Survey reveals low levels of financial literacy in India

Aviva Plan India Plan Survey 2017 shows that financial planning is mostly ignored by People.

Indians are better financial dreamers than planners.

In a recent survey conducted by Aviva Life Insurance Company it was found that Indians dream big but are weak at financial planning. The Survey consists of two indices:

  • The Dream Index, which explains how aware Indians are of their life goals; &
  • The Plan Index, which shows how Indians plan financially towards achieving their life goals.

financial planner

The Dream Index for the topmost tier of Indians stands at 61, while the Plan Index is at a dismal 24; this means that while 61% of Indian’s in the survey had big dreams only 24% of the people had a financial plan to reach there.

Three finance lessons for your child

The survey includes respondents from Delhi, Mumbai, Kolkata, Patna, Jaipur, Ahmedabad, Hyderabad, and Bengaluru. It was aimed at people belonging to SEC (socioeconomic classification) groups A & B. The survey covered 5,572 respondents between the ages of 25 and 45 years and included men and women. Responses were collected by face-to-face interviews using a structured questionnaire.


Contrary to the popular notions following are some more interesting findings of the survey:

  • Individuals in the 25-29 year age group are most aware of financial investments. Millennials score 31 on Plan Index, compared to the All India score of 24.
  • Women are quickly catching up with men on financial awareness and planning with a score of 19 on Plan Index against 25 scored by men.
  • Couples without kids are better financial planners as compared to couples with kids. Couples without kids score 31 on Plan Index contrary to 21 of couples with kids.

Only 24% Indians are financially literate : S & P

  • Individuals belonging to SEC B are better prepared than those belonging to SEC A. Though SEC A is considered a higher income category than SEC B, higher income doesn’t accelerate better financial planning.
  • Individuals having the monthly income of more than Rs. 1 lakh scored 59 on the Dream Index compared to 61 for all of India. This emphasizes that they are not necessarily better financial planners.

While India is making rapid strides at almost all spheres, most of the people don’t have any concrete financial plans towards achieving their life goals. The survey reveals a disturbing reality about financial awareness & planning in India. However, having assessed the gaps could work as a basis for developing programs that encourage financial planning in India.

Reasons to appoint a fund manager

The rising competition to gather more assets, during the last few years, has highlighted the significance of appointing fund managers. The fund manager is one of the key persons in the asset management industry and often the face of the fund house.

Functions performed by a fund manager:

  • The manager implements a fund’s investing strategy and manages its portfolio. A fund can be managed by one person, by two people as co-managers, or even by a team of three or more people.
  • For actively managed mutual funds, the fund manager is basically in charge of stocks, bonds or other assets the fund will buy with the money given by investors.
  • As a stock picker, the fund manager is responsible for making sure that the portfolio is ahead of its benchmark and peers.
  • The fund manager monitors market, economic trends and tracks securities in order to make informed investment decisions.


Responsibilities of a fund manager

  • The fund manager is responsible for a fund’s performance and he looks at optimizing returns while managing risks for the portfolio.
  • He has to focus on a quantitative parameter such as price-to-earnings ratios, sales, earnings, dividends and other parameters.
  • He tracks financial results of the companies in the portfolio and its various metrics.

Why Tata Group stocks are not attracting Mutual Funds anymore?

  • He also decides which stocks will form part of the scheme and builds a portfolio of assets to accomplish the aims of the mutual fund.
  • Operationally, in consultation with the investment team, the fund manager is in charge of actually placing orders and buying/selling individual stocks/bonds from the portfolio as and when required.

How is a fund manager evaluated?

A continuous evaluation of fund managers is done by financial planners. They judge their performance on the basis of quantitative parameters, looking at outperformance in relation to the benchmark, the returns in comparison to peer funds, ratios such as standard deviation, Sharpe Ratio, Alpha, Beta, R-Squared etc.

They also look at their investment style, fund management team and the amount invested by them in schemes handled by them.


No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Strategies that fit the Bull Markets

Bull Markets are characterized by an uncertain period of rising prices where markets are flooded with investors as more people jump in there. Markets surge new financial specialists run in, business sectors surge more. Further, the whole scenario eventually changes thereby disappointing a class of investors who decide on not to deal in equities again.

It seems like India is on the threshold of a long-term secular bull market. Investors are on cloud nine as the Sensex closes today at 29319 and the Nifty 50 a bit closer to the 9106 mark.This marks the beginning of a strong bullish market, a time when investors dump caution and chase returns as if there is no tomorrow.


Given below are certain tips that could help the investors ride this bull market safely:

Present investors shouldn’t abandon their asset allocation: The investors should carefully manage their asset allocation (equity: debt: gold mix) based on their risk profile. They must avoid dumping their portion of debt and gold and throw all money into equities to maximize profits. That will badly affect their returns.They should pay more attention to their asset allocation and consult with financial advisers to get appropriate guidance on the right asset allocation mix.

New investors should carefully invest into equities: This is the phase when one should avoid entering the markets. Even if they have to, it is advisable to enter the market through SIPs. Also, one should consider the long term investment with a well-diversified portfolio.

DMart IPO ( Avenue Supermarts ) Review and current market premium

Investing for short term may affect your SIP: Equity mutual fund schemes got a major thumbs up from retail investors in the last year, thanks mainly to the emergence of systematic investment plans (SIPs) as an alternative investment. But with the markets at current high levels, investors can make losses even with SIPs if they have a short-term plan. It is therefore recommended to Invest with SIPs for five to seven years or more.

Be careful with high valuations in midcap and little top assets: At present, the valuations of mid-cap and Large cap stocks are at high levels with the Nifty 50 at 23.17, Sensex at 22.47, BSE Midcap at 22.47, BSE small cap at 68.94. Clearly, the weight of these assets would have gone past the allocated level in your portfolio. It is thus advisable to book profits and carefully manage your presentation.

niftyNifty 50

Stay away from NFOs: In the event of a bullish trend, there is a craze of NFOs (new fund offers) among the investors. As in 1999-2000, it was the tech stocks and in 2007 it was infrastructure and realty.

New equity fund offers by mutual funds have dried up in 2016 as the Securities and Exchange Board of India (Sebi) has put on hold approvals for fresh schemes that are similar to the existing products.

However, in case they do turn out, it is recommended to keep away from them, particularly closed-end reserves and sectoral offerings. If investors want to trade in equities now, they must stick to plain-vanilla diversified funds.

Useful tips for investors

Following a disciplined approach to investing, investors can create wealth in the long term.

  • Along with investing in growth-oriented equity funds, investors should diversify their exposure to asset allocation funds and value funds. These assets handle the downside risk in a better way when the business sectors turn.
  • Among the growth-oriented funds, it is advisable to opt for specific funds that are capable enough to bear the downside risk.

Can the ideal equity portfolio beat inflation substantially?

With every passing year, inflation tends to erode the purchasing power of your money. However,by staying invested in equity for a longer period of time; you could beat inflation.

Let’s assume that your equity portfolio has delivered 10%,of which, inflation will consume 7%;leaving you with only 3% which would be your inflation-adjusted return. At the onset, it seemed lucrative but when you adjusted it against the inflation, it was nominal. This is how inflation impinges on your investments in the long run. Equity as an asset class has outdone the inflation in the past, for instance, Sensex has delivered 16.06% CAGR in the last 38 years, beating inflation by 8.09%.


The above chart depicts that if you had invested Rs.100 in the year 1979 in to 3 different a venues i.e. Fixed Deposit, Gold and Sensex, today the Value of Rs.100 after adjusting for inflation would have remained almost at the same level in FD,would have merely been just above double in Gold, but in Sensex,it would have been almost 15 times.

Worst Retirement Mistakes and Remedies to improve them

YOU COULD also beat inflation through investing directly in equity, provided you have the time and expertise to study the stock/company before you buy and monitor them periodically or simply leave it to an expert by investing in Mutual Funds.


Past Performance is Not Indicative of Future Results.

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

How REITs and InvITs will be a game changer for Indian real estate and Infra sector.

The Government had been working on easing regulations on REITs and InvITs to encourage more investors to India’s capital-starved property sector.

REITs or InvITs are expected to acquire billions of dollars for the country’s real estate and infrastructure segments. These are listed entities that invest in rent-yielding assets and distribute most of their income to shareholders as dividends.

RBI to soon allow banks to invest in REITs, InvITs; to issue detail guidelines by end of May.


Mutual Fund schemes investing in Real Estate Investment trusts (REITs) and Infrastructure Investment Trusts (InvITs) will have to give 15-day time to unit-holders to exercise exit option.


1.Sebi has put in place regulations for REITs and InvITs and requested RBI to allow banks to participate in these schemes.

2. REITs are investment instruments for real estate which are comparable to a mutual funds.

3. InvITs are mutual funds like institutions that enable investments into the infrastructure sector by pooling small sums of money from multitude of individual investors for directly investing in infrastructure so as to return a portion of the income (after deducting expenditures) to unit holders of InvITs, who pooled in the money.

Your first home loan could cost Rs 2.4 lakh less


Recently, SEBI notified norms allowing mutual funds to invest in REITs and InvITs in order to attract more investors. The existing scheme intending to invest in units of REITs/InvITs will have to follow these norms. The SEBI circular would come into force with immediate effect. As per the guidelines the following rules need to be followed:

  • A Mutual fund would be able to invest only up to 5 percent of its net asset value in units of a single issuer of REIT or InvITs.
  • The maximum allowed investment in the alternative instruments by a single fund would be capped at 10 percent.