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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)

HC continues interim protection till April 16

Mumbai: While continuing the interim protection against arrest till April 17 granted by the Madras High Court to standup comedian Kunal Kamra, the Bombay High Court has posted his plea to quash a Mumbai Police FIR against him for further hearing on April 16.

 

A division bench comprising Justice Sarang Kotwal and Justice Shriram Modak also issued notices to the Mumbai Police and ruling MahaYuti ally Shiv Sena MLA Murji Patel for the FIR against the funnyman over his ‘traitor’ swipe at Deputy CM Eknath Shinde.

 

Queried on the interim protection granted by Madras HC, Kamra’s lawyer, Senior Advocate Navroz Seervai told Justice Kotwal and Justice Modak that it was an oral order applicable till April 17, but his client (Kamra) was really concerned about quashing (the FIR).

 

After the judges listened to his arguments  (See… BOX),     they said they would hear the matter on April 16 and asked Additional Public Prosecutor Mankunwar Deshmukh appearing for the State to get instructions.

 

However, she sought a hearing on April 22, but the judges explained to her that Kamra is protected till April 17 (by Madras HC) and not beyond, so they would hear the matter here on April 16 afternoon.

 

Based on Patel’s complaint with the MIDC Police Station on March 24, the Mumbai Police had lodged a FIR against the comedian under various sections of the Bharatiya Nyay Sanhita, which was later transferred for probe to the Khar Police Station.

 

Though Kamra had not taken any name in his show, DCM Shinde’s loyalists construed it as lampooning him - as a ‘traitor’ (gaddar) with reference to his rebellion and split from the undivided Shiv Sena in June 2022 – and went on a rampage.

 

That day (March 23) the enraged supporters had vandalised the Habitat Studio in Khar where the show was recorded, but later at least 12 persons were nabbed for the violence and enlarged on bail even as Kamra has been claiming getting death threats since then.

 

As the row snowballed, more FIRs were filed against Kamra in Nashik, Jalgaon and Nandgaon, all of which are being probed by the Khar Police Station.

 

Not murder case: Lawyer 

On April 5, the Tamil Nadu-based Kamra, 36, filed a writ petition in Bombay HC seeking to quash the Mumbai Police’ FIR.

 

He cited constitutional grounds of violating his fundamental rights under Articles 19 and 21 pertaining to freedom of speech and livelihood.

 

His legal team led by Navroz Seervai argued that the satirical remarks in Kamra’s show ‘Naya Bharat’ constitutes protected speech and so should “not be criminalized under defamation of public mischief” charges.

 

He said that Kamra had written thrice to Mumbai Police to record his statements via videoconferencing as he had been getting multiple death threats.

 

“The authorities are not keen to record his statement but they want him to be present here physically. His physical presence must not be insisted upon till the present petition is heard. This is not some murder or a serious offence… It is a comedy show, a video of which is available with them,” pleaded Seervai.

 

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