Responsible blogging

I did not think my blog would be visited by people who do not know me. So if you look at my posts on portfolio advice, they will seem not too deep. I was analysing the page hit statistics and realised 7 of the 10 hits I had till date was when peoples searched for Bhavishya Nirman bonds. I am not sure I gave enough data to people to decide if they were looking for this. Notes to self - I will write slightly detailed posts and post my analysis also. I think I owe it to my readers. Leave a note if you want to see some detailed analysis of the deep discount bond.

Company deposits - a calculated risk

I posted about the deep discount bonds last time, that assumes that you have money for long term debt options. While most people will suggest that if you are ready to lock funds for periods like 10 years, then go for equity, my suggestion is to keep a healthy mix of debt and equity unless you are a very short term investor (defined as 1 year horizon).

I am also assuming that you have already looked at the standard options like the Bank FDs, Post office schemes etc.

The other option available if you are open to a higher degree of risk is you should be looking at some company deposits to bolster your portfolio returns. Keep in mind that most of the company deposits are unsecured in nature and any loss will land you with Zero money in most cases. having got that flag away, lets focus on how you can add this thing to your portfolio - 2 sites which seem to have a good list are moneypore and Bajaj capital. Check only companies which are profit making and have a history of dividend payment and long history of fixed deposits. As per law, a statutory adevertisement is to be released by the company, check this out, this gives information about the company, its history and operational details etc. My personal tenure for most of these is 1 year, I usually review the companies performance and review whether I need to renew or not. Always check the credit rating for the instrument. If there is no credit rating ( not probable) or has not been revealed steer clear.

What can you expect from these investments - maybe +1 to +2 % on interest rate on AAA rated instruments for a year over the bank deposits, but in the current scenario the gap has reduced.

I will post about that new kid on the block Fixed Maturity plans next, keep reading....

Return of the sith with bullshit?

Back from a long break, hoping to blog more often from now on.

I have been reading Bill Bryson - A short history of nearly everything - Dhammo said, hope atleast these people landed in heaven - how true. Some of the guys mentioned have pushed the frontiers of our knowledge to limits which have seriously enriched the homo sapien understanding of the world.

As an aside, I intend to look at investment opportunities in this blog, so if you looking for some investment analysis, keep visiting.

Since I have been a great fan of Benjamin Graham, I believe in maintaining a very balanced portfolio - debt and equity in the portfolio. I still have not mastered the balancing bit and hope to setup some rules for myself, so that I can effectively book profits in a bull market and cash on capital appreciation.

I am trying to build a balanced portfolio and will share some of the instruments I am using to this effect.

Lets start with debt - I will write about some interesting options on the fixed income side and then move to the equity side.

NABARD has launched the Bhavishya Nirman Bonds - the current one on tap has a fairly good yield for a debt instrument of 10 year tenure. It is a deep discount bond/zero coupon bond with a face value of Rs . 20000 and a tenure of 10 years, issued at a price of 8250 if you are a retail investor. Its an unsecured instrument mind you, so maybe the premium is justified. I need to check out the current t-bill yield but locking in a pre tax 9% quarterly compounded yield is fairly good I think. If you can take that kind of a tenure then investing in this makes sense.

Although the option of holding this investment in demat form exists, trading on the BSE is in physical form and in market lots of 50 , which is slightly large. I have not checked the trading volumes of deep discount bonds but the option does mean you have some liquidity. Odd lot trading was something from the era of paper trading and am not most guys understand it today.
Should one invest in a deep discount bond ? The main advantage is that you avoid the re-investment risk, and (need to check on this!) the tax treatment - where the interest is considered capital gain and not income, helps if you are in the higher income bracket.

check it out at www.nabard.org.

Disclaimer : This is not an investment advice, you should speak to a qualified financial planner and tax consultant before acting on this post. This represents my view and my view only, not of my organisation, my parents , my pet fish or any other entity living, dead, fictional or otherwise.