What is BITCOIN? A simple explanation.

 Let me try to explain using an example of prison currency.

Prisoners need a proxy for currency as they are not allowed to possess cash. So how do they “pay” for laundry service, hygiene products, protection, a haircut, a book, chocolate or even alcohol? The medium of exchange must be durable, uniform and have a wide acceptance. That is how Ramen noodles and canned fish became prison currency. But cigarettes are top of the pecking order.

Notebooks are kept. Prisoner X will note down how many cigarettes he owes Prisoner Y, and Prisoner Y will make note of what Prisoner X owes him. That book documents all the transactions. The ledgers are draw in an identical fashion. So all books have the same template. To prevent fake entries, a third individual is selected as a witness. He signs the entry made in the books of Prisoner X and Prisoner Y.

Cigarettes / instant noodles / canned fish are bitcoin.
Notebooks are ledgers.
The similar format in the notebooks is blockchain.

Is bitcoin money?

There are 3 functions of money:

1. Money is a store of value. It can be used as a means of saving and allocating capital. It holds its value over time, despite inflation slowly eroding the purchasing power of money.
2. Money is a unit of account. It can measure value in transactions. It can be used to record debts and make calculations. It is divisible and countable. It can account for profits, losses, income, expenses, debt and wealth.
3. Money is a medium of exchange. It is accepted as a method of payment. When you go to the store, you can be confident that the cashier will accept your money, and not demand your shoes as a barter exchange.

Though increasing in popularity, bitcoin is not universally accepted as a unit of account and a means of payment. Far from it. Countries can even ban it. As billionaire Mark Cuban said: Bitcoin would have to be so easy to use it’s a no-brainer. It would have to be completely friction-free and understandable by everybody first. So easy, in fact, that grandma could do it”.

Is bitcoin like gold?

Gold and bitcoin are both speculative; their prices are not determined by cash flow, revenue, earnings, interest payments or dividends. Though bitcoin is sometimes referred to as “new gold”, the similarity ends there. Since gold exists in the physical realm it has to be stored someplace. It is universally acknowledged and humanity has a long history with it. While gold is classified as a commodity, cryptocurrency has eluded categorisation.

What is bitcoin?

• Bitcoin is a cryptocurrency. There are thousands of cryptocurrencies, the most popular being bitcoin.
• A cryptocurrency is created and held electronically. Call it digital currency or virtual money. It can be used to buy goods and services online.
• Cryptocurrencies are powered by blockchain --- a decentralized technology that manages and records transactions spread across many computers. Each "block" contains many transactions. Blocks are "chained" together linearly. Blocks are like a page in a physical ledger signed with maths (cryptography).
• Cryptocurrency uses an online ledger with strong cryptography to secure online transactions.
• Bitcoin was introduced to the world via a whitepaper authored under the pseudonym Satoshi Nakamoto. The creator’s gender, race, nationality, or whether it is an individual or a group, remains a tantalizing mystery.

It is NOT dependent on central banks that control money supply.
It does NOT flow through the traditional banking system.
It is NOT controlled by a monetary agency, institution or country.
It is NOT paper money like the rupee, dollar, euro or yen.
It is NOT backed by gold or central banks or monetary authorities or countries; it is backed by code.

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

What is the difference between a large cap equity fund and an equity focused fund? Which one is a better option for investment?

What is the difference between a large cap equity fund and an equity focused fund? Which one is a better option for investment? 

Large-cap Funds:

These are equity funds that invest a minimum of 80% in large-cap companies.

These funds invest primarily in larger & more established companies.

These are in the lowest-risk category amongst equity funds as larger companies tend to have less volatile earnings and stock price volatility than smaller companies.

Large-cap equity funds are suitable for Conservative Investors who wish to invest in equity but are not comfortable with the higher stock price volatility associated with smaller companies.

Equity Focused Funds:

Focused funds take more concentrated exposures in stocks, as compared to the diversified approach more common to mutual funds. Focused funds typically follow a multi-cap approach.

These funds offer higher risk-return than diversified funds.

This fund category essentially includes the top ideas of the fund management team and can outperform or underperform more diversified funds based on how well the investment teams call pans out in the markets.

Focused funds are suitable for Aggressive Investors seeking higher returns on their portfolios, who are comfortable with the potential higher volatility of more concentrated portfolios.

The best investment option depends on your investment profile and financial goals. One must evaluate their risk appetite before investing. The return that an investor can expect from his investments is therefore typically dependent on the level of risk that the investor is willing to assume and the investment horizon.

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

How to Build Your Emergency Fund

Experts say's one should having three to six months’ worth of expenses available for emergencies. That’s a pretty wide range; knowing which end of the range to target depends on several factors. 

Saving three to four months’ worth of expenses might be enough if:

• You’re relatively healthy
• You don’t have much debt
• You live in a low cost-of-living area
• You rent and your car (if you have one) is reliable
• You could easily find a job if you lose your current one
• You don’t have kids or dependents (including furry ones) relying on your income
• Your job is very stable
• You have a partner or other family you can rely on for financial assistance

Saving closer to six months’ worth of expenses is recommended if:

• You live in a high cost-of-living area
• It’d be hard for you to find a job if you lose your current one
• You own your own home (especially if you have an older home)
• Your job isn’t very stable (you’re a seasonal worker, gig worker, or an artist)
• You have children, a stay-at-home spouse, pets, and/or other dependents you support
• You have a medical condition, or do high-risk activities (like rock climbing or BASE jumping)
• You lack a financial support network

 Saving a year’s worth of living expenses is ideal if:

• You have a high income
• You have a niche position or specialized job that might require relocation or take extra time to replace
• You are the sole provider to multiple dependents
• You are retired or are nearing retirement

A lot of people will be a blend of these. But if you see more potential for risks in your life, consider saving more versus less.

How to Build Your Emergency Fund

Calculate how much your emergency fund should have and take steps to fund it.

1. Set a savings goal: Determine how many months of expenses to save, between three and six months, based on your personal circumstances and risk factors. 
2. Calculate one month’s worth of expenses: When calculating expenses, only tally up things you’d still pay for in an emergency, like rent, groceries, and bills. Leave out optional expenditures like travel and dinners out.
3. Calculate the amount of your savings goal: Multiply your monthly expenses by the number of months you want to save. For example, if you want to save four months’ expenses and one month’s expenses are 20000 your target is an 80000 emergency fund (20000 x 4). 
4. Automate your savings: If you automate your savings, you’re more likely to succeed. Decide how much you can afford to save each month, then set up automatic deposits into your savings account from your checking account after you get paid.
5. Capitalize on savings opportunities: If you come across other money, such as a tax refund, side hustle income deposit it in your emergency fund to reach your goal sooner.

Don’t get flustered if your goal seems difficult to reach. Just remember that you don’t need it all immediately, or even next year. It’s better to think of your emergency savings fund as an ongoing process, like your retirement savings account. Then, once you do reach it, you’ll have extra money each month to put toward other goals.

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

What is the best step to deal with debt?

 GET RID OF IT.

Start by taking inventory of all debt. Credit card debt, personal loans, education loans, vehicle loans, home improvement loans. What you can keep away from this list is a home loan since the tenure could span over a decade. In an excel sheet, stack them in order of interest rate, and size (amount of outstanding).

• Debt Avalanche Strategy: Pay off your debts in order from the highest interest rate to the lowest, regardless of balance.

Say you have a credit card outstanding bill of Rs 40,000 at 24% per annum interest rate. But your personal loan is 18% per annum. This strategy would need you to pay off your credit card bill with priority as it has a higher cost. Once you clear that, you move on to the next most expensive outstanding.
But it does not imply paying off one loan to the exclusion of another. Make the minimum payment on each loan, while the extra money you have managed to save should be channelized into the one with the highest interest rate.

• Debt Snowball Strategy: This time, the size of the debt becomes the focal point, not the cost of it.

Make the minimum payment on each loan, while the extra money you have managed to save should be channelized towards clearing the smallest debt. Once that is paid off, you move to the next one, and the next, until you are debt-free. If you have many loans, this is a good way to clear the clutter.

Which is the right one?

Pay-the-smallest-debt-first is a straightforward strategy that can provide you with the much-needed motivation you need to get started. The small win can help you stay on track. But it also means that getting rid of the smallest debt entails holding onto the debt with the highest interest rate longer. This translates into paying more in interest.

The math favors this Avalanche Strategy, but if the Snowball Strategy helps you actually achieve the goal of being debt-free, there's value in that, too. The Snowball Strategy helps you take the first small steps and is kind of a behavioral trick, the idea being that taking small steps can lead to a sense of motivation and empowerment. It gives you a sense of control and achievement.

Or, you can try a combination. You can work at eliminating the smallest loan first to keep you motivated. After getting one or two out of the way, you can switch to tackling the most expensive debt. A word of caution here: Have a written plan that you adhere to. Or else you will be switching between the two constantly and not make much progress.

THE BEST STEP TO DEALING WITH DEBT IS TO GET RID OF IT.

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

What is the surest path to financial independence?

 There are only 3 aspects you need to focus on.

1. Income
2. Dependents
3. Investing

Let's tackle all these three one by one.

Income:

Your income can be from a job, or your own business, or from your assets that are generating income, this income should be able to take care of the shelter, food, and clothing.

Obviously, you should spend less than your income, and the rest need to be invested into assets.

Dependents:

At least In India, We end up taking on the financial responsibility of family finance and sibling financial needs, and even housewife.

Some people are lucky, some parents don't depend on their kids, some people marry a working partner (I think it's a smart move). You will need to find ways to solve this dependent problem (If you have dependents).

It will be hard, but If I can do it, then you can also do it.

Investing:

Obviously, your income can stop due to multiple reasons, you could lose your job, your business can fail or your investments can underperform for a couple of years.

You need back up and that is nothing but more investments.

Until your income is flowing, your investments need to happen side by side, the more you invest, the more you are financially independent you become.

My investment generates almost 2K per day (Somedays even more), But my spending might be at 500 per day, rest 1,500 is always re-invested. Eventually, it will grow into a huge pile of cash and ensuring more financial freedom.

One More: Your Attitude

Your attitude towards money, towards your financial freedom is a very critical part, You can let money and society control you or you can take control of your money and your lifestyle - It's your choice.

As for me…

I live in a small home (Not Villa),

I don't have a SuperBike 

I don't have a luxury car (I do have a nice car)

I eat and drink well at home (Maybe once or twice a month I eat out)

I keep my expense in check and invest most of the money.

I work where I want and I don't really care about getting big offices.

So basically, I am Financially Independent for Many Years to come :)

I hope this helps!

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

Why ELSS is a better tax-saving option than traditional instruments?

Equity-linked saving schemes (ELSS) qualify for a deduction under Section 80C. You can claim a deduction of up to ₹1.5 lakh against investments made in ELSS during the financial year. Some experts also believe ELSS is a better option than traditional instruments such as public provident fund and National Savings Certificate as they have a potential to deliver better returns.

However, returns are not guaranteed and are market-linked but they have the ability to deliver inflation beating returns if one stays put for a long term. “Since we already have EPF deductions, it adds a good balance. And more importantly it teaches us how to be good equity investors, stay for long term," said Shweta Jain, chief executive officer and founder, Investment.

ELSS returns are, however, not guaranteed and are market-linked but they have the ability to deliver inflation beating returns if one stays put for a long term.

Apart from these, there are other reasons which make ELSS a better choice for tax savings.

Shortest lock-in: ELSS has the shortest lock-in of 3 years when compared to other tax saving instruments. This gives comfort to people that they may have the option to withdraw the money in case of an emergency. However, it is advisable that one satys invested in ELSS for long-term. “ELSS can deliver better returns but one should stay invested for more than just 3 years, need to stay invested for longer and definitely see better returns, also these are good habit forming decisions, so definitely one should opt," said Jain.

SIP option available: ELSS helps in building the discipline of investing in equities as one can invest systematically through SIP plus the lock-in ensures that the person stays put for long-term and doesn’t withdraw due to market movements.

As the financial year is coming to an end, many of you may be looking for investing in tax-saving options. However, it is always advisable to invest in equities in a staggered manner to get the benefit of rupee-cost averaging. So, may be you can start with your investments in ELSS now and continue it for next year in a staggered manner.

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

IS IT A GOOD TIME TO INVEST IN EQUITY?

The question is a loaded one, and legitimate too. But given the stock market’s erratic behavior, there is no right answer. And if you wait for one, you will end up sitting out the market.

• Is there ever a good time to invest in the market?

Of course. When it hits rock bottom. Invest huge amounts and then wait for the market to rise. This is timing the market in its purest form, something that is extremely difficult to do. Let me tell you why.

You need to be convinced that the market has touched rock bottom. No one can successfully call out the bottom or peak in advance.

You need immense conviction and confidence to invest when scene is dismal.

You must have tremendous patience to ride it out. The wait could sometimes be years. Then again, those who invested in March 2020 found that the wait could be a few months. Unpredictable.

• Stocks: Is there a right time to invest?

In 2020, infotech and pharma stocks had a massive bull market, while banking and finance stocks had a bear market. So, was it the right time to buy? The answer is, depends on what you want to buy.

You wouldn’t buy a car without knowing its value. You would not buy a house without knowing what it is worth in terms of location and area and other factors. Why would you buy shares in a company without knowing its Fair Value Estimate (FVE)?

The FVE helps you determine whether the market price of a stock is high or low compared with its fundamental value. Calculating the FVE involves looking at a company’s financial statements and annual reports, its business and competitive advantage, predicting future cash flows, assessing the management structure and corporate governance. Based on that research, a value is calculated that estimates the value of the company and what one share of stock should sell for if no emotions or headlines or hype from talking heads were involved.

So you need to look at the stocks you want to buy and see where they stand with respect to the current stock market price. That will help you determine whether or not you should buy. Don’t just blindly look at the Nifty or Sensex and wonder if it is time to buy.

• Equity Funds: Is there a right time to invest?

The best way to invest in a diversified equity fund over the long term is via an SIP.

1. The need for convenience. It is very practical. You may not have huge amounts to invest, but you can invest at least Rs 5,000 every month. And once you select the fund and the amount, it is a hands-off approach. You could do an SIP every fortnight or every month or every quarter. The money from your bank account will automatically be debited to buy units of the fund. You decide the amount, the fund, and the periodicity of the investment.

2. The need for consistency. To be a consistent investor, you must do away with constant human intervention. Or else, during market downturns, you may be tempted not to invest at all. Or, when the market scales new highs, you could get carried away by the euphoria. The hands-off approach is convenient and prevents you from over thinking.

3. The need to exploit market upheavals. It capitalizes the erratic movements of the market. The stock market never moves in a linear fashion. This capitalizes on the market’s erratic movements; you get to buy more units when the market falls. And you are always invested, not sitting on the sidelines.

However, this is only in the case of diversified equity funds. When it comes to sector funds, you need to time your entry and exit.

 

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing.