Personal Finance
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July 22, 2022
How Much Should I Invest and When?
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Say goodbye to spreadsheets and those Notion tables, get a bird's eye view of your wealth anytime anywhere.
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The two most consistent pieces of feedback we received when talking to users:
We agreed with both and launched Mintd 360 - a consolidated dashboard where you can get a holistic view of your live net worth across asset classes at any time. As we continue our journey to democratize access to sophisticated wealth solutions for India, the next step in our roadmap is to use the insights from this data to tailor and customize users' portfolios even further, across asset classes, based on more than just a questionnaire. Mintd 360 is free for all, you don't need to have an investment account with Mintd to get a bird's eye view of your wealth.
Take a quick look at how asset classes across India and the globe fared.
News outlets and publications love to dissect market movements down to specific stories for the month, week, day, and even hour. However, markets over long periods are generally tied to one core theme - everything else is just a derivative of that theme. That theme is presently inflation, and its derivatives include central bank interest rate policy globally, its implications on local economies, and therefore markets and stock prices.
Global markets rebounded this month. The US S&P 500 rebounded ~8% despite poor earnings reports by big tech co’s. The reason? The markets now expect the US Federal Reserve to hike (increase) rates slower in 2023 than they did in 2022. If you have followed the flip-flop of market expectations and actions around singular data points over the past few months you might think “wow, investors across the world sound pretty finicky.” And you’d be right.
Indian markets performed well too. The Nifty 50, India’s large-cap stock index, ended the month up 5.37%, outperforming its mid and small-cap peers. While the positive global story over October did help Indian indices higher, the country is also increasingly starting to see inflation play out better in the local context. This reflects in returns too - the Nifty 50 has outperformed the S&P 500 by more than 20% YTD (year to date).
Things to look out for that could have a material impact on the markets as we head into the last two months of the year (in the following order):
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Understand the motivations behind RBI's CBDC pilot and learn how this ambitious project works
The RBI began its central bank digital currency pilot for wholesale segment on November 1. A total of 9 banks, including names such as SBI, HDFC, and HSBC will participate in this trial run. It'll be safe to say that the big brains at the central bank will stay attached to their drawing boards from now on, in order to test and understand different tech solutions before the full-fledged implementation of e-rupee. The pilot for retail CBDC will be launched in a month.
This is not the first time that a central bank has introduced or tested its digital currency on a mass scale. China, Bahamas, Nigeria, Jamaica, and the Eastern Caribbean Central Bank (monetary authority of several Caribbean nations) have active CBDCs. Even Singapore launched its CBDC (named Ubin+) for cross-border transactions on the 3rd of November this year. More than 80 central banks worldwide are looking to introduce digital currencies soon.
So how will it work in India? In a token-based system, a common public key will be used to initiate the transfer while a private key such as a user-defined password will be used as a verification tool to complete the transfer. As per RBI, an e-wallet will be provided for transaction purposes and a bank account is not required. While transactions of smaller sums will remain anonymous, larger sums will require self-disclosure in compliance with national and global money laundering and economic terrorism laws. The e-rupee will be outside the commercial banking system which can help reduce the concentration of liquidity and credit risks in payment systems mediated through commercial banks. So basically when you give a commercial bank like SBI your money, the cash becomes the liability of SBI instead of the RBI. But if you have the new and shiny digital rupee, you deal directly with the big boss i.e. RBI (now the institution that mints money will be directly responsible for your money, pretty neat). This greatly reduces the risk of defaults and delays in getting your money from a commercial bank.
A comprehensive comparison of daily, weekly and monthly SIPs over the past 25 yrs
Opting for a weekly SIP will definitely make you wealthy, but not wealthier than a monthly SIP will do.
Over long periods of time, the returns get evened out, and opting for the good old monthly SIP timed for a couple of days after your paycheck arrives is the best way to go. As long as you're making informed decisions, being disciplined and regular is more than enough to earn healthy returns in the markets.
The infographic below shows returns for daily, weekly and monthly SIPs invested in Nifty 50 over the last 10, 15, and 20 yrs. The result? taking up the hectic job of managing daily or weekly SIPs won't yield higher returns over time.
