Poor Investment in Stocks, Thinking to Restructure Portfolio


(Susindar) #22

I am seeing a few issues in your classification of sectors which could mean a big difference with your thesis of investment. That is Mahindra holidays as entertainment rather than hotels and kitex as consumer rather than textile. This could mean a world of difference in valuation and hence the price you pay to buy and sell. For example zee and sun are entertainment and royal orchid is hotels. Similarly for kitex- textile (among lowly valued) and consumer stocks (among highly valued). Simple way to look at this is what seperate your stock from others. If there is no differentiation, it is more likely that it is a commodity rather than a brand


(starpenchal2018) #23

I am really liking this quote, Thanks for suggestion, This brand is selling in amazon also, but i am not sure how many people are aware of this brand, Brand is still not popular so far. I will looks couple of quarters, if management is not meeting their promises, Then I will exit from here.

Yes, Mahindra holidays is entertainment business, this has unique model of business. I will get benefit in long run of the business (may be more than 15 years), Similarly I am expecting in wonderla also.

I am planning to exit future consumers and enter into Nilkamal. This has brand value.


(Shailesh) #24

Good to see you have never say die spirit . Keep it up

Just a small piece of advise don’t change your stocks too often

Now on performance expectation …

Remember Index is composition of best performers ie like a IIT among engg schools , so chances index will perform better than overall market ( no survivor bias ) is a fact … That means lot of people will do far worse than index …

Now good number of Mutual funds are also better performers than index , which means making money better than index ( forget mutual funds ) is even more difficult …

In this context you need to think why you want to beat mutual fund … if you are not a full time investor or cannot do full time research .

My advise would be pl invest 75% in equity mutual fund and 25% in fixed income / liquid funds and use time saved to improve your earning power & saving potential by investing in skill related to your current job .


(Arun S G) #25

[quote=“kb_snn, post:24, topic:20638”]
In this context you need to think why you want to beat mutual fund … if you are not a full time investor or cannot do full time research .

My advise would be pl invest 75% in equity mutual fund and 25% in fixed income / liquid funds and use time saved to improve your earning power & saving potential by investing in skill related to your current job .
[/quote]: +1:t6::+1:t6:

Very good advice ! This brief sentence captures lot of wisdom. Time is money and best investment is always in oneself. Increasing earning is more important at certain stages of life than squeezing out a few percentage points in return.

One addition to the above would be, even if you are a full time investor and can do full time research, unless you are able to measure your performance and convincingly beat mutual funds consistently and prove it to be due to skill and not luck, a mutual fund is a better option for most investors.


(starpenchal2018) #26

Thank you Shailesh and Arun for good suggestions.

I am 38 years old now, Planning to retirement at the age of 43, I am planning to leave Bangalore, and going to my native place(Small town in Andra), and live in my own house. Now I have another 5 years for saving, Actually my total investment as of now, as per below table.

45%20AM

I am doing monthly SIP to Mutual funds, Here after I decided to not to change equity frequently, I will check my portfolio performance every year. I have exited few stocks, GM brveries, future consumers and motherson and semi. and Enter into new stocks Everest Industries and Nilkamal. Please see below my equity PF

24%20AM

Now this equity turn -6% to plus 4%. I will leave this portfolio for 1year.
Here after I will focus on Mutual funds monthly, mutual fund weightage will keep increase with SIP.

Thank you all


(Vijay) #27

Unless we try, we cannot be sure if we can beat a mutual fund. Time is money and I agree that we must see if it makes sense to spend time on investment. For example , 1% of my portfolio is significant and is more than the salary I get from my day job. If mutual fund charges 1% as expense ratio, it makes sense for me to invest myself to save that expense fee even if I don’t beat mutual fund returns.


(Bharat) #28

There are few good direct Mutual Funds where the expense Ratio is around 0.8%. Index Funds have far lower expense ratio which too can be an alternate to active funds. I am not getting into debate of whether the returns by index fund can beat Active funds or direct investing.
Every type of investments has some advantages and can be suitable for different crowds.
Someone into a 9-5 Job won’t get enough time to analyse individual stocks and follow them and may be Mutual Funds would be better for him.
Some may have low capital to deploy and low knowledge about analyzing companies and monthly SIP in Mutual funds can work for him until he gets a good amount and knowledge of direct investing.
One Size does not fit all. One can own diversified companies through MFs which is not the case with Direct Investments. Risks are relatively lower in MFs than Direct investing though rewards may be lesser. It is also of about what one expects from markets.
Even for Direct investing , one has to pay brokerage (Discount brokers are there now but i have seen their servers hanging up many times) , one has to pay mandatory 0.2% for STT on Buy & Sell , there are Annual Demat Maintainance Charges , Depository Charges for every sell transactions etc.

It all varies from investors to investors


(Shailesh) #29

I see you have taken up very tall task of retirement by age of 43 ie within 5 years from now .

To ensure that your annual passive cashflows ( from dividends and rental income ) should be > 1.2 your salary when you retire …

As I see your are primarily in Real estate ( 50% allocation ) – you need to see that this real estate generates monthly income for you … which is close to 60% of your current salary . I hope this real estate PF does not include your current residence and you have no mortgages outstanding …

Now on to fixed income allocation of 32% – It is too high for your age … You can reduce it to 20% and put 12% slowly through STP into equity mutual funds

Finally you can forget what happens to equity as it is just 8% of your Pf … Even 10% alpha will not give great overall portfolio returns .

Your focus should on increasing saving rates and monetising real estate …

Best of luck …


(Vijay) #30

0.8% and 1% are both high in my case. As mentioned by both of us, investment choice depends on the target audience. Moreover index funds offer very low returns if I compare it to my investments in the last 15+ years.

I don’t think so. We can diversify as much as we want and there is no limit. Also remember that diversification beyond a point is meaningless and does not reduce risk.

I have used many brokers in the last 2 decades and had sold very rarely. Hence the 0.5% brokerage is spread across 10 to 20 years and hence is trivial. Mutual funds charge 1% fee every year. Hence it depends on the individual. My holding period is usually more than a decade and hence this strategy may not work for 99 % of investors. In fact it takes 3 to 5 years for me to buy a stock. So selling is often very rare.


(starpenchal2018) #31

Thank you . Now my site is not generating any cash, So I am planning to sell this land in 6 months time, part of the money will be used to buy Commercial place in my small town, rest of the money will add to mutual funds, After 5 years All my policies, PPF will get maturity, I am planning to use this money to construction of shops in my town, then I will get monthly rent.

I don’t have any home loans, So I will save 60% of my pay for next 5 years in mutual funds.

Please can you explain this in some more detailed, I dint get it, Thanks


(Shailesh) #32

If you are annual passive income from dividends and rental income is equal to 1.2 times of your current salary , you will be easily finance your current lifestyle ( assuming your current expenses are below your current salary) .

Now why 1.2 times … It is because during economic downturns … some companies may reduce their dividends or some of your properties may be vacant ( and not give any rental income ) … This 20% Margin of safety will help you tide through these times …


(EL) #33

I read a very long time ago in a book and believe strongly in it
I forgot the book name unfortunately
Basically the book said you should expect to draw 4pc every year and let the rest grow in equity
Using this formula consistently through market bear and bull patterns, you can consistently live at the ongoing inflation rate
For example, if your monthly cost is 50k, hence yearly 6L today
If you invest 1.5cr and consistently every year not withdraw more than 4pc, your 4pc or below withdrawal will ensure you will live at your current standard of living in perpetuity
However you would be wise to keep aside a little bit extra for health care as this is likely to increase as your body ages