Decoding The Art of Investing

Passive Investing !!

With the usual sensationalism, we have made Passive investing a sophistication by itself.

It’s as though, retail investors can’t venture into passive investing at all

Let’s break this down

Consider a middle income household in Indian context. The popular asset classes are

Gold – eternal favourite
Real Estate – “safe”
Equities or Debts – relatively new from exposure point of view but gaining momentum

How do they invest this in the most simplistic form?

GOLD

As of last evening, the Gold price for 22 Karat is around 9K. This makes it highly unaffordable from an investment point of view

The closing price of Nippon Gold bees (no reco) as of market closing yesterday is 81₹.

From an investment standpoint, the affordability goes tremendously high if being done through Exchange Traded Funds (ETF)

The ETF is to appreciate or depreciate in price in line with the price of Gold.

REIT

Commercial Real Estste or high scale Residential real Estste is still an unfulfilled dream for many.

Cut that down to REIT traded as ETF in the Live market. You get to own a fraction of shareholding in a trust that owns multiple high ticket properties ranging from 250-500 crores

If the Economy needs to grow, businesses have to have offices which will push the demand higher.

The simple no-nonsense approach is to own REIT based ETF

EQUITIES/DEBT

There’s a common tendency for investors to be overwhelmed with sheer number of Mutual funds with negligible difference between them. We end up suffering paralysis by analysis.

Cut that to index based investing like

Nifty 50 ETF (nippon bees)

Personally I find this a long term winner for beginners in the crowd of Equities based index investing.

Keep it simple.

With about 287₹ of investment for a single unit of Nifty bees, you get to invest in all top 50 companies which are part of the Nifty 50 index.

At times, we get overwhelmed on

How to start investing?

ETF is one of the top choices covering multiple asset classes.

Disadvantages of ETF

• You need a Demat # to trade in ETF. You don’t need Demat for Mutual Funds
• Since they work on live prices, the tendency to buy High & sell Low happens for retail investors.
• Tracking error -there’s always a small error which is the tracking error. In simple words the drop or increase in price of Gold or Nifty 50 might not instantaneously reflect in the price of ETF.

Please reach out to help you get started.

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