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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

Four Methods to Choose Investment

One of the most common questions investors ask is: “Which investment should I choose?” The real answer is that no investment is good or bad in isolation. A simple way to judge any investment is the RRLT framework - Risk, Return, Liquidity and Time Period. Before investing in any product, all four factors should be seen together. 1. Return Return is the reward you expect from the investment. It may come in the form of interest, dividend, capital appreciation or regular income. Naturally, every...

Four Methods to Choose Investment

One of the most common questions investors ask is: “Which investment should I choose?” The real answer is that no investment is good or bad in isolation. A simple way to judge any investment is the RRLT framework - Risk, Return, Liquidity and Time Period. Before investing in any product, all four factors should be seen together. 1. Return Return is the reward you expect from the investment. It may come in the form of interest, dividend, capital appreciation or regular income. Naturally, every investor wants good returns. However, return should be understood properly. It is important to look at the real intrinsic / internal rate of return (IRR) of every investment, especially when cash flows happen at different points of time. A product may sound attractive on the surface, but the actual return may be very different when calculated correctly. 2. Risk Risk is the possibility of losing money whether partially, fully, temporarily or permanently. In some investments, the risk is very low. In others, the value may fluctuate significantly in the short term. Direct stocks, equity mutual funds, gold and real estate can create wealth over time, but they need patience and the ability to tolerate ups and downs. On the other hand, fixed income products may offer stability, but they may not beat inflation over the long term. 3. Liquidity Liquidity means how easily you can convert your investment back into money when required. A savings account is highly liquid. Fixed deposits, mutual funds and stocks are reasonably liquid. Real estate may take time to sell. Liquidity matters because emergencies do not come with advance notice. Before chasing returns, every investor must ensure that enough money is available in liquid instruments for short-term needs and emergencies. 4. Time Period Time Period is the most important filter. The investment product should be selected based on when you need the money. If the money is needed within a few months or one to two years, safety and liquidity matter more than high returns. If the goal is ten, fifteen or twenty years away, growth-oriented assets like equity mutual funds, direct stocks and gold-related instruments can play a larger role. The longer the time horizon, the better your ability to handle short-term volatility. Goal-Based Planning This is where proper financial planning becomes useful. Make a table of your financial goals - home purchase, car, vacation, child education, child’s marriage and retirement. Write the amount required, adjust it for inflation and mention the time left for each goal. Once this is clear, choosing the right investment becomes easier. Investment Avenues Broadly, investment avenues can be divided into two categories - those that help beat inflation and those that mainly provide stability. Equities, equity mutual funds, gold and real estate help in long-term wealth creation by beating inflation. Your long-term financial goals should ideally be invested in this bucket - the one that helps your money grow faster than inflation. For your short-term goals, rely more on bank fixed deposits, recurring deposits, and debt mutual funds. Here, safety and availability of money are more important than high returns. A good investment is not the one that sounds exciting. A good investment is the one that fits your goal. So before investing anywhere, remember RRLT - Risk, Return, Liquidity and Time Period. When these four are aligned with your financial goal, investment decisions become much clearer. (The writer is Chartered Accountant and CFA (USA). Financial advisor. Views personal. He could be reached on 9833133605)

EPIC Cards, SIR, and the Fight for Accurate Electoral Rolls

Voter turnout has consistently been low, around 60–65 per cent in both Lok Sabha and Legislative Assembly elections, and may drop further due to alleged multiple voting. This means, on average, 35–40 per cent of eligible voters do not cast their votes.


Currently, these apprehensions have been reported to the Election Commission and the Supreme Court of India, while the mandatory Special Intensive Revision (SIR) of Bihar’s Electoral Rolls is underway. The Election Commission has yet to complete the process and finalise the declaration, and soon the SIR will begin in other states.


A comprehensive review should be undertaken to address apprehensions by revamping the process and procedures enrolment and management of voters. The Electoral Photo Identity Card (EPIC) must be recognised as a true document of nationality, and all citizens should treat it with due seriousness.


However, the voting percentage would increase if the updating of the voters' list were carried out after discrepancies removal, and before the elections are declared. A precise check on the facts and correctness of the voters' list is also required immediately after the elections are over. This post-election updated list could be made available as a reference list for the next elections for Panchayats, Nagar Palika, the Legislative Assembly, and the Lok Sabha.


The EPIC Cards should also have an expiry date (10 years), as in the case of passports and driving licences, to fix the responsibility of voter registration on the Election Commission and the individual voter.


This interactive procedure will be useful in updating the voters’ list automatically to a large extent. As it is related to the 'Right to Vote' for the 'citizens' only, this action is a must to maintain solemnity and earnestness.


The updated EPIC should be the first, essential, and compulsory document for issuing any other documents required for permits and licences. This will promote voter registration and updating automatically.


A major shortfall is due to no-shows on election days. This may be a shortfall due to alleged fake voters that cause overcounting of voters in the lists. The reason for the no-show of genuine voters is also a matter of concern and can add to the fake voting, as alleged.


In the current scenario, in Bihar State, the major attention is being drawn to the removal of 65 lakh voters (22 L dead, 36 L permanently migrated outside Bihar, and 7 L names were found included in the voters list for multiple constituencies) under various categories and circumstances as laid down in the procedures following the SIR methods.


This type of issue, therefore, falls under the overnumbering of voter lists. Such issues need to be addressed immediately by updating the voters' list after the elections are over, as a continuous process for ensuring correctness with reasons.


Irregularities due to non-citizens need to be checked by birth certificates and/or by the date of birth, as verified in the educational records of primary to high school levels.


Other documents subsequently released for personal identity (Aadhar Cards), bank passbooks, work, food (ration card), travel abroad, permits, business, licences, etc., cannot be considered as authorised documents for citizenship. These are issued to facilitate living.


The EPIC cards are to be considered as the document for voting by the true nationals of the country only. It is, therefore, a prime identity and non-transferable. Birth is the proof of being a citizen, subject to MEA rules, and needs to be confirmed through the verified birth and educational records from primary to high school levels only. Other documents are only facilitating the living and are issued by producing the information, which can not establish the true meaning of citizenship.


Recently, the Supreme Court of India passed an order to consider the Aadhar Card as proof of identity for the deleted voters, with the reason that it is the most easily available identity document. The Election Commission needs to exercise the power to consider the birth records over the Aadhar cards.


Further, the Supreme Court of India directed the Election Commission to publish the names of deleted voters in Bihar along with the reasons for their deletion. It also ordered the Commission to issue a notice allowing those who have not yet submitted an Aadhaar Card or EPIC to do so. However, the display of such lists with reasons may lead to the addition of unauthorised and/or non-eligible voters through manipulation.


A life certificate, declaration for non-possession of other EPIC cards, no casting of votes in any other constituencies, present employment, and birth records should also be sought from the listed names of the 65 lakh deleted voters for further disclosure and action.


Ensuring accurate voter lists and recognising EPIC as the definitive proof of citizenship is essential not just for electoral integrity but for strengthening the very foundation of our democracy.


(The writer is a resident of Mumbai. Views personal.)

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