She is driven more by the current contest or campaign running within the firm than by the end use of the investments thus made. Also, since she does not have complete information regarding a client’s assets, liabilities, cash flows, and goals and responsibilities, her advice is blinkered and limited to her piece of mosaic without drawing a holistic picture.

The third player is the loan processing agent. She processes our income documents to let us know our maximum loan eligibility amount and more often than not we end up taking the full loan amount as per the approval. We do not stop to do an analysis on whether we are earning (on our investments) more than what we are paying as interest (on home loan). This objective assessment aside, we are keen on retaining the status quo on our investments as it is convenient to us.

The flaw with this disjointed kind of financial planning lies in the fact that these three outside characters do not meaningfully interact with each other, because of which planning is piecemeal, superficial and ends up creating pockets of inefficiencies. For example, a client of mine had an outstanding home loan of Rs.50 lakh at an interest rate of 13%, and he also had Rs.15 lakh invested in FDs of one-year tenor earning an interest of 8.5% per annum. In effect, he was paying 13% and earning 8.5% per annum, a net depletion every year.

Our life is to a large extent what we make it out to be. So let’s resolve to organize our financial lives. I firmly believe in this quote by American evangelist Billy Graham, “If a person gets his attitude towards money straight, it will help straighten out almost every other area in his life.”

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Five Common Investment Mistakes to Avoid

We list five common investment mistakes that investors must avoid.

Vicky Mehta, source: http://www.morningstar.in/posts/1094/5-common-investment-mistakes-to-avoid.aspx

Ever noticed how most investment advice is centred around telling investors what they must do. But the opposite i.e. what investors must refrain from doing is as relevant. In this article, we list five common investment mistakes that investors must avoid.

1. Trying to get even with investments

Even the best of investors end up making poor investment decisions once in a while. However, what separates them from regular investors is that they don’t try to get even with their investments. Investors must be patient and give their investments sufficient time to prove themselves. However, if a subsequent evaluation reveals that an investment has failed to deliver as anticipated, investors should not hesitate to cut losses and exit the investment. Staying invested in a ‘dud’, hoping to get even (read recover losses and eventually exit at a profit) may further aggravate the situation. The key lies in being dispassionate while making investment decisions.

2. Investing in top performers based solely on performance

Surprised? Isn’t investing in top performers always a good idea? Not necessarily! This one is applicable to investors in market-linked avenues like mutual funds. When investments are made based solely on performance, an important evaluation parameter is overlooked – risk. And investing in line with one’s risk appetite is a fundamental tenet of investing.

Investors must try to understand the reason behind the impressive showing. This in turn will help them evaluate if the performance is sustainable. Consider a situation wherein a fund’s performance can be attributed to simply riding rising markets by investing in stocks that are the season’s flavour. In such a case, the impressive performance is unlikely to be sustainable over the long haul and hence is misleading for investors. Therefore, making investments based solely on the performance is fraught with risks.

3. Investing in an ad hoc manner

Several investors believe that the investment process begins with making an investment. Crucial steps like setting investment goals and creating investment plans are overlooked. Ideally, the investment process must begin with setting tangible goals, followed by the drawing up of an investment plan. Making an investment should be the result of the aforementioned and not the starting point.

Investing without goals and plans, amounts to investing in an ad hoc manner. As a result, investments may become directionless and fail to achieve desired results. Investors must appreciate that investments are not an ‘end’, rather they are ‘means to achieve an end’. Hence, the importance of having goals and plans in place at the outset.

4. Mirroring someone else’s investments

While it’s one thing to ape someone else’s lifestyle choices, using the same approach to investing might be stretching things a bit too far. Investing in this manner can have disastrous results. Investing is a personalised activity. Consequently, the investment avenues chosen have to be right for the investor. They should mirror his risk-taking ability and investment goals. What might be suited for one investor could be completely unsuitable for another. For instance, the investment portfolio of a retiree seeking assured monthly income cannot be the same as that of a risk-taking investor who intends to build a retirement kitty. Simply put, investors would do well not to mirror someone else’s investments. Instead, they must seek investments that are right for them.

5. Not reviewing the portfolio

We have already discussed the importance of holding an apt investment portfolio. Similarly, the importance of conducting periodic portfolio reviews cannot be overstated either. Investing isn’t a one-time activity. After creating a portfolio, monitoring its performance is as vital. Furthermore, the review should be conducted in a timely manner, so that deviations (if any) can be identified and rectified.

A portfolio review is also necessitated by a change in the investor’s risk profile and needs. With passage of time, a new set of needs may emerge; also the investor’s risk-taking ability might change. The portfolio should be suitably modified to incorporate these changes. Ideally, the investment advisor must play a significant part and aid the investor in the review process.

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What is your Real Return?

The rate of return you get on your investments might often not be your final return. Here’s how to calculate it

Ashish Pai, Business Standard 27/8/2013

source: http://www.business-standard.com/article/pf/what-is-your-real-return-113082400615_1.html

It’s a dilemma that many investors might be going through. Your fund says that it earned a return of 15 percent, but you find out that your final returns were actually much lower. The gap between what a fund reports as returns and the what investors finally get are sometimes huge and the difference is largely because of the fact that a fund might calculate returns differently than you.

You should look at a lot of other factors to calculate your final return and that includes adding up dividends or adjusting your tax status in your final return. Let us look at the return calculation of these two most popular investment class: fixed income and equities.

A hang of fixed income
For fixed income instruments, always look at post tax returns as the adjustment for taxes will actually show you how much you really made. Tax is an expense from your return. Here’s how to calculate it. Suppose a bank deposit is currently having an interest of 9 percent for one year. An interest rate of 9 percent appears very attractive. However, the return post taxes turn out to a lot lower. If you are in the highest tax bracket, it is less than 6.20 percent. So take into account not only the absolute return but also its post-tax status.

CALCULATE TRUE RETURNS

For bank FD

  • Interest earned from banks: 9%
  • Deduct taxes paid @30%: 2.7%
  • Arrive at the final return: 6.3%

For PPF

  • Post-tax interest earned – 8%
  • Equivalent pre-tax interest@30% – 12.6%
    (PPF is tax-free in hands of investors)

For stocks

  • Stock purchase price: Rs 100
  • Dividend received*: Rs 10
  • Stock sale price: Rs 120
  • Total earnings: Rs 20 + 10
  • Gross returns: 30%
  • Tax at 10% on capital gains: Rs 2
  • Net returns: 28%

*@100% of Rs 10 face value

Adjust it for inflation.
Tax adjustment is just one part of finding out the final returns. The other is to adjust it against the rate of inflation. You know that the value of your investment diminishes over time due to inflation. If you adjust this inflation for your
investments, you will get a real rate of return.

When an investment is made, you postpone your current consumption for future income. If during the period of investment the price of goods or services rises, you require more money to acquire these. It is, therefore, essential to adjust your total return on investment for inflation. This is known as the real rate of return. To illustrate, suppose you earn interest at 9 percent on your bank deposits. Assume inflation is at 8 per cent. The real return adjusted for inflation is merely one per cent. If inflation is more than nine per cent, the real rate of return turns negative.

Compounding effect: In case of fixed income instruments such as bank fixed deposits, there is quarterly compounding of interest. This improves the effective yield. For example, if you invest in bank fixed deposit at 9%, the effective yield is at 9.30% due to quarterly compounding. Similarly in case, if you invest at 9.50%, then the effective yield is at 9.84%. If you invest at 10%, the effective yield will be near 10.40%.

Impact of liquidity on returns: At times, there can be impact on returns due to liquidity. For example, in case of bank fixed deposits, if they are withdrawn prematurely, then the interest rate applied will be rate applicable for the tenor for which it was maintained prevailing on date of deposit less penalty of 1% for premature withdrawal.

There are some tax-free instruments for which the pre tax returns need to be calculated to make them comparable for decision making. The two popular tax free avenues are Public Provident Fund and Tax free bonds.

Public Provident Fund (PPF): Public Provident Fund is one attractive investment avenue, with high post-tax yield. Currently, it gives a tax-free return of 8.70%. So, pre-tax yield comes to around 12.60% for a person at the highest tax bracket, that is, 30 per cent. In addition, investment up to Rs 1,00,000 per annum qualify for rebate under section 80C of the Income Tax Act.

The minimum and maximum amounts that can be invested in a year are Rs 500 and Rs 100,000 respectively. An account matures in 15 years; however, withdrawal is permitted after completion of the sixth financial year from the initial year of subscription.

Tax-free bonds: This are typically bonds issued by PSU entities such as REC, PFC, IRFC, HUDCO etc. The duration is for 5 to 10 years. The tax free interest rate varies from 7.50% to 8.30%. Accordingly the pre-tax yield can range from 10.87%to 12%. The added advantage of the tax free bonds is that they are listed on the stock exchange and provide moderate liquidity.

A hang of equities
In case of stocks, the returns need to be calculated after adjusting for corporate actions such as Dividend, rights issue etc, if any. Suppose you buy a stock of worth Rs 106 which is cum dividend. After the dividend record date you sell the same at say Rs 100/-. You will receive a dividend income of Rs 6 and there will be short term capital loss of Rs 6%. The simple return from the stock is Nil. However, in case the stock is sold at say Rs 108. Then the total absolute return will be not Rs 3 but Rs 9 including the dividend of Rs 6 paid.

Similarly if you have share on which bonus is received, the cost price needs to be adjusted for the bonus. Suppose the cum bonus cost price is Rs 100 and you receive a bonus of 1:1. Then the cost price after bonus will be Rs 50. If you sell this stock for say Rs 60, then the absolute return on this stock will be 20%.

Time element: An important aspect in calculating returns is the time element. For example, you buy two stocks, say stock A and B, say for Rs 800. Let us assume you sell A after one year for Rs 1,000 and B for Rs 1,040 after two years. Then, the absolute return on A is 25 per cent and on B is 50 per cent. However, considering the holding period, the return is 25 per cent and 15 per cent for A and B, respectively.

Expense adjustment: In case of equities, the investor has to bear charges such as brokerage, Depository charges, Demat account maintenance charges etc. While calculating the returns from this asset class, it is important to reduce the expenses to calculate the return.

Conclusion: Proper understanding and calculation of your return on investment is critical for Investment decision making. It helps in building a robust portfolio and having a proper asset allocation plan. It is important to account for all factors while calculating your returns!

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