Friday, July 21, 2023

Invest in your well-being. Buy protection through Mediclaim.


Nomoshkar, welcome to Monmoney, presented by Content Crankers. Today’s episode is about medical insurance. But before we proceed, please take a look at the opening screen.

Suparna Pathak: I am Suparna Pathak, with me is Investment advisor Saibal Biswas. Our questions to Saibal today are about Medical Insurance. Medical insurance is pretty complicated. People don’t understand how much coverage is needed, what are riders? Many complain that with a coverage of less than Rs 5 lakh, am unable to get admission in any nursing home, as only 1 per cent bed charge is allowable on the entire amount… can you please walk us through the world of medical insurance.

Saibal Biswas: We hardly study medical insurance and mostly buy it out of compulsion. How much to insure? We don’t know and follow wild suggestions. Let me start with a little fact here – the cost of education and medical insurance attracts the highest inflation rates, running almost in double digits. This means that our medical expenses are going up by the day

Suparna Pathak: it is about 14 per cent on average over the last five years…

Saibal Biswas: now if you add compound rate on that, you can imagine where it is headed. What I feel is that we must consider Mediclaim as the priority. Because we don’t know how high medical expenses will be in the days to come. There are many families who have become impoverished in trying to meet medical needs. I feel that we must give more attention to medical insurance, and increase the coverage amount.

One good thing is that suppose you take a policy of Rs 10 lakhs and there is no claim, then the coverage amount gets automatically increased, even doubling over time. This is a good thing.

Secondly, as you are mentioning, and we often overlook these, there are different limits, Like a 1 per cent limit on room rents, or a 2 per cent limit on ICU’s, in which cases you have to pay out of pocket. However, there are policies where these limits are waived, or you can take a rider.

Suparna Pathak: And perhaps they are not very expensive either…

Saibal Biswas: yes, you have to pay a little extra premium. In cases of medical emergencies, we reach out to the nearest facility where we feel the best treatment will be made available. Now at that point in time, perhaps the low-cost rooms may not be available and one has to shell out the extra amount. What I feel is that we must be careful, we have to see the features of the policies. Suppose in one particular year, the policy ceiling gets extinguished, can we still access the policy in that year? There are many small riders, add-on’s that we must check out.

Suparna Pathak: You are saying that I can take a policy for Rs 5 lakhs and by spending a little extra, buy some riders, like a room rent allowance. As we have seen during the Covid a huge amount of consumables were used, which are mostly not covered …

Saibal Biswas: exactly. Such riders can be bought. One can even buy riders where one gets cash benefits, where every day spent in the hospital entitles one to a cash benefit, provided one has opted for that rider. Similar is the case with maternity benefits. Critical illness – if one takes such a rider one is provided with a lump sum immediately. We all know how expensive the treatment of critical illnesses like a kidney ailment or major cancer is … a part of which can be addressed with riders.

I feel everyone must pay attention to medical insurance and increase the amount of coverage. Many people think that the office pays for medical insurance. But what happens after you retire? Perhaps you will not be able to access anything when you need it

Suparna Pathak: Besides, after the age of 60, new policies cannot be started vSaibal Biswas: my take on the subject is that even if the office pays for the insurance one should take additional coverage and perhaps even increase it after retirement. Everyone must look at the riders and carefully study what is being offered by which insurer to arrive at the best policy for the self, for health is something that cannot be compromised.

Perhaps we should do a full episode on medical insurance at a later date.

Suparna Pathak: We will return with a full episode on medical insurance for we seldom appreciate the value of teeth while we have them. It will not be out of context to state here that the cost of dental care is also going through the roof and you can also consider getting dental care under your medical insurance umbrella.

Keep watching Mon Money, Check out the description box to get our contact addresses, keep sending in your queries, and to see the written text of our discussions. Like, Subscribe and press the bell icon to receive notifications about our latest episodes. Nomoshkar.

Saibal Biswas: keep sending in your questions. Perhaps they will lead us to areas hitherto untravelled. Stay with us. Thank You.

Episode takeaway: Mediclaim is a Must. Another Must is reading the fine print.

Friday, June 30, 2023

Who the hell needs an advisor? I know everything.


Namoshkar, welcome to Mon Money presented by Content Crankers. We are back with a new episode, but before we move on, let us take a look at our opening screen.

What we will discuss today is a common question. For example, Utpal babu from Burdwan has asked us why we need to go to an advisor. What more do they know about my investment needs? Well, he may not have asked it in so many words, but that is the crux. I am Suparna Pathak, and with me is investment advisor Saibal Biswas – let us put the question before him.

Saibal Biswas: We may stand in front of a mirror and lapse into a monologue, but do we have all the right answers to our questions? We don’t. That is why we need mentors, colleagues, and subordinates… we feel that it is always prudent to get a second opinion. Finance is no exception. And for getting our decisions evaluated, it always makes sense to approach someone who has domain knowledge, someone who has studied the subject. This is a very basic rationale behind the importance of an advisor.

Now look at it this way. Suppose your age is X and mine is Y, our risk-taking ability may not be the same. Our goals may be different. Our investing ability may be different. Even, our financial outlook may be different.

Suparna Pathak: even if our ages are the same, our investing abilities may differ…

Saibal Biswas: Exactly. We tend to box things in. We tend to say that the risk-taking ability of a particular 25-year-old boy will be similar to that of another 25-year-old. But it may not be the case. What I am trying to convey is that everyone is unique. Their risk appetite and their ability to take risk is also unique. Their goals are unique and the roads to approach those goals will also be different. Who will decide on these roads? Who will analyse the risks? Who will choose the ways of approaching these goals? How are you going to achieve these goas and how will you continuously review your performance – this is where you need an advisor.

Suparna Pathak: an advisor is thus in effect like a doctor? Someone who identifies the pulse of the patient to identify the ailment. Now the question is, what is the pulse that you, investment advisors, look for?

Saibal Biswas: Every person’s need for investment is goal or target-dependent. Suppose one is unmarried. Then the question of saving for one’s children’s education does not arise. Even one’s need for insuring one’s life is redundant. As everyone is unique, we have to identify the needs through discussion. The person has to explain his or her needs, what is it that they seek to invest for and identify the goals. And based on that we draw out the charts and chalk out the routes.

Suparna Pathak: What kind of information do you need to arrive at such decisions?

Saibal Biswas: For understanding the risk we run a questionnaire. Where we try to understand how the person behaves when he or she is faced with certain circumstances. This is a part of behavioural economics – we believe that someone who gets easily scared when the market falls should avoid being exposed to equity. Similarly, there are others who may feel that they are not risk averse, people who want to take risks to earn more. They may be provided with higher exposure to equity. From the questionnaire, we identify the ability and willingness to take risks. Suppose we break it down to three categories – conservatives who do not want to take any risks, neutral who can take some amount to risk and aggressive who want the maximum risks to maximise their returns. Based on this we can fit a number to it, and then decide which asset class will best meet these goals.

Suparna Pathak: You mentioned a number. You have talked of this number in past episodes as well, what exactly is this number?

Saibal Biswas: Let me give an example. Suppose one’ son’s current age is 10. At 18, suppose he will go to study engineering. Now suppose the cost of studying engineering today is Rs 20 lakhs. Now in eight years’ time, because of inflation, that Rs 20 lakhs will become Rs 30 lakhs. So, one has created a number – that on a particular year, one will need Rs 30 lakhs. How this figure will be reached is the purpose of both the customer and the advisor helping one.

Suparna Pathak: This means that an investment advisor is the doctor of our finances. Their job is to understand our ability to take risks. Just as should not hide anything from the doctors, similarly one should not hide any material facts from the investment advisors. Their job is to go through your earning ability, spending habits and arrive at your ability to take risks. That is why we suggest that in this complex world to invest right, identify the right investment advisor first.

Stay tuned will we come up with more investment and savings-related questions answers and commentaries in the coming episodes. Post your questions in the description box. Visit our website to access our blog where this and more discussions will be uploaded. Saibal Biswas: Press the bell button for notifications. Write in your comments. Stay with us. Thank you.


An investment Advisor is your financial physician. He helps you remain in the pink of financial health while helping you achieve your investment goals.

Thursday, June 22, 2023

Balance risk, choose the right fund


Suparna Pathak: Welcome to another episode of Mon Money. I am Suparna Pathak and with me is investment advisor Saibal Biswas. Before we move forward, let us take a quick look at our opening screen.

Suparna Pathak: Saibal, everyone invests in Mutual Funds. More or less, everyone is of the opinion that investing in mutual funds will generate good returns. However, which Mutual Fund? Why Mutual Funds? Answers to these questions are still largely not known universally. If you tell us about Mutual funds – why we should invest in Mutual Funds, in what kind of funds…

Saibal Biswas: let me start by defining a Mutual Fund. To put it simply, a Mutual Fund is a vehicle that can carry many things simultaneously. A Mutual Fund is where we have collected different types of investments on the one hand while we have collected many investors on the other. They have all put their monies in the common basket and when the basket grows, the benefit is shared by them. This may be an oversimplification of things, but this is it.

What a Mutual Fund offers is professional management. These are professionally managed by Asset Management Companies. Naturally, if one were to manage the fund on one’s own, this kind of research, this professionalism would have lacked, or even the kind of funds available for investment would not have been there. For an individual, it would not have been possible to compile so many different kinds of investments.

The second advantage is risk diversification. If one were to invest in any one class of asset, it may lead to a disproportionately high amount of risk, but a Mutual Fund allows one to spread the risk evenly.

The third point is that one can invest in a Mutual Fund even with a low corpus fund which may be as low as Rs 500 or 1000. There may be many economically challenged people who may want to invest but are unable to because of the lack of funds. The Mutual Fund offers them a route.

Liquidity. Mutual funds are largely liquid. Some allow the withdrawal of funds within a day. In equity-based funds, investments can be withdrawn within two days. Basically, they are very liquid.

Because of the numbers involved – from investors to investments, to corpus funds – the cost of creating the basket also goes down.

So, a Mutual Fund offers a basket, at a decent cost, that is professionally managed and monitored by SEBI that also offers tax savings in cases. Overall, it is a great basket.

That is not to say that all funds were born equal. Debt funds, which are based on fixed assets, offer low returns while being exposed to lower amounts of risks. While equity funds offer higher returns with higher risks. There are also mixed baskets where debt and equity funds are mixed to create a Balanced Fund. This is to say that there are different categories of Mutual funds and one has to choose one according to one’s requirement.

Suparna Pathak: What you are essentially saying is that if one had, say Rs 100, one could have bought into a certain class of investment. Now if one invests the same amount with many others in a Mutual Fund, then professionals will invest the collected amount on behalf of everyone, freeing one of the worries relating to the why, when, and where of investing. The crux of the matter is that what one cannot do

individually, one can achieve through a Mutual Fund. Secondly, with a very small corpus fund, one can invest in a well-diversified basket – in bonds, in equity, perhaps even in real estate. The spreading of risks is also taken care of in a Mutual Fund

But are all Mutual Funds good? Towards which one should I turn?

Saibal Biswas: Risk. The choice of a mutual fund will depend upon one’s risk appetite. It will also depend upon one’s goals. For example, the goals that are on the longer term, allow one to tread a slightly riskier path. We have discussed in the past how, if equity is given adequate time, its riskiness goes gown increasing its returns. That is if one has long-term goals, one can consider equity investment as the chosen weapon.

Now suppose one has a short-term goal and wants to buy a car in two-year’s time. If the funds are deployed in the equity market, and it falls, that will be catastrophic. There is condemnation all round. But the fact remains, it was due to the wrong identification of the goal and the investment class. Here the identification and marrying of the right goal to the right investment is of paramount importance. That is why we say that for short-term goals, invest in fixed classes – they may be fixed deposits, mutual funds, bonds and the like, but for meeting long-term goals, use equity. The selection must be very precise and clear.

Suparna Pathak: many people pick up funds as it is said that the particular fund has posted the highest return. Should one make this the only factor or consider other things before choosing a mutual find?

Saibal Biswas: The return that is high today, may become low the next year if such returns were the result of high risk. What we look for is the consistency of returns. What kind of an outlook the Fund Manager has, the investment philosophy as it were. The Fund may follow a growth route or a value route but it should also accord some amount of safety. Otherwise, why will one take the Mutual Fund route?

Highest return should not be the consideration. It is good if such figures are posted, but what we look for is the consistency of returns with adequate safety.

Suparna Pathak: Investments, like relationships, is also about stability.

To sum up, what Saibal Biswas has said today is that one should invest in mutual funds, for even with a small saving, one can access all opportunities of investing in different parts of the market through them. He has also said that in order to identify the right fund to invest in, look for one that is stable, like peace is, in relationships. It is even better if you discuss with an expert advisor to seek out the right fund for yourself.

In the next episode we will see how investment advisors go about their jobs, how they analyze risks and on what they base their advice.

Saibal Biswas: keep watching.


Identifying the right Mutual Fund is the trick in the game of investment. Consulting an advisor is advisable.

Thursday, June 15, 2023

If it were not for books


wrote this a few years back in response to Prof Ayan Banerjee’s call to list 10 of my favourite books. If floated up on Facebook again And frankly, I was stumped. And as I kept reading this old post I thought of curating this as my blog as well.
Now, It's not as if I am not used to requests but requests of such intellectual proportion have seriously not been a regular occurrence. So, I was tempted to start with Swapan Kumar just for the play but it wouldn't have been right. So here I go. 
At an age when kids go out and enjoy a game, I was given a space of a few metres of a blind lane and access to the district library in Baranagar Ramkrishna Mission. Beyond that was a world full of violence, police raids and conflicts of sorts that were believed to have a corrupting influence on a young mind, and, of course, the real physical danger of stopping a stray bullet. 

 I had learning difficulties. Coming from a family where scholastic achievements and literary fame came easily, I was a skeleton in the cupboard as it were. But that lack of recognition was made up many times over by the books in that library and my father's collection. 

 Well as I said I had a middling intellect and an eager tongue. And I was fairing poorly in school. This was the time when I stumbled upon জীবন স্মৃতি by Rabindranath. What I am today is primarily because of that book, elementary physics, Euclidean geometry and Asimov.
Ayan Banerjee stay on. 

 I am curious to know how many of you reading this piece still remember the intro that Tagore wrote the way only he could. He writes that life paints pictures on the easel of memory and the facts blur. So what he was going to write shouldn't be checked for historical veracity. It struck a chord in my young mind. 

And then came Euclid. And somehow even my middling intellect latched on to the importance of an intro while communicating something. I realised that even literary efforts needed a structure as did academic articulation. 

While for years my mother and my teachers were trying to drum in an academic sense into my dyslectic mind, Tagore and Euclid together achieved the feat effortlessly. 

And then came elementary physics and the concept of relative motion. While for a lot like you, the difference between Newton and Einstein may have opened the gate for figuring out the intricacies of the physical world, to me it came as a justification for what I was -- a being with a middling intellect. What I was, I was. 

What I am today is what I am -- the product of a complex journey, a being defined by its course etched in my memory, a person defined by others from their relative perspective. Wait for Asimov. As is required I invite my cousin Ananyo Bhattacharya to join me in this journey. 
Illustration done by Dall-E

Wednesday, June 14, 2023

You can now invest in foreign stocks and reap the benefits. But stay informed about the risks too

Suparna Pathak: Namoshkar. Welcome to Mon Money produced by Content Crakners. I am Suparna Pathak, and with me is Saibal Biswas, an Investment Consultant. In this episode, we will be discussing savings and investments. Before that, a quick look at our starting screen.

Saibal, Ramprasad babu from Medinipur has sent us a question. I am not disclosing his actual name as he has some reservations about it. He wants to know how he can invest overseas.

Saibal Biswas: There are two ways of investing abroad. One, you can buy shares overseas directly upto a certain limit as set by the government. This is called the LSR Route, which is $ 250,000, a substantial amount. There are many international funds as well, funds that invest in stocks overseas. One can invest in these as well through Mutual Funds. Ramprasad babu can either invest directly, or take the Mutual Fund route and invest through them in the stocks they choose.


Suparna Pathak: But why will he do this? What is his benefit? What kind of risk or benefit can he expect?

Saibal Biswas: Well, when we are investing in India, we are investing in only one particular economy, depending upon one particular geography. If anything untoward were to happen to our economy, my market may fall. In such a scenario if I invest abroad, in a different economy, it may so happen that their market may not fall … this is a diversification process. The second point is that of currencies. Say for example the US Dollar is now quoting at Rs 80 which may go up to Rs 85 tomorrow: in such a case not only will I get the benefit accruing to my investment, but will also get the benefit of currency appreciation. This is an extension of the dictum of spreading your investments – previously we used to advise people to spread their savings across debt, equity etc, today we are saying do that, but also spread it to different geographies, over different currencies. Invest in such types of stocks that are not available here.   

Suparna Pathak: All this while we had restricted our discussion to the Indian economy. Now what you are saying is that it is possible to spread our risks further by investing abroad. Perhaps, if our market falls and theirs does not, then the investment would be safeguarded. The second thing that you are saying, and let me understand this, is that if I invest in a hundred dollars at Rs 80 a dollar my investment will be Rs 8000. Then, suppose, even if other things remain the same and the Dollar rate goes up to Rs 83, I will still gain by Rs 300. So, I am getting two advantages, one of investing in overseas markets to take advantage of their dynamism, and two, the advantage of currency exchange differentials.

In this context, what do you mean by terms like averaging?  

Saibal Biswas: Averaging means, suppose I buy something at a certain price and the price falls. Then if I buy more of it at a lower price, then the cost of my entire holding will go down. To cite an example, if I buy some stocks at Rs 80 and the price goes down to 60 and I buy more, then my cost of holding will come down to under Rs 80. 

Suparna Pathak: Perhaps if I then sell at Rs 75, I may even make a profit.

Saibal Biswas: exactly.

Suparna Pathak: This means if I were to sell at Rs 60 I would have lost, but since I bought more, and my average cost is reduced, I am still able to turn a profit.

Saibal Biswas: Let me go back to investing overseas and point out that there is a flip side to it too that everybody should be aware of. It is also possible that we invest in a geography that goes under … we must understand this risk. Or suppose we invest in a currency that starts to depreciate, for whatever reasons, this means that we have to do enough research to invest overseas. That is, it is not that anyone can go to any country and invest, I feel one needs someone, an advisor, who can act as a guide. So, investing overseas is not unidimensional, it has both sides of the coin…

Suparna Pathak: Ramprasad babu, are you hearing us? There are many hassles as well. It is not that by investing overseas one can access endless gains. The more you spread your risks, including in overseas markets, the character of your risk will also change. When you are investing abroad you will have to contend not only with the risk of your currency but also with geo-political risks, how different factors will affect its economic prospects will also have to be considered.  

What Saibal is saying is do invest. But take the advice of someone who knows before investing overseas. 

Today we have discussed about investing overseas and have seen that there are two advantages – one of gaining from the price fluctuations in their share market and two of gaining from currency exchange differentials. That is to say, even if their market remains constant and the value of Rupee depreciates, you will still be the gainer. On the flip side, the socio-economic-political status of the country you are investing in will have to be considered to assess your risk, which is why, you must seek advice.

Let us stop here today. Please like, share, and if you want to refer to this again, go to the description box where all the details are provided. Nomoshkar.

Saibal Biswas: Please share and like Ramprasad babu if you want to send us your questions feel free to send them to us.

Thank You.



Investing abroad offers multiple benefits, but beware, the risks are many too.

Friday, June 09, 2023

Time your equity investment


Suparna Pathak:
Namoshkaar. Welcome to Mon Money presented by Content Crankers. This discussion is about the intricacies of Savings, so subscribe and keep learning about the various facets of savings. I am Suparna Pathak, with me is Investment Advisor Saibal Biswas. Before taking our questions to him, let us take a quick look at our opening screen.
Saibal, we had promised our viewers that we will discuss about the stock market. Many people say many things about the stock markets. But the point that keeps recurring is that the more time one remains invested in the stock market, the more the return. The age of the investor is also relevant in the context. If you could tell us something about this.
Saibal Biswas: 
As an investment advisor we hold the view that the faster one enters the market, the lower becomes the risk. There is always risk in the share market, but if one remains invested in the market for a sufficiently long period of time then the risk is reduced. When one enters the share market at a young age, then the person gets a long time to remain in the market. Let us take an example – suppose one wants to buy a car worth Rs 20 lakhs after a period of seven years. This means that an investment of about Rs 12000 monthly in some Systematic Investment Plan of some Equity Fund will ensure such a sum. If I do the same thing after two years, the SIP requirement will become Rs 25,000 per month. This means that by missing out two years I have to invest so much more to access the same amount. It is clear that the younger we start; the bigger will be the corpus that we will be able to create with a lesser amount of money.  Secondly, when we are young, we end up spending much more – we all have pent-up demands that we want to address, and there are other enticements also with so much being on offer on the net …. But if I approach my investment plan from a different angle, that is, if I invest first and then spend, then you will see that my spending habit will also fall in line…
Suparna Pathak: if you explain this a little more clearly…
Saibal Biswas: When we get our salaries, what we first do is spend, and then, from what is left, we think of saving. What I am saying, is to think the opposite. First, you invest according to your goal, then spend. This will help reign in the spending apart from controlling the youthful urges to splurge. 
Suparna Pathak: What you are trying to say is that one should change the priority of spending with the money in one’s hands… what we normally do is spend and after meeting all the monthly expenses, whatever is left, view it as savings. You are saying, “No”, one has to first define the expenses, and while doing so, separate the savings, and what will be left will define the expenses. Right?
 Saibal Biswas: exactly.
Suparna Pathak: My next question is what is the role of age in the context of rise and fall in the market?
Saibal Biswas: One is, at a young age, one’s ability to take risks is much higher. At a young age, one has the strength of conviction that one can overcome the market swings. Second, what we have not discussed yet, is compounding. The most potent tool to beat inflation is compounding. As we have discussed in the past, the return in the equity market is higher, as is the risk, and volatility, which leads to the doubling of monies in the long term…
Suparna Pathak: this is becoming too complex … you are saying that as the market is volatile, if one invests when the market falls, one loses …
Saibal Biswas: till one actually sells out, one does not lose. It is an opportunity, if I buy more after one's investment and a subsequent fall, I can actually average down.
Suparna Pathak: that means, if one can stay invested for a long period, one can take the ups and the downs of the market in stride. Normally people say that the Indian markets have a 5-year cycle. Now suppose one remains invested for twenty years. And suppose both the up and the down cycles remain for five years. Then, if I hold on for twenty years, what is my benefit?
Saibal Biswas: The benefit is simple. If I buy a share or into a Mutual Fund when the market is going down, then when it goes up, then in a relatively short period of time, my money can be doubled. Now for the compounding – 2 becomes 4, four becomes 8, 8 becomes 16 – imagine how this can grow like an atom bomb, if one is able to give it sufficient time. Suppose somebody starts investing at 50 or at 40. Then by the time the 4 becomes 8 or the 8 becomes 16, the time runs out. But for someone who starts young, the time available may be 30 years – just imagine the number of times the money can be rolled and to what value it can be taken to.
Suparna Pathak: Another thing that we heard is that the share index which was at a certain level twenty years back, would be at a much higher level twenty years hence. This means that the growth in the index will also be reflected if one remains invested for a longer period. This means that like going uphill, taking the ups and the down into consideration, the incline is upwards…
Saibal Biswas: It is like the maths problems involving the monkey going up a greased pole… it goes up and down, but ultimately reaches the top. The same is true for investments in the stock market…
Suparna Pathak: I see you have done some calculations …. If you quickly explain this, please…
Saibal Biswas: This is about the example that I was giving. If one has a time period of seven years to buy a car. If one invests Rs 15000 every month then one’s total investment is Rs 12 lakhs. This will allow one to buy the desired car worth Rs 20 lakhs after 7 years. But if one starts after 2 years, then one will have only 5 years, which will call for a monthly investment of Rs 25,000. For going back two years one has to invest Rs 3 lakhs more to reach the same target.  
Suparna Pathak: Consider this: If you start early, then. In the end, your gains will be much more. To sum up, the market is characterised by ups and downs, you have to be patient to enjoy the power of compounding. I mean, the fruits of patience are always bigger.
Let us stop here. In the coming episodes, we will cover the other areas of savings and investments. Stay with us. Subscribe and Like.
Saibal Biswas: Don’t forget to share. Awaiting your questions. Thank You.
To reap gains invest in shares from early in life
Calculate your requirements: first set aside for investment, then with the leftover, meet you expenses.


Tuesday, June 06, 2023

Searching for the Serendip


I am still looking for clues about the proverbial lost camel. 

King Giaffer’s sons were clever. The three princes of the Serendipo were taught well. Their teacher was great. He managed to imbibe in them the power of logic and its application. Incidentally, this Serendipo is said to be the Serendip for us that gave birth to ‘serendipity’.

The story, in case you don’t know it, runs like this. King Giaffer had three sons. He wanted them to grow as able heirs to the throne of Serendipo. Their master on completion of their education returned them to the palace reporting that the princes were ready to take over their royal duties. But the king needed to test his sons’ ability to rule with sagacity. At that point, a merchant came into the royal court to complain that his camel was lost, probably stolen. The three princes were tasked with finding the camel even without being told anything about the camel.

So, the three Royal Princes set out on their task to first find the clues. I leave the details about how they found the clues to the camel’s look and other details for identifying it for you to find by reading the story. 

When the princes approached the merchant with the details, the merchant thought they were the ones who had stolen the camel, for how else would they know so much about his lost camel? The story ends with someone finding the camel in the desert and bringing it to the King and King rewarding the princes for their sagacity and cleverness.

Alas! For me the life that I had aspired for remains even now like the camel. Lacking the sagacity of the princes of the Serendipo, I am still searching for the clues that would lead me to the life that could douse the craving for that life in me. But the Serendip or the Serendipo continues to elude me.

I sometimes feel that I was not meant to be. Whatever that has happened to me, in a good way that is, came in accidentally. That was the serendipity for me. But for the rest that actually was meant to be.

Take for example the issue of achievement. All my contemporaries and classmates are achievers and resting on their laurels. And me? Well! Still learning tricks to stay in business called earning and surviving.

So, I thought he could be my master when he told me I was still in my prime and I need to learn the tricks of creating content in a modern way. But he left that to my sagacity to define ‘modern’!

Trust me since then I have been running from pillar to post to learn about what modern was. The ultimate was the guy who nursed whisky at my expense telling me to leverage my experience! So, I blended the two received pearls of wisdom and thought digital would be the way.  Isn’t it modern? I learnt video editing, and creating a domain for my blogs (yes, that’s where, if you are reading it, I have posted it.) and now I am told I need to create a sub-domain. I don’t know how. So I have to learn it.

But the best came from the wisest. He told me to learn from my failures. From relationship to profession, I have been a serial failure. So, my bag of wisdom is full by that count. Yet, I still remain in search of the master who taught those three princes so that I would at least know about the shape of the craved life and the way the princes predicted the camel’s look!

(Please feel free to leave your comments in the comment box so that we can stay connected)

(DALL-E created the pix for me)

Wednesday, May 31, 2023

Bond buying: What to look for

Suparna Pathak: Namoshkar. Welcome to Mon Money produced by Content Crakners. I am Suparna Pathak, and with me is Saibal Biswas, an Investment Consultant, who is well-known to many of you. In this episode, we will be discussing savings and investments. Before that, a quick look at our starting screen.Saibal, in the last episode we mentioned that the cost of debt papers goes up when the interest rates fall and vice versa. If you could please elaborate on this as people have many questions about this?  

Saibal Biswas: let me explain this with an example. Suppose a government debt paper costs Rs 100 with a coupon rate of 7 per cent. In the meantime, suppose the interest rate falls. This means that new debt papers will carry a coupon rate of 6 per cent (say). This will lead to a situation where the 7 per cent bond will attract a premium, as no one else in the market will be able to offer 7 per cent bonds. When interest rates go up in the reverse scenario, what is the effect on debt papers? Suppose I have the same 7 per cent debt paper, while in the market such papers are sold at 8 per cent, then my debt paper will be sold at a discount. It is clear from the example that when interest rates go up, debt papers become discounted, that is, their prices go down. Similarly, if interest rates go down, debt papers become more expensive. Whatever the coupon rates, the price depends on the rise or fall of interest rates. 

Suparna Pathak: Let me get this clear. Suppose I buy a bond, I can think of them as fixed deposits, at seven per cent. Now if I do not sell it, what happens to the relation between coupon rate and interest rate?  

Saibal Biswas: if I do not sell and hold on to it till maturity, then I will get seven per cent only. But if we want to evaluate, that is arrive at the “mark to market”, that is to find out what should be the value of the debt paper according to the market, then all these factors of discount and premiums will come into play. But if I hold it till maturity like a fixed deposit, then I will only get the coupon.  

Suparna Pathak: Let me try and understand it in layman’s terms. Suppose I buy a debt paper at Rs 100 which carries a 7 per cent interest. That is the coupon is 7 per cent, which means if I do not sell it, I will continue to get 7 per cent. Now the interest rate becomes 6 per cent in the market. Now suppose someone approaches me to buy the bond. Now if he buys the bond at Rs 100 from me, he will be entitled to an interest that is above the market rate. Now the logic is, as the market entitles you to 6 per cent and as you will be getting seven per cent if you buy from me, you will also have to shell out more. That is why, if the interest goes down, the price of bonds goes up. The opposite also holds true. 

Saibal Biswas: Exactly

Suparna Pathak: How should one look at the prevailing cost of interest for buying bonds? Suppose I want to choose between equity and bonds. Suppose the return on equities is 6.5 per cent and the rate of interest in bonds is 6 per cent and someone advises me to invest in bonds. Why would they give such advice? 
Saibal Biswas: Look there are two things here. Bond is like a fixed deposit. Its asset class is also different. Its risk profile too is completely different from equity. Equity investments carry much higher risks, while a bond, acting like a fixed deposit also carries a much lower amount of risk.

Where do we buy our bonds from? From the Government of India, State Governments – Corporates also float bonds but they are relatively riskier though their risk profile is unlike that of equity.

Suparna Pathak: “Their risk profile is unlike that of equity”, please explain.

Saibal Biswas: The stock market's volatility is much more pronounced with steep ups and downs. Now in a bond with a coupon rate of 7 per cent, if you hold on to the end, you will get seven per cent for sure. So, you can rest assured about the return. Equity cannot give you such a surety about the return, though, in the long term, it tends to be more.

So, when you are buying bonds, you are buying them because of the asset class in which bonds are in your portfolio, you will buy them if there is a need for such an investment in such a class. So, it is not correct to say that you are buying bonds against that of investing in equity – you are buying bonds because of their value proposition because it is needed in your portfolio. 

Suparna Pathak: What you are saying, and we have talked about this in the past, is that the risk must be spread out in the portfolio. High risk for high gains, medium risk for medium gains. Low risk for relatively low gains. I have to fit my bond investments in this scheme of things – keeping in mind that as the risk in terms of bonds is low, the return is also comparatively steady. Is this what you are saying?

Saibal Biswas: Exactly, exactly.

Suparna Pathak: Today we have seen why the bond prices go up and down with the movement of interest rates. We have also seen how we can fit in bonds to address our individual risk profiles. That is, what will be the position of bonds in terms of risks within the portfolio?

We will discuss the importance of one’s age in stock market investing.

Please keep watching, please subscribe, and like. In our description box, you will find our web URL. Please visit to find the gist of this discussion should you want to refer or otherwise feel the need.
Saibal Biswas: I think the next episode will be an important one as young people always want to know things like what is the right age to enter the stock market, where and when to invest, and such things – watch the next episode, for the answers. 

Suparna Pathak: namoshkar.


Invest in bonds to balance the risk of your portfolio.

A Bong will always be a Bong

  I have known Rajib and of him ever since he started his professional life as a journalist and then of him when he decided to say adieu to ...