Earn a Pension from your Mutual Fund investments in India

Posted by on Mar 25, 2017

Here’s a plan for a conservative investor who aims to earn a regular income/pension from his investments in mutual funds and expects a return that is better than what bank fixed deposits offer him at this point.

  • The Indian equity market is expensive on today’s date. The current PE (price to earnings, one of those markers that show how expensive the market is) of the NIFTY is near 22 against a historical average of 18. See here.
  • Hence, it won’t be wise for our conservative investor to invest a lump sum in an Equity Fund (that invests almost 100% in equities) or even a Balanced Fund (with at least 65% in equities) right now.

  • Among the Debt Funds, the Short Term Debt Funds are the most stable (longer term bond funds are more volatile) although they won’t give you the highest returns in the long term. Still the short-term funds are much better than bank fixed deposits with an average annual return of about 9% per annum. See here.
  • There is little difference between the Liquid Funds and the Short Term Debt funds in their risk profile. The short-term funds invest in slightly longer duration papers and some of these may have an exit load (deduct a small percentage) if you withdraw money within 15/30 days of your investment. But the short-term funds would give you an additional 1 to 1.5 percent return compared to the liquid funds.
  • I would recommend an investment of 80 to 90 per cent of your corpus in two or three short-term debt funds (select the 4/5 star rated funds from the above list and while selecting please check the expense ratios of the funds (the lower the better). Opt for the Growth option and after one month initiate an SWP (systematic withdrawal plan) so you withdraw 7.5-8% (what an FD would offer you) of your investment in that fund every month or every quarter. At the present rate your initial investment should still grow!
  • Keep the rest (10-20%) of your corpus in another short term debt fund and wait for the market to fall. At opportune moments, when the PE has come down substantially (20 or lower), switch some portion of this investment to a Multi-Cap Equity Fund. See here. These funds invest in all kinds of companies: big, medium and small, their world is not limited to any specific sectors and, as such, they are the most diversified. You can stagger this investment, doing it in several tranches to get the benefit of market volatility. The general principle is you should increase the amount you switch with each fall.

If the market never falls, your money is still safe in your fund and you can keep it and use it as an emergency corpus at any point of time.

[Disclaimer: What is suggested above is by way of guidance only. I am not a financial adviser and I am not asking anyone to follow this guidance. I had to write this short note for a friend and am uploading it here with the hope that it may help a few thers too. Readers should make investments only after proper assessment of their risk profile and at their own risk.]

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Review: Jedo Micro 0.9 mm Mechanical Pencil

Posted by on Mar 25, 2017

A 0.9 mm lead mechanical pencil is perhaps the pencil with the strongest lead that you can use for writing without any need to sharpen the lead. I have been looking for a 0.9 mm pencil in Calcutta in which I can use B or 2B softer lead for darker impressions. However, I have found neither the 0.9mm mechanical pencil nor the 0.9 mm lead refills in my locality and even a little beyond.

But on searching the amazon.in site, I have found a Korean brand of mechanical pencil named JEDO M105 at a very affordable price. I have also got 0.9 mm lead refills manufactured by MICRO, Korea from the same seller. I discovered that both the pencil and the leads are produced by the same Korean Company.

Jedo 0.9 mm mechanical pencils are available in four colours: black, green, blue and yellow. Their yellow version is more orange than yellow. The pencils have thin plastic barrels that gradually taper towards the tip. There is a metal sleeve at the end of the tip. The pencil has ridges where you would grip it and this facilitates easy gripping. The tip, the clip and the eraser cap that needs to be pushed to advance the lead are made of steel. On removing the cap I found a thin, cylindrical, blue rather flimsy eraser. If you use a mechanical pencil at home, it is always better to use a separate eraser.  The stainless steel clip will securely attach your pencil to your chest pocket, very unlike what I have seen with most other cheaper mechanical pencils.

The finish of the JEDO M105 isn’t perfect, but it performs its function adequately. The lead is sturdy and will not break easily. This is better than 0.5 mm or 0.7 mm leads in that respect. Considering its price, JEDO M105 is a good buy especially because it may not be very easy for you to find 0.9 mm mechanical pencils and lead refills here in India.

You can also buy Micro Touch-Line 0.9 mm leads which come in plastic dispensers. Five such containers, each carrying 126 leads, can be bought for Rs.125 plus delivery charges. The leads are of fine quality.

Compared to this Korean brand, I have used much superior mechanical pencils made in Japan.  Those Japanese pencils are almost equally affordable here in India. But I haven’t found the 0.9mm variety there. I recommend JEDO M105 mechanical pencils to those who haven’t found 0.9 mm pencils in a retail shop. These are ideal instruments for writing on very inexpensive paper and that way you save a lot of money.  It is a decent buy!

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