Kavitha Menon's Blog

It is a well known fact that expensive products like ULIPs and endowment products can considerably reduce your wealth pool over long durations of time. Let me explain with an example. Take two equity funds with 1 lakh each invested in the same portfolios, one being a regular diversified equity fund having a 2 % expense structure while the other being a ULIP product having a 4 % expense structure. Let's assume that equities deliver a 17 % compounded annual return over a 20 year period. The end value of the regular equity fund will be approx Rs.16 lakhs at the end on term while the ULIP product with the same portfolio will notch a mere Rs.11 lakhs at the end of term. The difference in returns is approximately Rs.5 lakhs. With Annuities or SIPs this difference in wealth will only accentuate disproportionately over time. Typically any product that creates a package for you will be expensive. A ULIP is an investment plus insurance package, a MIP is a debt plus equity package, a capit

What's your opinion on silver? Since equities don't seem to be doing much why don't we switch to gold and silver?" asked my client of several years. This was coming from a client, who had earned rock solid returns from his investments under our PMS, had an asset allocation plan and had benefited tremendously from regular rebalancing of his portfolio. I didn't have an opinion on silver prices. My only fear was that it was moving up too fast for comfort and as an advisor I am averse to suggesting commodities specially ones that have had a speculative run. It is mandatory for every investment scheme that publishes returns to declare that past returns are no guarantee for future returns. Then why do investors seem to chase those assets that have already had a superb run. Despite years of historical evidence that the best returns are earned when a particular asset class has been badly trashed and at rock bottom, investors seem to care less. There is an enigma about inv