A cocktail of factors – from the rollout of the Covid vaccine across the world, to optimism about economic recovery to a spiking of US bond yields – has had a dampening effect on gold, pushing it into an official bear market. (A bear market is roughly defined by a 20% decline in any asset from its peak).
Suddenly everyone’s talking about US bond yields surging. I see that the 10-year US government security is up by some 0.02 % to 1.57%. Why is this such a big deal?
While yesterday’s move isn’t big, what’s big is the US 10-year Treasury’s 43 basis point rise in the last one month. This means that, a month ago, investors in long term bonds issued by the US government were getting 1.13% by way of interest and now they’re getting 1.57%. That’s a 40% jump in returns from an asset that is regarded as one of the safest parking grounds for money in the world.
With the economy looking up and interest rates likely to rise again, safety-seeking investors may like
to shop around for bank deposits offering attractive rates. But as we had explained in an earlier
article, given the way deposit insurance works in India, it simply isn’t worth it to take risks with your
bank deposits for slightly higher rates. (Read this to know why https://primeinvestor.in/why-bank-
fixed-deposits-can-be-high-risk-too/)
But identifying a sound bank has become infinitely tougher post-Covid. Borrowers are just coming
out of a loan moratorium and banks are prevented from reporting their true bad loan picture due to
a Supreme Court standstill. If bad loan provisions get out of hand, some currently profitable banks
can turn loss-making or face capital shortfalls.
When building a long-term equity portfolio, one common mistake that many of us make is to watch over our profit-making stocks with tender love and care, while orphaning our loss-making stocks. This, over time, leads to our portfolios featuring a few big winners but carrying a long tail of loser stocks that are down 80 or 90% from their buy price.
With bank deposit rates plumbing the depths, fixed income investors are hard-pressed to find investment options that can deliver better returns without big risks. Power Finance Corporation’s (PFC) retail offer of secured non-convertible debentures (NCDs) appears well-timed to capitalise on this need. But should you bite the bait? If yes, which of the 7 bond options is worth a look? An analysis.
Financial stocks are dicey bets to make when stock markets are expensive and there’s uncertainty over the economic outlook. But here’ an NBFC that is a good portfolio addition today, for investors seeking a defensive stock that can weather any upcoming volatility while delivering long-term wealth.
Forecasting is a tricky business and 2020 showed how Black Swans flying at you out of nowhere can make you look foolish. But looking back at the debt outlook and strategy we recommended a year ago, we’re glad we erred on the side of caution.
With Indian stock markets at an all-time high valuation despite uncertainty about the shape of earnings recovery, it is not surprising that many investors want to take some money off the table ahead of New Year. There could be three legitimate reasons for you to sell some of your equity holdings.
Is it time to buy gold? Does the recent correction in gold prices provide an opportunity to accumulate? Aarati Krishnan analyses.
As the stock indices defy gravity to soar past earlier highs, AMCs are back to using a time-tested ploy to manage their flows – rationing your investments.
Mirae Asset has just drastically slashed the monthly SIPs it will allow into its Mirae Asset Emerging Bluechip Fund from Rs 25000 to Rs 2500 from November 6. SIPs and STPs registered earlier will be allowed to continue, but new registrations will need to be capped at Rs 2500. The scheme had already put a stop to all lumpsum investments from October 2016 and capped its SIPs at Rs 25000 a month in November 2017. This is a rare instance of a large and mid-cap equity fund regulating inflows, but such rationing is a common practise with small-cap funds.
While the National Pension System (NPS) has been opened up to all Indian citizens of late, employees who work with the Central government service have been contributing to NPS as their default pension scheme since January 1, 2004. The features and tax rules of the NPS as they apply to Central government employees are quite different from those for ordinary folks.
Our previous articles had many of you asking about the less-known NPS Tier II account. Does the Tier II account offer the same tax breaks as Tier I? If not, should one open it at all? Here’s all you may like to know about the NPS Tier II account and how you can make the most of it.
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