The infrastructure story is even more compelling. Government CAPEX has nearly doubled since FY22, from ₹5.9 lakh crore to ₹11.2 lakh crore. For every rupee the government spends building roads, ports, and digital infrastructure, the economy gains ₹2.5 to ₹3.5 in GDP. A calculated multiplier effect that creates compounding returns across sectors.

Something fascinating is happening in India’s urban landscape. All top 10 fastest growing cities in the world are Indian: Surat, Agra, Bengaluru, Hyderabad, Nagpur. Wealth creation has moved beyond Mumbai, Delhi, and Bengaluru. Tier 2 cities are quietly becoming growth engines, and this geographic distribution of prosperity changes everything about where capital should flow.

The labor market is transforming in ways most people aren’t tracking. India’s gig workforce has exploded 55% in just four years, from 77 lakh to 1.2 crore workers. E-commerce and logistics lead, but BFSI, manufacturing, and retail follow closely. This represents over 2% of India’s total workforce now, reshaping how businesses scale, how people work, and how consumption patterns evolve.

Global capital is sending clear signals. FDI in services has shifted dramatically toward energy, gas, and information & communication. These sectors now capture nearly 48% of global services FDI, up from 27% pre-COVID. India is well positioned in these areas, but we need to move faster to capture this capital before others do.

Then there’s innovation. India has leaped from rank 81 to 38 in the Global Innovation Index since 2015. We’re now 3rd globally in scholarly publications, up from 7th in 2010. Indian universities in QS rankings have grown from 11 to 54 institutions. A structural shift in how India creates and commercializes knowledge.

The technology story is even sharper. India now ranks in the top 3 globally across 15+ critical technologies: 2nd in biological manufacturing and biofuels, 3rd in AI algorithms, quantum cryptography, and advanced aircraft engines. These rankings represent sectors where India has real research leadership that can translate into commercial advantage and export strength.

The Survey projects real GDP growth at 6.8 to 7.2% for FY27, with potential growth at around 7%. The headline number matters, but the structural forces beneath it matter more: controlled inflation, distributed urban growth, infrastructure multipliers, labor market flexibility, and innovation at scale.

For investors, these forces will define portfolio construction and returns over the next decade. India’s wealth creation story is accelerating, and the foundation looks more distributed, more innovation driven, and more resilient than ever before.

Disclaimer: : Content provided herein is for educational/ informational purposes only. Source: Economic Survey of India 2025-2026

According to the Securities and Exchange Board of India, as a part of investor education, averaging is “The process of gradually buying more and more securities in a declining market (or selling in a rising market) in order to level out the purchase (or sale) price.” With this concept in mind, let’s delve deeper into value averaging and its unique approach to investment.

To understand value averaging better, one needs to first understand dollar-cost averaging.

The Concept of Dollar-Cost Averaging 

Dollar-cost averaging (DCA) is an investment strategy where you regularly invest a fixed sum, like, say, for example, ₹5,000 every month, into a specific instrument. The approach is simple yet can be quite effective in the long run.

When prices drop, your fixed amount buys more units i.e., you intend to buy more units with the same ₹5,000. On the contrary, when high, you get fewer shares with the same amount of ₹5,000. Over time, this probably helps evens out the cost per unit i.e., averages the cost of buying, helping to manage market volatility.

In India, we call it Rupee Cost Averaging (RCA). It’s common in Systematic Investment Plans (SIPs). With SIPs, you invest regularly in a mutual fund. Here you buy more units when the Net Asset Value (NAV) is low and fewer units when costly. This method seeks to smoothen out market fluctuations.

RCA can be assumed to be well-suited for long-term financial goals like retirement. They encourage disciplined investing, reducing the urge to time the market which can be highly risky. While these methods don’t guarantee profits, they help you build wealth systematically.

Book an expert call with us today to see how Dezerv can help you build wealth in a systematic manner. Get in touch now!

What is Value Averaging?

In RCA, you invest a fixed amount regularly. Value averaging (VA), however, is dynamic. Instead of investing a set amount, you adjust your investment to meet a target portfolio value, which may be inferred by the illustration mentioned below.

By that, if your portfolio falls short, you increase your investment to make up the difference. Conversely, if your portfolio exceeds the target, you reduce your investment to balance it out and maintain the desired growth trajectory. 

For example, let’s assume that your target portfolio value is to increase by ₹10,000 every month, and currently, your portfolio is worth ₹100,000. By the end of this month, your portfolio value has increased to ₹104,000. Then, in this case, you will need to invest only ₹6,000. If your portfolio value would have been ₹112,000, then you would have to sell investments worth ₹2,000 to reach your target portfolio value for the month.

Source: Nasdaq

This method suits investors who want a structured approach to achieve a financial goal within a specific timeframe. It helps instil financial discipline, steering clear of rash decisions caused by market highs and lows.

Why pick value averaging? It is argued that it helps reduce the risk of overexposure during financial market bubbles. By adding more funds during market downturns, it may help your portfolio recover faster. Having cash reserves ready is essential for making these adjustments.

Monitoring is key. Keep a close watch on your folio’s value & tweak your investments as needed. This may seem demanding, but it has the potential to maximise the benefits of market movements, letting you buy more when prices are down and less when they rise.

Value averaging deals with market volatility effectively. In rising markets, it prevents you from overcommitting. When prices fall, it positions you to buy at lower prices, setting up for potential gains when the market rebounds.

How Does the Value Averaging Strategy Work?

Assume an investor investing in a Mid Cap Fund, aiming to grow an investment by ₹10,000 each month. The investor aims to have the portfolio value reach ₹40,000 by the end of the 4 months, starting with an initial investment of ₹10,000. The fund manager is responsible for managing the Scheme to help achieve this goal.

Here’s how value averaging works in this hypothetical scenario:

When the market surges:

From the above hypothetical example we may infer that in the first month, with an investment of ₹10,000 at ₹10 per unit, you acquire 1,000 units. The following month sees the market price rise to ₹12.5. To hit your target value of ₹20,000, you only need to add ₹7,500 more since your initial 1000 units are now worth ₹12,500. This extra investment nets you 600 more units, raising your total to 1,600 units. 

When the market declines:

From the above illustration we can say that by the third month, the market price declines to ₹8 per unit from ₹12.5. To achieve a folio value of ₹30,000, you have to add ₹17,200 more. This buys you 2,150 units, summing up your holdings to 3,750 units. Investing more during a market dip means you get units at a bargain, setting the stage for substantial gains when the market rebounds. 

Now, RCA is in the same hypothetical scenario.

In summary

RCA shows an average cost of ₹9.88 per share, with a total investment of ₹40,000, resulting in a current gain of ₹500. In comparison, VA has a lower average cost of ₹9.30 per share, a total investment of ₹37,200, and a higher current gain of ₹2,800.

In both market conditions, value averaging seeks to adjust the investment amount based on how the market is performing. This can result in a lower average cost per unit. As a result, the overall performance of the portfolio may improve. On the other hand, RCA aims to involve investing a fixed amount regularly, no matter how the market is moving.

Why Does Value Averaging Investment Plan Stand Out?

• Customised Investment Approach: Value averaging offers a flexible strategy. Unlike fixed-sum investing, it adjusts contributions based on portfolio performance. If the portfolio dips, you invest more. If it rises, you invest less. This method seeks to keep you aligned with your targets.
• Responsive to Market Conditions: Markets are unpredictable. Value averaging thrives on this unpredictability. Suppose your folio value falls short of the target, you invest more to make up the difference. Conversely, if it exceeds the target, you scale back your investment. This dynamic adjustment seeks to capitalise on market volatility.
• Cost Efficiency: When prices fall, you buy more shares, lowering the average cost per share. As prices rise, you buy fewer shares. This strategy of buying more during downturns and less during peaks helps position your portfolio for potential growth. Over time, this method may result in lower costs and potential returns. As markets recover, the lower-priced shares you purchased during the downturn may contribute to increasing your overall potential returns.
• Risk Mitigation: Spreading investments always has its perks. Instead of a lump sum at potentially the wrong time, gradual investments may smooth out market fluctuations, reducing the impact of volatility and thereby aiming to manage risk.
• Discipline and Corpus Building: The act encourages disciplined investing by making you adjust contributions based on market conditions. This method keeps you focused and prevents hasty decisions. By aiming for a fixed portfolio value it helps progress and seeks scaling of investment corpus towards your financial goals.

Potential Pitfalls of Value Averaging Strategy

• Missing Out on Rally: In the bullish phase, the strategy might aim at buying less, potentially missing out on significant gains. For example, during a bull run, investing less means not fully capitalising on rising prices.
• Frequent Funding Requirements: Maintaining target values often demands more frequent contributions. This can strain your finances, especially if surplus cash isn’t readily available. The need for regular funding can be a significant burden.
• Complex Calculations: Value averaging involves intricate calculations to determine the target portfolio value.
• Demand for Active Oversight: Unlike RCA, which is straightforward, value averaging requires constant attention. You need to adjust contributions based on market performance, which can lead to emotional decisions and biases.
• Higher Expenses: Frequent adjustments might lead to higher expenses. For instance, buying more shares during market dips and selling during rises can incur transaction costs. These expenses, coupled with potential tax implications like short-term or long-term capital gain taxes, can reduce your potential returns.
• Dependency on Market Prediction: Value averaging relies heavily on predicting market trends. Misjudging market movements can derail the strategy. This reliance on forecasting can be challenging, especially in volatile markets.
• Challenges in Downturns: During recessions, increasing investments can be tough. For instance, when incomes drop, finding extra funds to invest can be challenging. This aspect makes the strategy difficult to implement during economic downturns.

Head-to-Head: Rupee-Cost vs. Value Averaging

To Sum Up

Value averaging is a sophisticated method requiring active management and market knowledge. It isn’t as straightforward as Rupee-cost averaging, which may suit the common investor. Although the potential returns from value averaging are debated, it might attract those who like to navigate market fluctuations themselves. Your choice depends on your investment style and goals.

Frequently Asked Questions 

What is the meaning of value averaging?

Value averaging is an investment strategy. You adjust your investments based on portfolio performance. When the market drops, you invest more. When it rises, you invest less. This way, you buy more shares at lower prices. It helps manage risks and aim for better returns. Value averaging keeps your investments aligned with your financial goals.

Is value averaging a good idea?

Yes, value averaging may be a good idea. It helps you buy more when prices are low. You invest less when prices are high. It aims for potential returns over time. But it needs regular monitoring. It’s not as simple as other methods. If you can manage it, value averaging could be beneficial. Hence, it’s always advisable to consult your financial advisor before investing.

What is value averaging in SIP?

Value averaging in SIP means adjusting how much you invest based on your target portfolio value. If your portfolio is below the target, you invest more. If it’s above, you invest less. Say if your goal is ₹10,000 & your portfolio is at ₹8,000, you add ₹2,000. If it’s ₹12,000, you invest less or nothing. This helps buy more when prices are low. It needs regular checking. It’s like tweaking your savings to stay on track.

Is value averaging an investable strategy compared to DCA?

Value averaging might be seen as one of the investable strategies as compared to DCA. With value averaging, you change how much you invest based on market performance. You invest more when prices drop and less when they rise. This approach can help you buy more shares at lower prices. It aims for possible growth. However, it requires more attention and adjustments. Some find it more complex than DCA. It depends on how much effort you want to put into managing your investments.

However, since financial markets are dynamic, the initial allocation may change as some investments perform better than others over time. Portfolio rebalancing refers to the periodic evaluation and modification of an individual’s investment basket to keep it at the required risk level for long-term financial gain.

This article examines what portfolio rebalancing means, why it matters, and when this process should be done.

What is Portfolio Rebalancing?

Portfolio rebalancing refers to the process of adjusting the proportions of assets or removing or purchasing some stocks/assets in your investment portfolio back to their predetermined levels, i.e. as per your investment goal.

For instance, let’s say that your initial allocation is targeted at 50% stocks, 30% bonds, and 20% real estate. But, further on, if equities outperform and represent 60% of the total value while bonds decrease up to 20%, with no change in the real estate holdings, then rebalancing will include trimming stocks and purchasing more bonds to restore the original goal. This is done so that one’s portfolio can have the desired level of risk as well as the expected potential return.

Periodic portfolio rebalancing may be required because each asset class’s market value changes over time due to the various potential returns they earn. Hence, this can make your choice deviate from what was initially targeted or wished for, thus making it subject to more or less risk than intended. Therefore, you will need to periodically rebalance your investment account to facilitate this reallocation.

Moreover, if you have altered your investment portfolio or even have changed risk tolerance levels, then you may consider using this method so that you can change weights on all securities in a given security basket as per your investment goal.

Advantages and disadvantages:

Ready to optimise your investment portfolio? Contact Dezerv today to discuss personalised portfolio rebalancing strategies. 

Why is Portfolio Rebalancing Important?

Rebalancing the portfolio makes it possible for you to execute whatever adjustments you may make in your asset allocation plan and remain on course. Here are some benefits of rebalancing a portfolio:

1. Maintains the Initial Asset Mix: Notice how your portfolio’s asset mix has changed over time. Consequently, the risks of investments and expected potential returns may no longer suit you. Rebalancing can help correct this.
2. Improved Risk Management:  The risks associated with an asset might change over time. Hence, it could be necessary to re-evaluate your portfolio’s riskiness and alter the mix of assets accordingly. Nevertheless, through methodical rebalancing of portfolios, it may be considered possible to regulate how much trouble you undertake.

Portfolio Rebalancing Example: For example, imagine an investor with a 60/40 portfolio, where 60% is in equities and 40% is in bonds. In a stable economic environment with moderate growth and stable inflation, the investor might expect equities to return 12% and bonds to 6%. By periodically rebalancing the portfolio to maintain the 60/40 split, the investor aims to achieve a balanced risk-return profile, potentially yielding an average annual return of around 10% with reduced volatility.

3. Helpful in New Investment Plan Adjustments: Gradually growing older often comes with new insights. Also, most investors become more prudent as they age. You can always seek to revise and adjust your investment style and strategy if you systematically rebalance your portfolio.
4. Selling High & Buying Low: Through rebalancing, investors are naturally induced to sell higher potentially returning assets and buy more of those that have lower potential returns. Although it may seem paradoxical, recalibration can be an effective long-term tactic for managing market-related risks.

Let’s use an example to illustrate how rebalancing can enhance long-term potential returns by seeking to sell high-performing assets and buying lower-performing ones.

For example, an individual wants to invest ₹20,000 in the ratio of 50:50 in the Nifty 50 TRI index and the Indian Government Bonds. The following table will demonstrate how the ratio changes over time without rebalancing the portfolio, exposing the investor to unforeseen risks.

(The above figures are for illustration purposes only)

The example illustrates how a portfolio that initially targeted an equal split of equities and government bonds (50:50) could go significantly off course over time if not adjusted periodically to compensate for different investment performances.

When Should You Rebalance Your Portfolio?

Portfolio rebalancing may be triggered by investors in three significant ways:

• Time-Based Trigger: It is a schedule that specifies the time for rebalancing, such as monthly, quarterly or yearly.
• Threshold-Based Trigger: Under this method, if the asset allocation of the portfolio goes off target by a certain percentage, then rebalancing is triggered.
• Combination Trigger: This approach combines both time-based and threshold triggers with an interval setting or a predetermined percentage of deviation in asset allocation to cause portfolio rebalancing.

You can decide to do a portfolio rebalance after one month, three months, six months or even every year. It depends on you. Nonetheless, remember that waiting for a long time to rebalance your portfolio can lead you to miss the opportunity to take advantage of the dynamics of the market.

For e.g., from its peak of ₹12,430.50 in January 2020 to its lowest point of ₹7,511.10 in March 2020, the Nifty fell by almost 38%. After hitting its lowest point, the Nifty increased 86%, ending 2020 with a 15% gain.

Is your portfolio aligned with your financial goals? Don’t wait! Rebalance your portfolio with Dezerv’s expert knowledge and data-driven insights.

How to Rebalance Your Portfolio?

Let’s break down portfolio rebalancing into simpler steps:

1. Set Your Asset Allocation: You should decide the proportions and amounts of your investments that you want to invest in various types of assets, such as equities, fixed-income securities, and others, based on goals for investment, time horizon, and risk appetite.
2. Review Your Current Allocation: If you find a mismatch between what you have invested so far and your desired investments, then it is time to make some changes.
3. Buy or Sell Assets: Buy only underweight assets and sell those that are overweight to align these with the target allocations.
4. Consider Tax Implications: Be tax-conscious while dis-investing. Start by selling those which attract tax benefits.
5. Monitor Regularly: Keep track of how well your portfolio is doing and check it periodically (on a quarterly, semi-annual or annual basis). Rebalance again if needed due to market changes or shifts in your goals.

Case Study:

Suppose you want to rebalance your portfolio; let’s check how to do it.

(The above scenario is for educational purposes only, and investors should consult their financial advisor before investing)

Do you find rebalancing complicated? Dezerv offers customised portfolio management services that suit your financial needs. Book a call now!

To Sum Up

Any investor who wants to seek long-term financial investment and aims for growth, in the long run, should make it a practice to readjust the contents of their portfolio. 

Once you understand why it is important, and adopt a systematic way of handling it, then you may be able to wade through the ups and downs in the market, minimise risks as well and aim that your investments align well with your future money targets. 

For both beginners and seasoned investors alike, regular adjustments are what keep a robust, diversified portfolio in place for many years.

Frequently Asked Questions 

Is portfolio rebalancing a good idea?

Portfolio rebalancing is important for maintaining your chosen asset allocation, managing risks and optimising potential returns. It seeks that your investments are in line with your financial objectives as well as your risk appetite, reducing exposure to particular asset classes and promoting long-term stability.

What is the 5% portfolio rule?

While diversification lessens the risk of any single investment affecting the whole portfolio adversely, this can be achieved by investing not more than 5% of total investment in one stock. This reduces the amount of exposure that you could have had in a case where one investment went wrong. However, we suggest that the said rule is for illustration purposes only, and an investor should consult their financial advisor before investing

Does rebalancing increase returns?

Rebalancing itself does not guarantee potential returns but helps with managing risks and keeping to an asset allocation plan, which we feel most comfortable with, i.e., one that comes close to our investment objective. Rebalancing improves long-term performance because it involves systematic investing that follows market trends through selling high-performing assets and buying undervalued ones.

Does portfolio rebalancing reduce risk?

Yes, portfolio rebalancing reduces risk by maintaining your desired asset allocation, preventing overexposure to any single asset class. It ensures that your portfolio stays aligned with your risk tolerance and investment goals, especially after market fluctuations, thereby optimising the risk-return balance and enhancing long-term financial stability.

His meticulously crafted spreadsheet, filled with air miles calculations and hotel point projections, revealed a world of ‘points-hacking’. 

This isn’t just his passion – thousands in India are leveraging similar strategies to fund travel, shopping, and more.

This conversation inspired me to delve deeper into the transformation of credit cards from mere payment instruments to lifestyle enablers. It’s a fascinating shift that reflects a growing sophistication in how people approach personal finance.

Today, I will guide you through the intricate world of credit cards, uncovering the deeper insights and opportunities they offer. I will cover:

• The economics of credit cards – how credit card companies make money
• Following the money – The flow of funds and the cost of convenience
• The anatomy of rewards – Decoding the point system
• The booming credit card landscape in India and growth drivers

But first, let me take you through the origin of the first ‘bank card’.

The birth of credit cards: A massive gamble that paid off

Did you know the credit card as we know it today was born out of a bold experiment in 1958 when Bank of America (BoA) launched the first-ever pre-activated credit card in Fresno, California?

According to Britannica, the BoA mailed unsolicited BankAmericards (the first ever pre-activated credit cards) with a USD 300 limit to 65,000 customers. This risky “drop” method led to initial chaos:

• Delinquency rates soared to 22%.
• Fraud spiked as criminals intercepted cards from mailboxes.
• Outraged customers found themselves liable for charges on cards they never asked for.

Despite a USD 20 million loss and the resignation of program creator Joseph P. Williams, BoA persevered. They tightened financial controls, improved fraud detection, and launched a PR campaign to restore trust. By 1961, BankAmericard turned a profit, sparking a financial revolution.

Despite these initial setbacks, BankAmericard’s eventual success laid the foundation for the modern credit card industry. Today, credit cards are an integral part of the global financial ecosystem, facilitating billions of transactions daily. 

However, the convenience of credit cards comes with a complex network of financial touch-points between various entities. To truly understand the credit card ecosystem, it’s crucial to follow the trail of money.

Following the money: The flow of funds and the cost of convenience

Every time you tap or swipe a credit card, a seemingly straightforward action sets off a complex financial process involving several key players:

This system keeps the flow of rewards and transaction processing running smoothly behind the scenes.

The surprising economics of credit cards: How card companies make money

Credit card companies primarily generate revenue via 3 sources: 

1. Interest fees – levied on your credit balance at a fixed rate (varies between card issuers)
2. Merchant fees – paid when you make a credit card transaction
3. Late fees – added to your credit balance if your payment is delayed past the due date

Did you know that customers who carry a balance and pay interest – known as “revolvers” – are often more profitable for credit card companies than those who pay off their balance each month (“transactors”)? Revolvers rack up interest and fees, which make them key contributors to credit card profits.

While credit cards offer convenience and rewards, they also come with costs that aren’t always obvious:

By being aware of these costs and utilising the benefits effectively, you can maximise the value of your credit cards.

The anatomy of rewards: Decoding the point system

Credit card rewards are a key attraction for many users, and most of us carry multiple credit cards for various purposes like travel, shopping or fuel, with each card offering different rewards and perks. But the system is more complex than it appears at first glance.

Let’s dive into the intricacies of the point economy:

Reward points: More than what meets the eye

1. Earn rates – Not all spending is rewarded equally:
   • Standard cards: 0.5-1 point per INR 100 spent
   • Premium cards: 2-5 points per INR 100 spent
   • Co-branded cards: Up to 10 points per INR 100 on partner spending
     

For example, a premium travel card might offer 5 points per INR 100 on flight bookings but only 1 point per INR 100 on grocery purchases.

2. Valuation variances – The value of a point can vary significantly depending on how you redeem it:
   
   • Travel points: Often valued highest, at 1-2 paise per point
   • Cashback: Typically INR 0.5-1 per point
   • Merchandise: Usually the lowest value, often below INR 0.5 per point
     

For instance, 10,000 points might be worth INR 200 as cashback, but could get you a INR 500 flight discount when redeemed for travel.

Maximisation strategies: Turning points into profits

1. Category optimisation: Use different cards for different spending categories. For example, use a dining rewards card for restaurants and a travel card for flight bookings.
   
2. Transfer partners: Some cards allow you to transfer points to airline or hotel loyalty programs. The transfer ratios for Amex points vary depending on the programme you’re transferring to. While many offer a 1:1 ratio, some can go as high as 1:2, meaning one Amex point could convert into two hotel or airline points.
   
3. Signup bonuses: These can offer tremendous value as some issuers provide bonus rewards for paying the joining fee within a set timeframe. For instance, the ICICI Sapphiro card comes with welcome vouchers worth over INR 9,000 within 45 days of settling the joining fee.
   
4. Pooling points: Some issuers allow you to combine points from multiple cards, helping you reach redemption thresholds faster. Some of the most popular ones are American Express Membership Rewards, Chase Ultimate Rewards and Citi ThankYou Rewards.

By understanding these nuances, you can extract maximum value from your credit card usage.

Staying ahead: Credit card experts and communities

In the ever-evolving world of credit cards, staying informed can make a significant difference in how you maximise your benefits. Let’s explore some valuable resources that can help you stay on top of the latest trends, hacks, and strategies.

Twitter: Your gateway to credit card wisdom

Twitter has become a hub for credit card enthusiasts and experts who share their insights, tips, and the latest offers. Here are some profiles that have popped up in conversations with a few team members who are credit card enthusiasts.

• @brownpoints: A go-to source for credit card news and analysis.
• @pointsdojo: Offers strategies for maximising your points and miles.
• @credit_cruze: Provides insights on credit card offers and rewards programs.
• @perfi_x: Shares personal finance tips with a focus on credit cards.
• @creditcardz_in: Keeps you updated on the latest credit card offers in India.

Thousands of accounts like these are providing a wealth of knowledge, from new card launches to strategies for maximising your rewards.

Discord: Powerful communities like Points Dojo

Points Dojo, a thriving Discord community has become a haven for credit card enthusiasts in India.

With over 3,000 members, Points Dojo is where credit card aficionados gather to discuss credit card hacks, points trading, reward maximisation and latest offers.

While these are two popular platforms that have come up in conversations, there are many more sources of information and strategies. 

Remember, while these resources can provide valuable information, always approach credit card usage responsibly. The goal isn’t just to maximise rewards but to do so in a way that aligns with your financial goals and doesn’t lead to overspending or debt.

In summary

I’ve watched India’s credit card landscape evolve with keen interest. The growth in spending is impressive, but it’s the qualitative shifts that truly captivate me. Take the integration of credit cards with UPI, for example – it’s not just about convenience; it’s potentially reshaping how India approaches credit. This fusion of traditional credit tools and digital payments is a game-changer, offering exciting opportunities but also presenting new challenges we need to address.

My advice? Think of credit cards as powerful financial instruments, not just plastic in your wallet. Take the time to understand the ecosystem – from how banks turn a profit to the mechanics behind those enticing rewards. Remember, the credit card users who come out on top aren’t chasing every shiny reward. They’re the ones who thoughtfully align their card usage with their broader financial aspirations. As this industry continues to evolve at breakneck speed, staying informed and adaptable will be your best strategy for navigating this space.

The senior citizen age is critical for an individual. The retirement stage is difficult as there is no fixed income like a salary, increasing medical expenses, and increasing family expenses. Managing all these circumstances would be easy if an individual earned a fixed regular income. 

So, how can senior citizens earn regular income? In this article, we will explore various senior citizens’ regular income schemes.

1. Mutual Funds

If diversified well, investments have immense potential to give competitive market returns and provide a space to curb the risk. Mutual funds are one of the best investment instruments for this. It creates a pool of investor’s money to invest in various schemes launched by the fund. There are several facilities for investors to save systematically and seek to earn returns, such as:

• Systematic Investment Plans –  This enables investment of small regular sums.
• Systematic Transfer Plans – This enables transfer from one fund to another over a period of time. 
• Systematic Withdrawal Plans – This enables withdrawal of small regular amounts.

Systematic Withdrawal Plans (SWP)

It may be a feasible option for senior citizens to opt for SWP. If the senior citizen investor has a large lump sum amount, if kept idle, its value may be depreciated off by the time value of money. So, the individual can invest such a large amount in SWP and have regular withdrawals every month. Further, we suggest that an investor consult his financial advisor before investing to know the facility and, depending on his risk appetite, invest in the scheme.

Let’s understand SWP with this example:

Mr Mehta has a ₹10 lakh corpus invested in a balanced mutual fund. To liquidate this investment, he has opted for SWP. He sets a withdrawal amount of ₹25,000/- per month. Mutual fund investment for some of the starting months would be as follows:

Learn how NRIs Can invest in mutual funds.

2. Senior Citizen Savings Scheme (SCSS)

The government of India aids senior citizens with this scheme, seeking to ensure that they are financially independent. Any senior citizen (as per age criteria) can open an account under this scheme. The scheme is an excellent investment for retired individuals who want to invest their retirement benefits in a lump sum and earn interest income every quarter. 

Moreover, the interest rate since the last few quarters has been nearly 7%-9%*, which is comparatively better than that of traditional instruments. Some key features of this scheme are:

• Interest = 8.2% per annum (From April 1, 2024 to September 30, 2024)
• Interest receiving date (every year): At the last date of every quarter
• No. of deposits: only one
• Minimum deposit = ₹1,000/- and more in its multiple
• Maximum deposit = ₹30 lakh
• Tenure: 5 years. Within a year, the application should be made to extend this tenure for a further three years if investors are willing to
• Account type: Individual or Joint (with a spouse)
• Tax benefit: Section 80C of Income Tax Act, 1961

(*The rate of interest is as of July 24, 2024; please read the scheme documents before investing)

3. Monthly Income Scheme by Post Office (MIS)

This scheme is offered through the post office under the guidance of the Ministry of Finance. It seeks to enable monthly returns at a prescribed interest rate against a lump sum investment made by the investor. The scheme is one of the suitable options for senior citizens who want to invest small lump-sum amounts to earn potential interest every month. 

The MIS features are as follows:

• Interest = 7.4%* per annum
• Interest received: Every month
• Account type: Individual or Joint (max three people)
• No. of deposits: only one
• Minimum deposit = ₹1,000/- and more in its multiple
• Maximum deposit = ₹9 lakh (individual), ₹15 lakh (joint)
• Tenure: 5 years 
• Tax deduction: Section 80C of Income Tax Act, 1961

*(This rate is as on July 24, 2024, please read the scheme documents before investing)

4. REITs & InvITs

These innovative investment vehicles are gaining attention these days. Direct investment in sectors like real estate requires a hefty sum. However, investing in the units of Real Estate Investment Trusts(REITs) and Infrastructure Investment Trusts(InvITs) can make it easy.

These instruments are relatively new compared to traditional investment avenues in India, but they have gained traction in recent years. They offer income in the form of dividends. However, they are accompanied by market risk. 

For senior citizens, who typically have a low-risk appetite, balancing these instruments with other fixed-income investments becomes crucial. Diversification is the key to managing risk and ensuring steady income.

• REITs

These trusts operate similarly to companies that issue shares and raise funds. The trusts offer units to the public, raise funds from them and invest them in real estate. Usually, these investments are in highly sophisticated residential or commercial properties. 

Investment in REITs can be made through its Initial Public Offer (IPO), starting from ₹10,000/- per unit. Investment in REITs trading on the exchange does not have any minimum limit. Trusts generate rent income, which is distributed among unitholders as dividends. However, due to their market exposure, the risk is close-knit to such investments.

• InvITs

The trusts invest in finished or under-construction infrastructure projects like flyovers, parks, airports, etc. Such projects need a high amount of capital, which the pooled funds of InvITs easily provide. 

Minimum investment in Public InvITs can be made in its IPO with ₹10,000/-. While trading on the exchange, there is no minimum investment constraint. Also, risk is an inherent part of it.

5. Bonds for Senior Citizens

Bonds are debt instruments offered by companies to raise capital. The government also provides bonds known as G-secs. The key feature of this instrument is that it seeks to earn fixed interest payments at regular intervals, which would suit senior citizens. Investment should be made by assessing the associated risk, returns (coupon rates), market conditions, and ratings. 

6. Fixed Deposit (FD) Plans For Senior Citizens

Many banks provide special fixed deposit plans for senior citizens, which offer higher interest rates than regular FDs. For example, some banks offer senior citizen FDs at a 0.5% higher interest rate than regular rates. Also, the post office has a scheme similar to fixed deposits known as the National Savings Time Deposit Account (TD), which offers returns of 6.9% to 7.5%* for different periods, such as one year, two years, five years, etc.  Further, investors should consult their tax/financial advisor before investing.

(The above figures are only for reference purposes)

*(Mentioned rates are as of July 24, 2024, please refer the scheme document before investing)

Factors to Keep in Mind While Investing

Consider aspects like these while aiming to select options for regular income for senior citizens:

• Identify your needs before investing and select the most suitable investment option. One size may not fit all.
• Investing part of your amount in diverse options would help curb the risks and aim to generate regular returns at different intervals.
• One government savings scheme, like SCSS, would help minimise the risk of your returns in times of market volatility.
• Tax liability, deductions, and tax-saving investment schemes should be considered, as they can help reduce tax payments on any investment.

Bottomline

Early investment is beneficial for all individuals. However, senior citizens should not worry, as several investment schemes can provide them with regular returns, even after retirement. The different factors mentioned above should be considered when investing. If needed, help should be sought from professionals for this planning. 

Are you worried about planning your wealth? Dezerv is at your service! Call us to book an appointment with an expert and get started today!

Frequently Asked Questions

How do senior citizens earn regular income?

Senior citizens earn regular income from government schemes like post office monthly income schemes, senior citizen savings schemes, fixed deposits, etc. Also, other instruments, such as mutual funds, bonds, REITs, InvITs, etc, seek to offer regular income to investors. However, it is suitable only if the senior citizen is willing to expose investment to market risk.

Which scheme is good for senior citizens?

The government offers various schemes for senior citizens to earn regular income in retirement. Certain investment instruments, such as mutual funds, bonds, fixed deposits, etc., can also be considered. Factors such as return needs, risk appetite, market conditions, etc., may be considered when choosing a suitable scheme. 

What is a senior citizen savings scheme?

The Indian government offers regular income to senior citizens through a senior citizen savings scheme. Lump-sum investments can be made of a minimum ₹1,000/—and a maximum ₹30 lakhs. The interest is paid quarterly. As of July 2024, the rate is 8.2%*. The per annum interest rate has usually varied around 7% to 9% since the last few quarters. 

*(The above rates are as on July 24, 2024. Please refer scheme document before investing)

How can retired people seek to earn money?

Retirement age is financially challenging to manage. However, there are various ways for retired people to make money, such as investing in senior citizen schemes, working part-time, freelancing with skills, etc. Financial independence during retirement also provides mental peace.

In recent years, we’ve observed an interesting shift in the investment ecosystem. As large-cap fund managers faced challenges in outperforming their benchmark indices, many investment houses began offering passive strategies like index funds and ETFs. This trend has persisted, even as markets have experienced various fluctuations and changes. This evolving dynamic highlights the importance of a balanced approach to asset management – one that bridges the gap between active and passive strategies. Factor Investing offers a systematic solution for optimizing returns while capitalizing on prevailing market conditions.

What is Factor Investing?

Factor Investing is an investment strategy that targets specific characteristics, or “factors,” of stocks to enhance returns and manage risks. It combines elements of both active and passive investing to achieve the best of both worlds. Here’s a quick breakdown:

1. Focused Strategy: Targets specific stock characteristics to enhance returns and manage risks.
2. Balanced Approach: Uses a rule-based method to select and weight stocks.
3. Diversification: Combines different factors for improved diversification.
4. Performance: Seeks better risk-adjusted returns and more stable long-term performance.

Key Factors in Factor Investing

Factors in Factor Investing are categorized into Macroeconomic and Style factors:

Macroeconomic Factors:

• Economic Growth: Boosts stocks during economic expansion.
• Interest Rates: Falling rates boost stocks.
• Inflation: Rising prices reduce purchasing power, affecting stocks.
• Credit: Loan availability impacts investment and spending.
• Liquidity: Ease of converting assets to cash affects stability and volatility.

Style Factors:

• Dividend Yield: Higher-yielding stocks provide superior returns.
• Size: Smaller firms tend to be high risk, high reward.
• Quality: High profitability and stable companies outperform.
• Value: Cheaper stocks outperform expensive ones over time.
• Momentum: Stocks that have performed well tend to continue the trend.
• Low Volatility: Lower volatility stocks offer higher risk-adjusted returns.

Things to Consider in Factor Investing

Benefits:

• Outperform Benchmark: Focus on historically outperforming factors like value and momentum.
• Systematic Approach: Uses tried-and-tested strategies in portfolio construction.
• Transparency: Helps understand the rationale behind investment performance.

Drawbacks:

• Complexity: Requires a solid understanding of financial metrics and market behaviours.
• Historical Data Bias: Reliance on past performance may mislead current decisions.
• Selection Bias: Reliance on favourable backtest results can lead to poor decisions.

Note: While factor investing can offer benefits, it’s important to note that some factor-based products may be restricted to accredited investors due to their complexity or regulatory requirements

Dezerv’s View

A key benefit is the cyclicality of factors – since different factors perform well at different times, combining them can provide diversification benefits. This diversification helps smooth out returns and reduces the impact of any single factor’s underperformance. While complexities and risks exist, a well-balanced Factor Investing strategy can be a powerful tool for achieving long-term financial goals.

We’ve created an easy-to-understand cheat sheet that explains:

• What is Factor Investing?
• Key factors involved in Factor Investing
• Things to consider in Factor Investing – benefits and drawbacks
• Opportunities and challenges that investors should carefully consider

Check out our Factor Investing cheat sheet, and let me know your thoughts in the comments below!

Disclaimer: The information contained herein is for informational purposes and should not be interpreted as soliciting, advertising, or providing any advice.

At its core, the idea of an Accredited Investor recognizes that not all investors are equal. Some investors possess the financial acumen and risk appetite to go beyond standard investment requirements. Regulators have identified these “informed and sophisticated” investors and decided to extend privileges in alignment with their capital, risk appetite, and financial understanding.

In this edition, we delve into the concept of Accredited Investors, a new investor category introduced by SEBI in August 2021, designed to expand the investment horizons of affluent investors.

What Does it Mean to be an Accredited Investor?

In essence, it’s about showing you have sufficient investment experience and assets to be considered a relatively savvy investor who doesn’t require the same level of hand-holding as the retail investor. Cross the defined thresholds for income and net worth, and you’ll be welcomed into an exclusive club.

The shackles come off in terms of investment size, concentration limits, disclosure requirements, and more. Portfolio managers can go overweight on unlisted securities. Investment advisors can ditch those fee caps, and performance-linked compensation is on the table.

What it takes to become an Accredited Investor

Why Was Accreditation Deemed Necessary?

The Accredited Investor framework is not just a gift to the wealthy – it represents a calculated move by SEBI to enhance overall market efficiency. By loosening the reins on sophisticated investors, the regulators have unlocked a pivotal pressure release valve for the entire financial ecosystem.

SEBI does a great job of protecting the interests of retail investors. But what about the seasoned market veterans who don’t require that same level of hand-holding? Under the AI framework, SEBI has found an elegant solution. Those passing the accreditation criteria gain the ability to invest in unlisted and unregistered securities at their own risk.

The accreditation process itself adds a critical layer of checks and balances. Only those demonstrating adequate risk awareness and net worth can enter these special investing channels.

Understanding how to create a Will is another essential aspect of managing and preserving your wealth.

Benefits of Becoming an Accredited Investor

There are two major benefits for Accredited Investors:

1. Easier Access to Exclusive Investments: Accredited Investors get the opportunity to invest in private placements, venture capital, private equity, hedge funds, and other alternative investments that are not available to the general public.
2. Greater Control: Accredited Investors often have more control over their investment choices, as they can directly invest in specific opportunities or work with private investment managers.

Being accredited has perks for different types of investors in various investment options like Alternative Investment Funds (AIFs), Portfolio Management Services (PMS), and individuals seeking guidance from investment advisors. Here are the key benefits:

For Those Investing Through Alternative Investment Funds (AIFs)

1. Lower minimum ticket size of less than ₹1 crore.
2. Large Value Accredited Funds (AI Funds) specifically for accredited investors with a minimum capital commitment of INR 70 crore enjoy the privilege of allocating a higher percentage of their assets under management (AUM) into individual companies within AIF category I & II (50%) and category III (20%), compared to regular investors who must adhere to a 25% and 10% allocation, respectively.
3. AI funds benefit from an extended AIF life of more than 2 years from the tenure stated in the PPM (Private Placement Memorandum).

For Those Investing Through Portfolio Management Services (PMS)

1. Those falling under the accredited category come with a minimum ticket size below INR 50 lakh.
2. Large Value PMS AI investors (with a minimum investment of INR 10 crore) gain the advantage of placing 100% of their investment in unlisted securities, fostering a more diversified portfolio compared to the 25% limit for regular investors with a INR 50 lakh minimum ticket size.
3. These distinctions in criteria for larger investors—like AI funds with minimum capital commitments of INR 70 crore in AIFs and PMS AI investors with INR 10 crore—grant them substantial relaxations and advantages.

For individual investors, Accredited status permits greater flexibility when engaging professional investment managers compared to regular investors. While fee negotiations remain bilateral for both categories, Accredited Investors may have a more flexible fee arrangement. Conversely, regular investors face a capped fee structure, limited to a maximum of 2.5% of assets under advice or INR 1.25 lakh when it comes to engaging with Registered Investment Advisors.

Challenges for Accredited Investors

While the accreditation program offers numerous benefits and advantages, it hasn’t fully gained traction in India. Several roadblocks are keeping investors from applying for accreditation, such as:

1. Limited Duration: Accreditation is valid for a maximum of three years. Extending this duration could make it more attractive and easier for investors to get accredited.
2. Optional Accreditation: Unlike in the USA, accreditation in India isn’t mandatory for accessing VC, PE, and hedge funds. Requiring accreditation for these asset classes could enhance investor protection and ensure a more equitable investment landscape.
3. Reliance on Accreditation Agencies: SEBI relies on Accreditation Agencies for accreditation, whereas other jurisdictions conduct due diligence through the vehicles/funds in which investors are placing their money. Since this would be a relatively small part of the Accreditation Agency business, these agencies may not focus on speed and efficiency in the process of accreditation.

Summary

Reflecting on the Accredited Investor framework, it becomes clear that this isn’t just about giving the wealthy a new set of privileges. It represents a pivotal moment when Indian regulators acknowledged that the traditional “one-size-fits-all” model had run its course.

Make no mistake: becoming an Accredited Investor is about more than just access to complex investment products. It’s an acknowledgement from regulators that you’ve earned the right to invest like a sophisticated professional.

Disclaimer: The information contained herein is for informational purposes and should not be interpreted as soliciting, advertising, or providing any advice.

The amount of wealth lost to non-communication, ignorance, or negligence is shocking. In fact, in March 2024, the unclaimed deposits with public and private sector banks were INR 78,213 crore, rising 26% over the previous year.

Imagine the untapped potential of this wealth if it were properly planned and distributed. Not only could it secure the financial future of the next generation, but it could also honor the legacy and hard work of the wealth creators. Therefore, at Dezerv, we emphasize that Wills are not just legal documents; they are instruments of peace, security, and legacy preservation.

Why Do You Need a Will?

1. Efficient Estate Planning: A well-drafted Will ensures an organised distribution of a diverse portfolio of assets. It facilitates clarity and precision, leaving no room for ambiguity about the testator’s intentions.
2. Protection of Assets: By having a Will, you safeguard your assets. It ensures that a comprehensive record is kept, preventing any asset from being overlooked or misappropriated.
3. Minimises Legal Complications: Family disputes over asset distribution are common in the absence of a clear Will. A Will reduces these legal complications by providing a clear directive on how assets should be divided.
4. Management of Digital Assets: In today’s digital age, managing online presence posthumously is crucial. A Will allows for the proper handling of social media accounts, digital currencies, online storage, and other digital assets.

Terms You Need to Know

• Testator: The person who creates the Will to specify the distribution of their assets. The testator’s clear directives form the backbone of the Will.
• Executor: The person chosen by the testator to execute the instructions in the Will. Executors play a pivotal role in ensuring that the Will is followed to the letter.
• Witnesses: Individuals who see or acknowledge the testator’s signature on the Will. 
• Beneficiaries: The persons among whom the assets are to be distributed as per the Will. Beneficiaries are central to the Will as they are the recipients of the testator’s assets.

Step-by-Step Process of Making a Will

1. Listing of Assets:

• Action: Begin by compiling a comprehensive list of all investments and assets held in the name of the testator.
• Details: This list should include real estate (primary home, vacation home, rental properties), personal property (vehicles, furniture, jewellery, heirlooms), financial investments (stocks, bonds, mutual funds, savings accounts, digital currencies), and digital assets (online storage accounts, social media accounts, websites, photos, videos).

2. Division of Assets:

• Action: Clearly specify how assets are to be distributed among the beneficiaries.
• Details: Carefully consider and document the distribution plan to ensure fairness and adherence to the testator’s wishes. Specify any conditions or stipulations for the distribution of certain assets.

3.  Appointment of Executors:

• Action: Appoint executors who will ensure the Will is followed.
• Details: Choose individuals who are trustworthy and capable of managing the responsibilities involved. Consider discussing the role with the potential executors to confirm their willingness and ability to serve.

4. Guardians for Minors:

• Action: If applicable, appoint guardians for minors to ensure their care and welfare are taken care of according to the testator’s wishes.
• Details: Discuss the guardianship with the chosen individuals to ensure they are willing and able to take on this responsibility. Consider the financial implications for the guardians and allocate additional funds if necessary.

5. Signatures and Witnesses:

• Action: The testator and at least two witnesses must sign the Will.
• Details: Ensure that the signing process adheres to legal requirements to validate the document. The witnesses should see the testator sign the Will and then sign it themselves to confirm its authenticity.

Understanding the importance of different investor categories, such as Accredited Investors, can also be beneficial when planning for the future.

Assets to Include in a Will

• Real Estate: Primary home, vacation home, rental properties. These tangible assets often form the bulk of an estate and require clear directives for distribution.
• Personal Property: Vehicles, furniture, jewellery, heirlooms. Personal property can have both monetary and sentimental value, making its distribution significant.
• Investments: Equities, bonds, mutual funds, savings accounts, digital currencies, etc. Investments require precise handling to ensure their value is maximized for beneficiaries.
• Digital Assets: Online storage accounts, social media accounts, websites, photos, and videos. Digital assets are increasingly important in modern estate planning, ensuring that the testator’s digital legacy is managed appropriately.

Dezerv View

A Will is essential for efficient and effective estate planning, particularly in wealthy families with substantial assets and multiple parties involved. It is crucial to consult with your lawyer, investment expert, and Chartered Accountant to understand the nuances of your estate planning. A Will should be made (or updated) as soon as significant assets are accumulated or major life changes occur, such as marriage, the birth of a child, or starting a business.

At Dezerv, we believe that a Will is more than just a document; it’s a testament to your life’s work and your love for your family. It is a powerful tool that ensures your wealth is passed on according to your wishes, minimising potential conflicts and maximising the value of your legacy.

Disclaimer: The information contained herein is for informational purposes and should not be interpreted as soliciting, advertising, or providing any advice.

Ample research is available on the subject that speaks about the merits of staying invested in volatile markets, highlighting the negative impact of missing out on the best days of the market’s performance. On the other hand, these arguments find a counter in the analyses that show the advantages of staying out of the markets during periods of corrections.  

Both these analyses have limitations of using historical data. Therefore, it’s important to use these data points in conjunction with other important approaches to answer this holy grail of a question.

So, which are the best days to invest in the market?

Generally speaking, each answer to this question is different based on the context in which it is asked.

For instance, if you asked Google “the best days to invest in stock markets”, the first result will state that “Monday is the best day to invest in the market for traders”. On the other hand, the 6th result indicates that “Friday is the best day to invest in the markets for long-term investors”.

Hence, it is important that we first develop a good understanding of the various types of market participants so that we don’t use the term ‘investor’ loosely.  

Market Participants

1. Traders

2. Speculators

3. Investors

Traders participate in the equity market with an intention to benefit from volatility. Days with high volatility are the best days for them to trade.  

Speculators participate to benefit from favourable outcomes of specific events. They prefer investment periods lined up with uncertain events.

Investors invest money for the long term with an intention to achieve specific financial goals. They abide by a financial plan and deploy money accordingly. For these investors, the best days to invest in the market are those that are outlined by their financial plans and their investment time horizon.

With this context in mind, let’s answer ‘what is the best time to invest’ question through three approaches – Historical Data, Human Psyche and Probability Analyses.

Historical data

Let’s assume you had invested Rs. 100 in the Nifty on 1st April, 1995 and had stayed invested till today (across all ~6500 trading days). The value of this investment, as on today, would be Rs. 1325 (implying a CAGR of 10.5%).

During this time period, there were ~3450 days with positive returns. If you, as an investor, had stayed out on 7 of the best days of the market (1% of the total trading days), this investment would have grown to only Rs. 695 (implying a CAGR of 7.5%).

Therefore, based on the historical data approach, patience is key. Considering that we are talking about the long-term investor, just being present on the good days is enough, since we can’t always predict the market.

Human Psyche

For this approach, let us try analysing the psychological emotions an investor goes through in his/ her investment lifecycle.

It’s generally difficult for an investor to invest in the falling market than the rising market.

Maximum participation (from retail investors) in equity markets come during the bull markets. During this market phase, the general atmosphere of the economy is positive and we realise greater investment activity. Conversely, bearish markets increase investor skepticism and make them extremely tentative about investing. This behaviour is also reflected through the changes in trading volumes during these market phases.

This doesn’t seem right, does it? Demand in the market increases (with higher prices) when it is performing well, while the demand falls (with cheaper assets) when the market is not performing?  

Well, this is how the human psyche influences our investing behaviour. Hence, for long-term investors, the best bet is to stick to their investment plans during volatile markets, while, at times, doubling down on strong fundamental investments which may be discounted during bear markets.

Probability Analyses

Probability weighted return calculations are an effective tool to compute expected outcomes from an asset class which has multiple probable return trajectories. This analysis can help us understand the expected return from an instrument, say, the NIFTY over a specific time period.

Let’s take an example to understand how this approach can help us answer the key question. 

For the sake of this discussion, let’s assume that an investor (as defined earlier) is looking to invest in the Nifty ETF for 10 years. The Nifty today is at 15,000 and is expected to be at 50,000 by 2031. This investor is deciding whether to invest in the Nifty today, or wait till it corrects and falls to a lower level.

Since, there is no certainty of a market correction, let’s assign probabilities to the Nifty level over the next 2 weeks:

– Nifty – 12,000; 50% (since the investor feel that this is a highly likely outcome)

– Nifty – 15,000; 20%

– Nifty – 18,000; 20%

– Nifty – 20,000; 10%

Now, if we consider the above-mentioned market levels and compute the probability weighted returns, what we see is that expected outcome is similar to the likely return from current market levels!

Wait, what?

Yes, the investor can expect to earn almost the same return over the next 10 years if he invests today (at 15,000) rather than delaying his decision by 2 weeks (13.3% v/s 12.8%). 

All these three approaches direct us to only one answer. For long term investors, it is best to get in early, systematically plan our investments over time and stay in through both, good days and bad.

One word of caution here though –

This approach might not work if you have certainty about futuristic market outcomes.

But let’s get real. If you truly knew what the market would do tomorrow, you would not be reading this post and neither would you be doing your jobs. You would’ve gone all out and invested all your wealth on that “certain” market outcome hoping to make a killing of a lifetime.

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‍Author: Vaibhav Porwal (Co-founder — dezerv.)

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Growing up in a traditional Marwari joint family with the business of textiles and plastic shoes, my world was all within a 10-km radius in Udaipur.

There are four landmarks which used to be most frequented by me and that is where I learnt early lessons of finance and investing.

1. Bada Bazar

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This is the commercial heart of the city. It is the hub of trading and retailing of agricultural, textile, handloom products and of money lending (or as we know it as P2P lending). I used to hang out there at our textile shop. Meeting people from all walks of life set the stage for me to understand human behaviour. That’s where I learnt the true nature of trade-offs. With higher risk came higher returns. And yet, everyone perceived this equation differently. Some would inherently seek out risk, and some would abhor it. I realised early on that finance is less about numbers and more about emotions.

Over the years, the quaint narrow lanes became traffic nightmares, and buyers moved on to shopping at malls. Most of the shop owners thought this was a fad, and stayed put. Eventually, many of them had to shut shop.

Lesson 1: Change is the only constant. As an investor, agility and dispassionate decision-making is the key.

2. Railway training ground

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Can you imagine a life without cricket? The Railway Training Ground (RTG) was that place where we would have some of the most passionately fought wars, also called matches. Interestingly, we were warned by folks to not go beyond the RTG as there were jungles beyond that.

Towards the late 80s, I remember many local brokers coming to our shop to talk about buying land beyond the RTG. Every once in a while we ended up going to the construction site nearby to fetch the ball. The opportunity was playing out right in front of our eyes. And yet, my family never considered investing. Today, we look back at it as a missed opportunity.

Lesson 2: Sometimes the investment opportunities we look for are right in front of our eyes.

3. Fatehsagar and Pichola Lakes

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No weekend was complete without a visit to the two lakes that defined Udaipur. Built hundreds of years ago to store water, these two lakes were central to the social life of the city. The roadside stalls there served up some of the best food I’ve ever had.

Little did we realise, that the introduction of private airlines & the consequent increase in tourism in the 90s would change the fortunes of this favourite picnic spot. While we always had some of the finest hotels in the country, the introduction of new air routes changed the landscape of the area with the opening up of new hotels around the lakes. This taught me an important lesson in investing.

Lesson 3: Always look out for the second and third order effects of change.

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4. Hindustan Zinc

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HZL was and still is, the largest company operating out of the city. Most of my friends’ parents worked at HZL. Hanging out at their homes, I realised one universal truth: almost every employee was very unhappy. It always amused me that despite being the largest producer of zinc in the country, it always struggled to make profits.

Soon with tremendous fanfare, and massive protests, HZL was privatized. Almost everyone we knew there opted for the voluntary retirement scheme. New management came in, and very soon, we started hearing about more jobs and happier employees. Thereafter, it felt that the fortunes of the company changed. It is this that brought home to me the importance of high-quality management in selecting investments.

Lesson 4: You’re always investing in the people, before you’re investing in the business.

Coming from a small town, I always had self-doubt about how I could go on to advising some of the wealthiest families in India. After all, they have seen and experienced much more than I had. Going back to my roots helped me believe in myself and carry forward the lessons I learnt in my professional life.

Author: Vaibhav Porwal (Co-founder — Dezerv)

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