top of page

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)

Rising temperatures triggering kidney issues

As heatwaves intensify across India, rising temperatures are not just causing dehydration but also kidney problems and urinary tract infections (UTIs). Follow the vital tips given by the expert in the article below and stay healthy during those sunny days.


Just like heatwaves can trigger heart crises, rising temperatures are now causing a spike in kidney problems and urinary tract infections (UTIs). Excessive heat leads to dehydration, which stresses the kidneys and creates conditions that allow bacteria to grow in the urinary tract. Are you aware? Urban populations, outdoor workers, and older adults are particularly vulnerable.


When it comes to kidneys, dehydration from prolonged heat, excessive sweating, and inadequate water intake reduces blood flow to these vital organs, inducing issues such as kidney stones, acute kidney injury, or worsening of existing kidney disease. Kidney-related issues can lead to lower back pain, reduced urine output, swelling in hands or feet, fatigue, or nausea that can interfere with the daily routine. Severe dehydration can lead to dizziness and confusion.


Untreated kidney problems can escalate to kidney failure, electrolyte imbalance, or long-term damage requiring dialysis. Moreover, many also suffer from UTIs, which tend to happen when the bacteria multiply in the urinary tract, often worsened by dehydration, infrequent urination, or poor hygiene. The symptoms of UTI are burning sensations while urinating, frequent urges to urinate, cloudy or foul-smelling urine, lower abdominal discomfort, and fever. UTIs, if left untreated, can spread to the kidneys, causing pyelonephritis, a serious infection that can be life-threatening.


The last word: So, everyone should prioritize their health during scorching heat. To prevent UTIs, hydration is key, so drink at least 2-3 litres of water every day. Avoid excessive caffeine or alcohol, which can dehydrate the body further. Maintain good personal hygiene, urinate from time to time, opt for breathable clothing to reduce UTI risk. For kidney health, moderate salt intake, avoid prolonged sun exposure, and rest during peak heat hours.


(The writer is an urologist. Views personal.)

Comments

bottom of page