Behavioral Biases in Investments

Creating and managing a portfolio by the investor requires investment decisions to be made on which asset classes to invest in, how to invest, timing of entry & exits and review & rebalancing the portfolio. These decisions have to be based on the analysis of available information so that they reflect the expected performance and risks associated with the investment. Very often the decisions are influenced by behavioral biases, which lead to less than optimal choices being made. Some of the well documented biases that are observed in decision making are;

 Greed and Fear

These are the most common biases impacting the retail investors. Investors enter the market when prices are already high and sell when the market bottoms out; thereby losing in both the scenarios and finally concluding “equity is the worst investment class”. Few who exercise patience overcomes these biases and emerges as winners.

Things you should know about - Gold Deposit Scheme

Govt. of India has announced Gold Deposit Scheme recently. India is the largest consumer of the gold and Major part of that is imported. A huge amount of India’s wealth is lying idle in form of gold and it is not productively contributing to the India’s growth story. To tackle this, Government of India has come out with the two new schemes primarily targeted at tapping   the idle gold with Indian households and institutions and further giving an alternative   for actually buying the physical gold. The two schemes are Gold Deposit Scheme and Gold Bond Scheme. Gold Bonds will be issued by RBI and Gold Deposits will be implemented through Banks.

Claims settlement ratios of Life Insurers

Claims settlement ratios of Life Insurers

(Latest available IRDA data for 2013-14)

 Claim Settlement Ratio

Simplify your investments!

On 18th June 2015,we conducted a Financial Well being Camp for Business people and Professionals of Raigad Chambers of Commerce and Industry at K star hotel, CBD Belapur.The sessions were addressed by the undersigned and Mr Amit Trivedi,expert trainer.The participants have provided very good feedback on the programme and we would like to share the deliberations on Investment Planning.

Asset Classes

There are four major asset classes;Gold,Real Estate,Debt and Equity.Gold and Real Estate are physical assets whereas Debt and Equity are financial assets.


The Government has announced simplified and shorter Income Tax Return (ITR) forms. However, the controversial issues with regard to details of foreign visits and expense as well as providing bank account details remain.

1. New Form Introduced: As majority of individuals/HUFs, who file ITR-2 Form, don’t have capital gains, the Government has introduced a new form ITR-2A to make the process simple for them. The proposed ITR-2A Form is to be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income.

Let us encourage social security!

We always hear of social security system in the western countries and lack of it in our country. But the new central government's initiative on financial inclusion has now made it possible for each one of us to enable the simple earners e.g drivers, maids at our homes and many others belonging the poorer sections of the society around us to lead better lives.

What can we do?


Customers of Banks be aware!

We have to maintain Bank accounts, depend on Banks’ services and trust the Banks staff. But there is a caution; Trust but verify. Now a days, Banks services come loaded for the unsuspecting customers. Recently the service charges in many Banks been increased. If Banks charge for everything under your nose, you have every right to demand to be treated fairly. Caveat Emptor; Buyers be aware goes the maxim. Here are some specifics;

Home Loan

The home loan is a common experience for many customers. You are offered without a choice to take Life Insurance cover along with home loan. The cover gets gradually reduced with repayments. Banks may also lure you with an offer of a loan for the single premium. But remember that the EMIs get increased due to insurance premium and you have to pay interest on it.

What can you do?

We have been submitting declarations in form 15G(Indian residents below 60 years of age) or 15H (Indian residents above 60 years) to the Banks for not deducting Income Tax TDS on the interest income on deposits kept with the bank. Now TDS has to be deducted if the total interest income from savings bank(s),Recurring deposit(s) and Fixed deposit(s) exceed Rs10,000/- during the year. If your interest income exceeds Rs 10,000 a year, the bank will deduct 10% tax at source.If you do not furnish PAN details, the TDS rate will be higher at 20%. However, you can submit a Form 15G and 15H to avoid TDS on interest income. But the repercussions of wrong filing are stiff from this financial year. A false or wrong declaration in Form 15G/15H attracts penalty under Section 277 of the Income Tax Act. Prosecution includes imprisonment ranging from three months to two years, and a fine. The term can be extended to seven years and fine, where tax sought to be evaded exceeds Rs25 lakhs.

When can you submit 15G?

“Hindus are seekers, not believers ....” thus spoke Sadguru Jaggi Vasudev in an interview to The Ecomonic Times yesterday.He clarified that all those people living in this ancient land below the Himalayas have pursued “search of truth” from the vedic times.
But when it comes to buying of financial products, we have been doing the opposite.We believe our friends,agents, brokers and banks staff without bothering to find out what we are buying and whether it suits our need or not ?By the time we realise the products, be it  insurance or investments, are mismatch to our needs, it is already too late!

Women need Financial Planning

Traditionally women are better at managing family’s budget and are more concerned about children’s education and marriage. We find women groups take to streets when prices of vegetables and other essential items increase beyond tolerable levels. Nowadays increasing number of women are opting for career in regular jobs. It provides them opportunity for financial independence. It is high time for women to take control of their finance for the following reasons; 

 (1)   Increasing divorce rates – India is witnessing a surge in divorce rates and therefore entrusting the spouse with financial matters can create money crunch. It is prudent to keep a tab on your monthly investments and determine holdings in your name, so as to avoid financial complications later.

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