Sunday, December 29, 2013

My investments in 2013 and the predictions for 2014

My best wishes to all my readers for a very successful 2014 - I hope you can help at least one person every day for 365 days in whatever way you can.

2013 was a reasonably good year from investing stand point even though my predictions of Dec 2012 went wrong.  I did not expect slowing down of the Indian economy and the resultant devaluation of the Indian Rupee. I had also expected the interest rates to come down and stock markets to do well. However, as I invest on specific stocks for the long term, my investments in 2013 have not been effected by my wrong forecast.  Here are my 2013 stock investments:

  • Wipro (Dec end  2012 –at Rs 386 – now it is Rs 555 –a 60% increase –that was pretty good)
  • Jubilant food (Feb 2013 –at Rs 1179 – now it is Rs 1259 –a 7% increase –that was not good)
  • Gruh Finance (March 2013 –at Rs 218 – now it is Rs 251 –a 15% increase –that was good)
  • Nesco (April 2013 –at Rs 790 – now it is Rs 790 –a 0% increase –that was not at all good)
  • Repco Home (April  2013 –at Rs 172 – now it is Rs 354 –a 106% increase –that was very good)
  • ICICI Pru FMCG Fund Marico (May  2013 –at Rs 56.89 – now it is Rs 57.87 –a 2% increase –that was not at all good)
  • Reliance Pharma Fund Marico (May  2013 –at Rs 72.3 – now it is Rs 84.15 –a  16% increase –that was good)
  • Marico (July end 2013 –at Rs 217 – now it is Rs 221 –a 2% increase –that was not good)
  • Asian paints (Aug 2013 –at Rs 424 – now it is Rs 485 –a 15% increase –that was good)
  • HDFC bank (Sept end 2013 –at Rs 600 – now it is Rs 669 –a 11% increase –that was good)

Beyond these stock market investments -  I also sold one flat in Bannerghata road in Bangalore and invested in a row house in Kengeri in Bangalore -  I expect this investment to grow well in asset value over the next 5-10 years.

My 2014 predictions are based on the following scenario –

May 2014 elections – a stable government is what everyone is hoping for. But with BJP, Cong and AAP in the reckoning – I am not sure if we can get a stable government. A split mandate could mean bad news for the industry and for the stock markets. 

I do not expect too great an year from that stand point. I expect the RBI to be under pressure to manage the economy as government policy would be weak. Interest rates would be kept high to control inflation. Fiscal deficit would be a concern and a rating downgrade would keep the RBI on the toes. Rupee devaluation would be a concern – we have seen a 11% devaluation in 2013 – I expect a similar devaluation and high inflation in 2014 if we have a fractured mandate.

I expect the US, Europe and Japan economies to improve further. This has good implications for our exports and the exporters in India would do well (IT and Pharma sector).  This also would keep global Gold Prices in USD under pressure as global investors would continue to flock to stocks rather than commodities like Gold.

In such a situation where would I invest?

  • For short term for 0-6 months– I recommend Liquid funds –that would give about 7-8% surely. 
  • For 6-24 months – I would recommend FMP’s – they also should give 9-10% returns.
  • For 24 months and above – stock market is surely a good option still. There will be companies that will do well and one needs to cherry pick the stocks - in case you want, please write to me – I have a Private Equity mailing list where I share my stock activities and you can also get that information.
  • For 60 months plus  – Urban real estate is still a good option. There is a bit of overheating in the real estate market   -so one needs to be careful. However, there are many ideas for investing in this space in every urban area in the country. My knowledge is limited to Bangalore and in case you want to invest in Bangalore and need some help  - please do write to me
  • Gold –I do not expect a great return this year. The global price of Gold in USD would be under pressure -it is currently holding at $1200 per ounce – I do not expect it to go below this.  The Rupee/US Dollar rate is currently around 62 – I expect it to be around Rs. 67-68 by 2014 end - an 8-10% devaluation (based on Indian inflation of 10% and US inflation of 2%) – that means Gold in Indian Rupee will give around 8-10% returns – that is the same as inflation in India. So investing in Gold in 2014 may not be a good idea – if you already have gold – then you would get around 10% returns (which means you have survived the inflation)

The key message is that in 2014, we can get a decent 15% plus ROI per annum on long term investments and appx 8-10% post tax per annum on short term investments. That is enough to “GET RICH AND RETIRE EARLY”.


Tuesday, December 17, 2013

Here is a typical High Net worth investment idea that you can participate in:-

Hennur Road in North Bangalore has seen a lot of real estate activity in the past 3-4 years. The new Bangalore Airport and the promise of many tech parks and other industries in the vicinity has triggered the demand for residential spaces in and around Hennur road. This road also serves as an alternate route to Bangalore airport for people travelling from the outer ring road area. It is a four lane road and is already chocked with traffic on any normal day. All well known builders in Bangalore, including Mantri, Shobha, Prestige, Brigade have launched projects in this locality. Apartment prices are around Rs. 4000 to 6000 per sq ft.  Land rates depend on the exact location – but typical land rates are around Rs. 4000 psft to 7000 psft.

A group of High Net-worth Individual investors are looking at investing in a 7 acres piece of land off Hennur road - this land is owned for about 4 decades by an erstwhile royal family and the price negotiated is just below 2000 psft.  This land piece is also literally on the proposed Peripheral Ring Road –this proposed road will in fact take a small portion of the land –the work on this road will happen in the next two years.  Needless to say that this road will increase the value of the property tremendously.

This investor group is looking at procuring the land and then getting into a JV with a builder to build residential villas or apartments  and exit the investment with the sale of the built up property. The time frame of investment is appx 5-6 years and I expect the investment to give 250-300% ROI during this period.

I have personally visited this land and I am convinced of the viability of this proposal. The risks in this scheme are the following:

·         the delay in signing the JV with a developer; or

·         the delay by the JV partner to deliver the project; or

·         delay in selling the project and exiting it.

The minimum investment for participating in this Rs 30 lacs – as this investment is for buying the 7 acres of land – you will need to invest this money by Jan end. So if you have this liquidity and have a 5 year time holding power - I would surely recommend this investment.

If you are interested and want more details or want to visit the site and meet the key investor, please reach out to me at  (Ph +91 98452 63000)

Saturday, December 14, 2013

How to become a smarter investor in 2014?

Year end is a good time to introspect and plan.  At this time of the year, most of us make New Year resolutions.  I am sure one of your New Year resolutions would be to do well financially in the coming year.

So here are some thoughts on “How to become a smarter investor in 2014”.

  1. Visualise Financial freedom - We all agree that achieving financial freedom can change our lives.  So visualise your life once you are financially free. What will you do from 6 am till  10 pm?  How you will spend seven days a week when you are financially free? What are the projects that you will pursue once you do not need a job to live your life?  I want you to list all the things that you have always wanted to do - but did not do due to time and money constraints. Visualising how your life will change once you achieve financial freedom is really the first step towards becoming a better investor.
  2. What do you invest your time on? The rich people continually invest their time in educating themselves to become better investors. They invest time and effort in getting clarity in their mind on their long term goals – over time, they know exactly what they want. They put time and effort in building networks with like minded people. It is this financial education, clarity of mind and networks that make them rich over time. So these are the three areas where you will need to work on.
  3. Getting rich is not magic or luck – it is 10 year project. Anyone can become rich. All it needs is to break this large 10 year project to 10 smaller yearly projects. Take one project every year and just do it.  Over time you will reach your goal of financial freedom. So while the world may think that you are lucky – you know that you have worked for it – you know that you have invested your time and effort and over time reached the goal of financial freedom.
  4. Where do I start?  Here's what you need to do:
    1. If you have not done it already – start by visualising how your life will change once you are financially free –this is required to motivate oneself over the next few years to sacrifice your today for a better tomorrow.
    2. Make a long term financial plan – I have a 20 year financial planning template that I can share.  It is explained in detail in the book. With the help of the book and the template, you can make a GET RICH PLAN for yourself.
    3. Commit two hours every week for improving your financial education, clarity of mind and networks  -these are the things that will make you rich over time.
    4. Break the long term plan to annual plans and take one step at a time  -  measure the current ROI on your investments and work towards increasing your ROI over 2-3 years to 15% per annum (post tax)
    5. Over 3-5 years, you will see that you are a smarter investor and you can clearly see that you are getting closer to financial freedom every year.

Remember life is a vacation once you achieve financial freedom – all seven days a week you are on vacation.  You can chose to do what you want and refuse what you do not want.

Now that is surely something worth working for – don’t you agree?