Transforming Advisory Through Trust
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Think Big Award for 2018 by Wealth Forum
“Choose a job you love, and you will never have to work a day in your life.”
"Financial freedom is freedom from fear."
Vikas Kumar Baid
Vikash co-founded Trust Capital in 2016, with an aim to provide transparent and client-centric wealth advisory services. Trust Capital has since then helped clients establish their life goals so that they are able to lead more well-rounded lives. Vikash's passion for finance and entrepreneurship is evident from his Executive MBA in the same field from Indian Institute of Management (Kolkata). He has over a decade of experience in the Broking and wealth management space - a highly demanding role in which he excelled. Before establishing Trust Capital, he held high-performance roles in HSBC and IL&FS Investmart to oversee investment advisory and relationship management for high net worth clients. Vikash aims to fill a void in the financial markets for unbiased financial advice.He says
"Your Success is our Success".
Sundeep is the Managing Partner at Trust Capital. With more than a decade of experience in the financial services industry, he is committed to helping clients preserve their legacies, pursue their financial goals and navigate the markets through both good and uncertain times. Sundeep works with clients to develop clear, sophisticated strategies to help them achieve their objectives. He monitors the investment landscape and the latest trends to help optimize appropriate financial solutions for clients’ portfolios. Additionally, he is responsible for the oversight of the practice's culture and commitment to providing clients with an excellent service experience.
Sundeep’s approach to solving issues is client centric and solution oriented. He says,
“For our clients, we play the role of a financial doctor to diagnose their financial health and prescribe suitably, it should never be the other way around.”
Seema Bhatter Baid
Seema believes that financial planning is the best way to make seemingly impossible money dreams come true. She also believes passionately that women cannot be empowered in the true sense of the word unless they are financially empowered. She graduated with a BA in business administration and began her career in financial services in early 2008 at Kotak Securities Ltd.
Seema is highly experienced in guiding clients through the complex details of financial planning, retirement planning, and wealth services. In addition to her customer service and administrative support, Seema is instrumental in contributing to our firm’s development and service goals. Seema is a strong advocate of continuous learning. She says,
“Always be learning – even the experts will tell you that the more you know, the more there is to learn."
Trust capital offers an unmatched product basket, ranging from Debt, Equity, Mutual Funds, Insurance, Derivatives, Commodities, Structured Products, International Funds, Art Funds and Real Estate.
Trust Capital was set up to cater to HNIs, keeping in mind that they require a different kind of financial planning and management. Our services include planning and protection of finances, planning of business and retirement needs, and a host of other services, which will help augment their existing as well as future finances and lifestyle. We combine a hard-nosed business approach with a soft touch of personalized attention and dedicated customer care.
Our research reports have been widely appreciated by the HNI segment. The delivery and support modules have been fine-tuned by giving our clients access to online portfolio information, constant updates on their portfolios as well as value-added advice on portfolio churning, sector switches, etc.
Mutual FundsPortfolio Management ServicesBonds Alternate Investment FundsEstate PlanningEquity AdvisoryStructured Products
FINANCIAL PLANNING SERVICES
Benjamin Franklin once wrote that “By failing to prepare, we are preparing to fail”.
Goal Based Planning ServicesTax Planning ServicesCash Flow Planning ServicesRetirement Planning ServicesEducation Planning Services
As a wealth manager, we collate the relevant financial information and life goals of the client, assess his risk tolerance level, examine his current financial status, and identify a strategy to fulfill his goals.
It is not how exotic your portfolio is but how well it is structured to meet your objectives and give you regular returns whatever the economic environment.
"Give us four hours a year, and never worry about your finances again!"
WHAT MAKES US UNIQUE ?
Trust Capital’s credo is built on 8 pillars that guide our work each day.
1. We treat your money like it is ours – dedicating the time and energy to your funds as we would our own2. We look at things long term and are committed to building durable, long-term relationships with our customers, employees and associates3. We do not set personal or organizational goals that are not aligned with what we would like for our customers4. We do not wish to create wealth for ourselves at the expense of our customers5. We do not think our relationships with our customers are short term and to be milked for what they are worth while it lasts6. We will not churn your portfolios or recommend products we don’t feel are optimal just to make a bit of extra commissions7. We do not believe in managing and motivating our advisors purely on revenue targets8. We do not believe in pushing the limits of what is permissible by law or regulation
HOW WE PICK FUNDS ?
There are more than 2000 mutual fund schemes available today from over 40 mutual fund companies. It can be confusing to narrow down on a mutual fund which is a strong performer in a category depending on your need.
Our proprietary model, Trust Selector, makes this whole process of picking schemes simple for you.
Sieves and separates the top performers from non-performers.Enables you to choose the most ideal schemes, based on your risk appetite and goals.Separates schemes based on their investment objective into different categories.Rates schemes across 16 different parameters, including risk, returns, fundamentals and portfolio.Publishes ranks for more than 1000 schemes every month.Maps ranks to schemes in your portfolio, so you know which funds need attention.
What should be Your Allocation to Equities
Posted on Oct 9, 2018
One of the most common questions asked by people we meet is: ‘What should be my allocation to equities?’ While this is best answered with the help of a certified financial planner, the most common theory is that one’s equity allocation should be x% of their total net worth (excluding the house that one stays in) where x is 100 minus the current age of the individual. So if an individual is aged 40 years, the allocation to equities should be 100-40 = 60%. There are others who believe that the allocation should be dynamically altered depending on the attractiveness of the asset class.
We believe the answer to this question is not as straightforward, but nevertheless can be easily arrived at in a few steps. Let us first look at what are the objectives of any investor while investing and also consider some background on different asset classes.
The objectives for any investor would be protection of capital and maintaining (at worst) and ideally, improving the purchasing power of the rupee given that inflation eats into our savings each passing day and year. Given that savings is essentially deferment of consumption, the goal of investment would be to meet future needs that come during different life stages of the individual and his/her family.
Now let us look at what the returns over a cycle (typically 7-8 years) that different asset classes have generated in the past. It is important to note that past returns may not be indicative of future. However, it does give us a sense of the trend and can help make some assumptions.
Bank FD – 8-9% (pre-tax)Real estate – 11-13% (pre-tax) ^Equities (Sensex/Nifty) 13-14%
^ returns on real estate vary significantly across locations and cities. However, on a longer term (10-15 years), returns hover around this range
Over a period of 5-7 years, the returns in equities (even if one were to just invest in an index fund) mirror the nominal rate of GDP in India. What we define as a cycle is low to low or high to high of the index over time. So if India’s real GDP averages 6-7% and inflation is about 6-7%, we get a nominal GDP growth rate of 13-14% and that is typically what a long term investor in equities in an index fund has made.
So clearly, the dice is stacked in favour of a long term equity investor – where one gets to ride an asset class which grows faster than most asset classes, offers high liquidity and enjoys an extremely favourable tax treatment. If only, one can ignore and/or digest the volatility in the equity markets and stay invested with a long term perspective, the outcome can be extremely rewarding.
Of course, one needs to wisely select companies which are high quality businesses and buy them at reasonable valuations.
The other fact that one needs to keep in mind is the power of compounding. Have a look at the table below:
Rs. 100 invested for 20 years at 6% (typical post tax FD rate) will be worth 321, at 10% would be worth 673 at 15% (historic equity returns in India) would grow to 1637 and at 20% would be a phenomenal 3,834!
Now coming back to the original question on asset allocation, we believe that one’s allocation to equities should depend on the following:
First and foremost, anyone investing in equities should do that with a strategic, long term horizon – minimum 4-5 years, ideally longer. So, after keeping sufficient in reserve for liquidity requirements which may arise from time to time, one can allocate that portion of one’s funds to equities that one does not foresee a need for, for at least 4-5 years. For a middle-aged person, who has a residual life expectancy of 40-50 years, we need to plan finances for a fairly long term. As Indians, the typical thought process is that of leaving ‘something’ behind for future generations. As such, one can easily take a 10, 20 or 30+ year view. Most investors tend to invest in FDs/PPF and other fixed income investments with a long term horizon whereas most of these fixed income avenues are sure ways to allow inflation to eat into the savings!
Second and equally important, how comfortable one is with the equity exposure. If one is not that comfortable, it would be wise to start off with a smaller allocation and increase it as one gets more and more comfortable with equities as an asset class. Therefore, with the 100 minus your age theory, does it make sense for a 35 year old to put 65% of her assets in equities, if she is going to need the money in the next 2-3 years for say, buying a house or if she has never invested in equities and is not comfortable with it? Conversely, consider a 50-55 year old person who is nearing retirement – these days, we come across a number of people who wish to or have already retired in their 40’s as well!. If such a person has a net worth of say 8-10+ crores and needs about 15-20 lakhs annually for his/her household expenses and is comfortable with equities, he/she can easily continue to allocate a significantly large part of their net worth to equities.
Depending on whatever decision one arrives at, the key to building and growing wealth is saving and allocating the investments wisely and if one does decide to invest in equities, choose companies that grow their business value with time, have a competitive advantage and are run with high standards of corporate governance. One can choose to do that on their own or look at a portfolio manager who is well aligned with the investors’ objectives.
We must add that the above can serve only as a generic guide. It is ideal to spend time with a financial planner and arrive at the best solution, given personal circumstances, preferences and comfort. We spend a lot of time thinking about how to grow our business/grow salary, and optimise our expenses. If one were to just spend a couple of days to plan out the financial future, invest wisely and monitor the investments/portfolio manager regularly, the time spent would enable us to meet a lot of our needs, wants and desires; besides allowing us to spend our time where it’s best needed!
How to Make it Big in Stock Investing
Posted on July 23, 2018
Radhakishan Damani, Rakesh Jhunjhunwala ,Ramdeo Agarwal, Ramesh Damani,and Manish Chokani the famous five of Dalal Street have a lot in common in terms of their net worth and investment philosophy. But one commonality which stands out loud is that all investment gurus have made a fortune out of stock market investment. Many stock market investors wish to achieve similar heights through equity investment. But are they investing right?
Stock market, a seemingly larger-than-life world attracts many individuals. Big and easy money, profit and loss, etc. are just a few of the many pictures that a stock market would generally draw in an individual’s mind. But stock market does not treat everyone same. Only those with the right knowledge, controlled emotions and patience emerge as winners in stock market.
Stock market is full of action and drama. If every crash or rise on stock market intrigues you and makes you want to enter this big money-minting world, then Hold On. You need to be persevering to learn and understand what it takes to make it big here.
Should You Invest In Equity Market?
Whenever you plan to enter an unknown territory, it is vital to know what exactly you are looking for and what should be your plan of action.Therefore, before investing in equity markets, ensure you have clear answers to the following questions:
What are my expectations from stock market investments?What kind of risks are associated with stock markets?What is my risk tolerance as a stock market investor?What kind of stocks do I want to own in my portfolio?How much can I afford to invest in equity market and how often?How long do I want to hold on to my stock market investments?What happens if my stock market investments fall drastically?Do I have any knowledge about the stock market?Will I take professional help if needed?
Clarity on these questions will make it easier for you to realise if you are ready to start as a stock market investor or if you still need time.
If you decide to take the plunge…
Once you decide to enter the stock market, it would be advisable to seek a professional advice before investing in any stocks. A professional guidance or an expert view will save any major loss. However, if you want to invest in stock market on your own, be mindful of the following:
Invest time in preparation: You might be looking at stock market investment for Big Money; but don’t let your eagerness allow you to go unarmed with knowledge. Read up, talk to individuals who understand the stock market to get an idea of what you may be getting into. A basic understanding is a must! Get familiar with the concept of target, stoploss, limit order, etc. Try to get important terms like price-earnings ratio (PE), book value, dividends yield, etc.Start small: As a first time stock market investor, as a thumb rule, do not invest large amount of money at the beginning. Also, ensure you are investing ONLY as much as you can afford to lose (just in case). Keep this amount as limited as possible! Anything more than that may do serious damage to your finances.Know the stocks you want to invest in & why: Do not decide on stocks on hearsay or a random ‘tip’. First choose the sector you logically believe will do well going ahead, follow news around it and accordingly make your choice. To be on the safer side, choose largecaps instead of penny stocks when you are just starting off.Do not go on a buying spree: If you buy too many different stocks, it will get difficult to track them and that might not be good for your investment. For new stock market investors, it is advisable to begin with a maximum of 10-15 different stocks in sectors or areas you have knowledge.Never use margin: Investing in stock markets on margin may increase your returns, but it can also increase losses. Therefore, avoid using borrowed money to invest in equity markets.Control emotions & practice constraint: In the stock market, it is fairly easy to go with the flow and do what everyone is doing. Often, when the market is up, new stock market investors jump in at the wrong time and end up with losses eventually. Always remember, to ‘buy low and sell high’. Also, remember to stick to your own targets and stoplosses.Cut losses: If a stock you own isn’t performing, assess the market situation and don’t wait for too long to sell it. Reduce your losses. If you want to buy it again, do so at lower levels. If you believe in the fundamentals of the company, then just buy more stocks when the price falls to bring down your average cost price.Diversify: This advice is for investments within the stock market and overall as well. In equity markets, try to hold few stocks, but those belonging to different sectors to safeguard your money at all times. And in your overall financial portfolio, while you invest in equity markets, also have investments in comparatively safer investments like mutual funds, FDs, etc.Be patient, but alert: As a stock market investors should always monitor your stock holdings for fundamentals and valuations at least once a quarter. Assess the market situation and buy, add, sell or hold accordingly.Get professional help: If you are new to stock market, it is always advisable that you take the help from a broker or a financial planner.
How to choose a stock?
Qualitative factors play a key role in determining the future growth prospects of a stock. A company’s business model strength and ‘Moat’ is critical for assessing the outperformance for the company over a long period of time. Apart from qualitative, various quantitative measures to assess while investing are as follows:
1.Price to Earnings Ratio (PE): This compares the stock price to the company’s earnings per share. High PE means investor is paying a higher price for the stock compared to the earnings of the company. Therefore a stock having low PE has better value.2.Book Value: This is a company’s total assets’ net value without the liabilities.3.Price to Book Value Ratio (PBV): This indicates if a stock is overvalued or undervalued, as it calculates the market capitalization to the book value. If the value of the ratio is under 3, the stock is considered a good pick. The lower the number, the better.4.Debt-to-Equity Ratio: This compares a company’s debt/liabilities with its equity base. A low ratio here is good from a risk perspective of your investment. On the other hand, know that low risk also means low returns.
Understanding these and many such technical terms will help you make sound decisions while choosing stock market investments. Also learn the technical terms used in the stock market for smooth operations.
Red Flags to look out for:
As a new stock market investor, avoid stocks of companies:
that are under investigation,that are under a huge debt,that are unable to make good profits,are known to have an unstable dividend history,whose stocks don’t rise much - with the rest of the market (check charts)
When to sell stocks
You can decide to sell stocks if –
You want to rebalance your financial portfolioYou have to fulfil a financial obligationThe stocks’ fundamentals have deterioratedThe stock is overvalued and hence can see a drastic fall in priceYou believe you can replace it with a better stock
Remember, long-term investments in fundamentally sound stocks can yield good returns.
For those who say investing in the stock market is a gamble, know that ‘Luck is a matter of preparation meeting opportunity’! And if you are well-prepared (with knowledge and patience), you can’t really lose this gamble.
Set Investment Goals in your Life
Posted on July 23, 2018
A good, sound and durable investment plan starts by determining your objectives while understanding your likes, dislikes, and any limitations or constraints that may exist. While most objectives could be long-term, a plan must be designed to sit / live through changing market conditions. It must be able to prepare for unseen / unpleasant events along the way. If you have multiple goals (obvious if you are talking about a life time) then each of these goals needs to be taken into consideration. Once developed, and implemented, the plan will need to be reviewed at regular intervals.
Consideration should be given to your time-horizon for each goal within the big broad plan. For example, if college education expenses will be incurred in 10 years, a house to be bought in 14 years, cars replaced every 8 years, while retirement is 25 years off, then the plan needs to build in these different time-horizons and plan accordingly.
Building in your time-horizon and need at different points of time will impact which investment strategy you select for different portions of your portfolio. The lesser the time period to achieve a particular goal, the less the VOLATILITY (risk) you SHOULD want to take, because a significant drop in the portfolio may impact the amount of money available to withdraw to achieve that goal! Also you may have withdrawn more and so when the rebound happens in the market, you do not have enough money to participate! It is also crucial to give some thought to your tolerance for market volatility and loss. You also need to assess your strength, ability and willingness to contribute money into the plan each year. And your ability to step up the SIP – which only a few fund houses like Icici Pru Amc allow. Higher returns often come with greater risk (which requires time to handle), so the trade-off is one that needs to be understood and chosen carefully.
MAKE THE PLAN
Without a plan, many investors take an haphazard approach to creating wealth by building a portfolio! This leads to buying the fashion of the week or month, focusing on acquiring popular investments chosen by the television anchor! This is done without considering how the entire portfolio has to be constructed to meet the different objectives. Mostly investors’ actions are influenced by the performance of the share market, indices, friends who claim to have done well, etc. This means now there is a tendency to increase share market exposure when markets are moving higher (and reducing stock exposure when markets are falling). This behavior will result in investors buying high and selling low and may cause them to destroy the carefully built portfolio.
DIVERSIFICATION is necessary
To achieve objectives over various periods of time – 3, 5, 10 and 25 years your portfolio will have long term debt products, short term debt products, liquid fund (emergency fund), equity funds, hybrid funds, gilt funds, etc. It is the job of the adviser to tell you which product is for which goal. Obviously the goals further away from today will have more equity and nearer goals will have lesser equity. Remember that it is the asset allocation choice that decides on the total return. In the long run it is equity which will give you higher variation (sleepless nights), higher risk and higher returns.
Your portfolio’s risk is reduced by diversifying across asset classes (shares, bonds, real estate, mutual funds, metals) and also within each asset class – long bonds, short bonds, mid cap shares, large cap shares, etc. Various asset classes and sectors of the market often perform differently from one another and diversification spreads this risk. Creating and owning a diversified portfolio with exposure to many asset classes allows you to meet your goals – assuming that you adhere to what is being told to you!