September 2012

Issue: Dear Mr. Gerard Colaco, congratulations on winning an award in the Karnataka Association of Mutual Fund Advisors (KAMFA) Convention. You fully deserved it and wished you were present to collect it.

Mr. Gerard Colaco: Sorry to disappoint, but I do not believe in awards at all! I was also not informed in advance that I had won any KAMFA award. Had I been, I would have politely declined it and the next Individual Financial Advisor (IFA) would probably have been given the award in our place, with our good wishes.

The new tax saving scheme called “Rajiv Gandhi Equity Saving Scheme” (RGESS), exclusively for the first time retail investors in Securities Market. This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs. 10 lakh.

The Scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an ‘equity culture’ in India. This is also expected to widen the retail investor base in the Indian securities markets.

Investor’s Query: With the euphoria of this dyeing UPA II (>18000), I think that we should take a break from my Monthly SIP equity investment of Rs. 40,000/- and wait till things settle down? What do you advise..

Mr. Gerard Colaco: Once you have embarked upon a systematic investment programme, whether in stocks or through mutual funds, the most important factor is to stick to your investment programme, regardless of market levels. If you alter the program you are trying to time the market. This may not be a good idea.

Investor’s Query: Please refer to the article in the latest issue of ‘The Economist’

http://www.economist.com/node/21562227

“In April alone, foreigners sold almost $1 billion of portfolio investments in listed shares and debt. Such outflows are scary. India runs a current-account deficit, which it aims to plug with portfolio inflows and foreign direct investment. After a record deficit relative to GDP of 4.2% in the year to March 2012, the deficit this fiscal year is expected to be 3-3.5% of GDP, or $50 billion-60 billion. To fund that kind of gap safely, India needs the world to be bullish about it most of the time”

Burton G Malkiel:

The Random Walk Guide to Investing: Ten Rules for Financial Success, (2003, publishers: W W Norton & Company)
A Random Walk down Wall Street, 10th revised edition, 2011, (Publishers: W W Norton & Company)
The Elements of Investing (co-authored by Burton G Malkiel & Charles D Ellis). First published in December 2009 (Publishers: John Wiley & Sons, Inc.)