Did you have a close look at the total losses in your equity portfolio this morning? The world’s economy has tumbled. The markets are seeing unexpected crashes to lower and lower levels in times of Covid-19. Indian-origin investors across the globe have lost a sizeable chunk of their hard-earned money staying invested in riskier bonds & stocks of all varieties. The market-linked products have eroded their wealth even before they could react to taking decisions themselves or, in turn, their hired & heftily paid wealth advisory doing the same for them. On a war footing, it becomes pertinent for this jolted investor to take ground defying financial steps and draw out a clear path on where to invest next. YES, ‘invest’ even in this bad time.
BigRise Financial™ thoughtfully suggests that you immediately recreate an apt ‘purpose’ with your new array of investments in debt. It appears obvious that your investment sentiments have been hard hit, but honestly, if you do not rake up enough courage to invest all the more now in high performing debt investments, that too overseas, you may not stand a chance to recover your losses even in a decade – forget the gains and high returns. The early set of Indian-origin investors till now including OCI, NRI and Expats who have thoroughly considered these strategic financial planning directions and acted fast enough to execute prompt advice, let’s say in India and have created a big cushion for themselves already against the future market falls, averaged their investment purchase costs, assured decent yield & returns, created a decade long flow of steady incomes and most importantly, bailed out of a loss-making investment portfolio to a quick-start profitable one.
Without an iota of a doubt, you instantly need execution on the 3 steps below that reengineers your existing financial portfolio and sets you up for a winning run, again. Read on:
The First Step: Strategize to cut your equity or market-linked exposure
Over the last 5-6 years, if all you’ve been doing is chasing returns, guess what, you’ve lost them all in less than 5-6 months! Equities, stocks, mutual funds, linked products, etc. have been severed on the streets considering their high-risk proposition. All the sadder if you’ve been locally investing (or rather betting) in equity markets of developed geographies including: US & Canada, UK, UAE, Australia, New Zealand, etc. The reality? Growth does not lie in any of these over-developed countries. You have to be able to ‘think global’ and explore high potential markets (like India) that will help you get past this financial mess happening across the globe, on a strategic front.
Indian-origin by design, across governments, have provision to consult Financial Advisors qualifying in ‘Debt’, cross-country, and get a 2nd opinion on equity assets held in their portfolio versus their square-off against debt. Even if you have to book losses at the cost of bringing down your overall equity portfolio, it is worth a decision. Equities and market-linked products aren’t going up on the growth ladder at all for several years ahead and you should knowingly restrict your exposure to them at max. 25%. The money scenarios in the world on linked products are over! Let us take you through a ‘mind and fact’ exercise which will help you get directions to bail out of this gloomy situation of having a large equity portfolio.
Categorize all your equity & market-linked products on our proprietary 4-point, ‘2-year Equity Non-Performance Scale‘ as per each under-mentioned ‘Equity non-performance category’:
- Not-so Promising: Returns between: +3% to -1%
- Poor: Returns between: -1.1% to 10%
- Extremely Poor: Returns between -10.1% to -18%
- Devastating: Returns between -18.1% & higher
Clearly Tabulate:
- Equity Name (equity or market-linked products)
- Total Invested Capital (net invested in each product over time)
- Net Current Final Value (today, against each product)
- Net Loss (which is the difference between the ‘Net Current Final Value’ minus ‘Total Invested’)
- Net Loss Percentage (which is ‘Net Loss’ divided by ‘Total Invested’ multiplied by 100)
- Equity Non-performance Category (finally define a category seeing ‘Net Loss Percentage’, out of 4 types above)
You can derive the Grand Total Loss of your portfolio by summing up all the categories. At this point, you can take a conscious call to still retain the ‘Not-so Promising’ equity assets, hold and watch them for a while (say the next 2 years) but it is a piece of strong advice to sell or square-off the ‘Poor’, ‘Extremely Poor’ and the ‘Devastating’ ones. In any case, it is advised that you do not keep more than 25% of your money invested in equity & equity-linked investments at this crisis time. By now you have a clear idea of what your product and overall equity portfolio loss is.
The Second Step: Knock-off your equity management liabilities
Investors have realized clearly that investing by oneself, without a deep knowledge of ‘finance’ as a subject would cause them more harm than good. It is a debacle to be investing money randomly, forgetting about it, or not finding enough time to monitor its growth and then finally waking up to a financial nightmare one fine day losing most of your invested capital. Your ‘self’ equity management indeed has taken a big hit on your investment portfolio. Then there is the other section of investors who have hired fee-based wealth advisories who haven’t been better-off either. The advisories have extracted hefty fees out of an investor’s hard-earned money and gained commissions on the top only to be turning the corpus negative in all these years. It is not sustainable for an investor to manage investments himself as it faces the risk of loss by doing things incorrectly. At the same time, since global equity markets are going to be affected for a long time from here, it does not make viable for you to slip money out of your pocket-hole and pay chunks of fee each month or quarter, etc. to these wealth advisories. In reality, you may never be able to recover your ‘Total Invested Capital’.
It makes sense that you take the utmost cognizance of the total money that you’ve lost towards a wealth advisory’s fee/ management and switch to debt-based advisories that do not charge you a single penny. Further, a robust financial advisory specializing in growth or guaranteed debt advising ends up surpassing several benefits and saving you: taxation, currency conversions, insurance cover costs, etc.
Ok, let’s do this. Obtain the total fee statement paid to your hired wealth advisory (as ‘Total Advisory Fee’) over the past 2 years and perform as under:
- Add Grand Total Loss amount (from Step -1) and Total Advisory Fee to get the ‘Overall Loss’ on your equity portfolio.
- Arrive at an ‘Overall Loss Percentage’ (by dividing ‘Overall Loss’ upon ‘Total Invested Capital’ multiplied by 100).
This now shows your final losses (‘Overall Loss;) including the advisory fee paid all along. Indian-origin investors doing management of their equity portfolio all by themselves were still better off (in losses) as they did not pay any wealth advisory management fee on the top to add to their woes. With the final figures in hand, in the next step, you would have to work with a Financial Advisor from India on guaranteed return debt strategies. Look for a non-fee based wealth advisory only which has a solid track-record on debt advising for Indian-origin overseas.
The Third Step: “Purchase debt overseas to add steady returns”
Debt is going a long way in high performance in this time of coronavirus and beyond. Sooner than you could think, it would be able to build a steady corpus, lump-sum, incomes, or simple flow of monthly or yearly returns for you and your family. As an Indian-origin investor, anywhere in the world, you should take fast steps to explore: Paper-Guaranteed Return debt instruments available for you to invest in India through your Global or Local/ NRE/ NRO bank accounts, sitting comfortably on your laptop in a video session with a licensed advisor from India. The governments and regulators give you the flexibility to exercise your OCI/ NRI rights, technically and financially, only if you knew the power of it. Your Indian-origin status is your financial passport to a wealthier tomorrow.
As you get in touch with a financial advisor in India, you could discuss in detail the equity non-performance list that you prepared from ‘The First Step’ and the ‘Overall Loss Percentage’ that you calculated at the end of ‘The Second Step’. Explore advice around your new investments (against new goals) or ‘guaranteed equity replacements’ (mapping older goals against your existing equity sells or squaring-off). In confidence, get your life goals mapped with tenure, obtain strategic directions in ‘payment spreads’, etc. – all of that as complimentary. The India-based guaranteed return papers mostly invest in government securities and bonds of the highest credit ratings, like: AAA, AA+ which currently are premier global standards in the ‘safety & security’ of investment papers. Further, these papers are backed by the world’s best and most credible life insurance companies making them very popular and highly chosen since last year when the market investments began to sink.
Basis the tenure that you wish to be invested for on these papers, you get a guaranteed return percentage & guaranteed IRR, completely non-linked to any factors of the market conditions, company performances, fund managers, or your hired wealth advisory’s performances. Returns on these papers are completely unaffected from global crises or pandemics, etc. You will be startled to know that several hundreds of Indian-origin staying outside India, invest in these world-class papers each month to get a range starting minimum 4.5% up to as high as 9.5% returns per annum, fixed income, guaranteed. Any day, an IRR of a minimum 4 is easily achievable and guaranteed at the sign up itself by the issuing life insurer. Other high-quality investments guaranteeing greater IRR are also available and only depend on the time you wish to stay invested for (ideally mapped to your life goal).
These papers additionally come along with decently high life insurance coverage, say 100K versus the first 10K paid, at a ZERO or adjusted cost. This attracts PIO (Persons of Indian origin) to purchase them especially understanding their home countries have a significantly high cost for life covers. Global large-sized insurers allow the purchase of these premium investments by Indian-origin investors, currently based anywhere, even if they were born in their home countries and not India. These investments can be done online through any bank and are strongly guarded by the regulatory bodies in India. It becomes imperative that you carefully rework your financial goals and take advantage of adding these investments online to your financial kitty.
Ok, let’s do this. Draw a financial charter for yourself using our proprietary ‘Goal Planner with Guarantees’, choosing a ‘Goal Category’ as below:
- Short-Term Goal (including: Steady income flows, substantiating for a job or business income loss, lump-sum money needs, etc.)
- Mid-Term Goal (including: Home mortgage pay-off, buying a property or car, planning a business investment or expansion, etc.)
Long-Term Goal (including: Children education funds, buying larger house cash down, investing in a business, retirement planning, legacy creation for family, etc.)
Clearly Tabulate:
- Goal Category (being short, mid or long)
- Goal Description (like: Building post-graduation funds for a 4-year old, start parallel passive incomes, etc.)
- Lump-sum Input (to invest at the investment inception)
- Yearly Investment Contribution (to add to this goal)
- Total tenure (to stay invested or when the final money output has to come)
- Total Output (desired corpus, whether in lump-sum or income format at the end).
Basis all discussions and hard facts, the magic advising is done by the expert on debt who should take into consideration your investment and sync along with your past losses. Note: The more structured your goals are; the better your eventual debt portfolio would be. Whether it comes to recovering losses fast or connecting on time with your defined goals with guaranteed gains, both could be easily planned. An example of a structured goal is: Post-graduation education funds of USD 2 Million for a 2-year old child who would need total lump-sum corpus when he turns 21. If you have such simple clarity on your financial goals, along with the frequencies on which you could invest, you are bound to win in a landscape called ‘India’!
The crux of the article is that as an Indian-origin you should work on populating and arriving at your total net loss on your equity or a market-linked portfolio, factoring direct losses, as well as, your wealth advisory fee. In these testing coronavirus times, look forward to cutting your collective equity losses fast by investing in India-based debt (classified under the world’s top life insurers) through a Financial Advisor in India. Stop paying heavy fees to wealth advisory as you would not be able to break even your losses. Put together, you would be able to recover your losses fast enough by buying new debt investments, saving on wealth advisory fees, and gaining high returns from debt. Compared to developed countries, India is much aggressive in debt investment returns and Indian-origin placed globally could invest with ease, sitting wherever they are.
Indian-origin investors have the flexibility to consult BigRise Financial ™, an Investment Consulting organization that works in the space of working with Indian-origin across the world including: PIO, OCI, NRI & Expats to get them cutting-edge investment options in India. They bring world-class products and solutions from the world’s most renowned financial organizations and insurers.
To get COMPLIMENTARY advices on this situation, write into: nitin@bigrisefinance.com
Or Drop a WhatsApp on: +91 98182 46300
Author: Nitin Attri
BigRise Financial ™
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