Risk in Personal Finance
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Transcript of Risk in Personal Finance
RISK!
Risk of being part of AIFW!
Before objective analysisRisk of not digging deep
After objective analysis!Risk of digging deep!
Paralysis
Before After
Priorities
Power of compounding does not matter for ~ 5Y or less
Popularity
“It Seemed Like a Good Idea at the Time”
A minimalist portfolio
Asan Ideas for Worthless information!
“Ashal Sir, Please name the two mutual funds you hold”
When Ashal says MDBSC* ….
A Mutual Fund SIP is Hope, Not a Strategy!
Currently there are ten funds that are 20-years old
In 2036, there would 500+ 20-year old funds!
Mutual Funds are not LIC polices!
A Mutual Fund SIP is Hope, Not a Strategy!
A Mutual Fund SIP is Hope, Not a Strategy!
Systematic investing + Systematic Risk Management
• Clear Asset allocation • Watch for deviations regularly (yearly first and
more often later)• Rebalance (once a Y, once every few Y and
more often later)• Quit while ahead
All this is possible with MDBSC!
Star Ratings
How to review a mutual fund SIP?
Do we have a review strategy in place?
How to review a mutual fund SIP?
How to review a mutual fund SIP?
Buying on dips!
Buying on dips = SIP!
How many of us are going to compare!
Buying physical gold <> Investing in gold
Aim: accumulate gold for daughter’s marriage.Aim: Hedge against inflationAim: Reduce volatility in my portfolio?
Buy physical gold or use gold funds, etfs . Bonds?
Gold always moves up!
Gold always moves up!
Gold always moves up!
Gold always moves up!
Riskometer
NAV always moves up!
Recency Bias - 1
Risk Ignorance
FD rates have gone down, so can I invest in debt funds?
Can I use balanced funds for SWP in retirement?
Can I invest in sector funds for next 3 years?
Liquidity Ignorance
NPS only for tax deduction
Use tax-free bonds to get tax-free returns
Real Estate
You cannot choose the “right” mutual fund or stock!
Invest in “good stocks” and forget about it!
Please suggest a mutual fund to start SIP for next 15 years.
Stock investing vs Mutual Fund investing
Timing the Market
Possibility vs probability
Hot-hand fallacy