Envy: An (Un) necessary evil

Warren Buffett has apparently said in jest that out of the seven deadly sins, envy is the worst….because at least we enjoy while committing the other six sins. In case of envy it is only pain and no pleasure.

Despite this, I notice that envy is widespread in our society. Here are a two instances:

  • A client of mine met me last week. I noticed that he was not his usual chirpy self. When I inquired about the reason for his despondency, he explained that he was perturbed to note that while his Portfolio Management Scheme (PMS) Account with our firm had given him a return of 12% over the past year (no mean feat, considering the the broad indices were actually down by 17%). It perplexed me that instead of being ecstatic he was downcast but I soon knew why. Apparently, his friend had invested in another PMS account which also invested in Gold Exchange Traded Funds. Hence his friend had earned a return of 21% on his investment, which apparently gave him bragging rights over my client.
  • Every year once the annual bonus is distributed among colleagues at my company, I always notice a few glum faces. In most cases, they are not glum because they feel shortchanged, but are dejected because a few of their colleagues have received slightly more than them.

How do we deal with this debilitating feeling? While I do not profess to be a psychologist or psychiatrist, here are a few options that work for me. Continue reading

New Year… Not so new Resolutions…..

Happy New Year! 2012!Its that time of the year again…A time to look back, reflect and ruminate. It is also a time to look ahead, resolving to learn from our past mistakes.

The year gone by has not been a happy one for equity investors. But such is the nature of the game. Equity returns are lumpy and not linear. Sharp bursts of performance are followed by periods of slumber. Investors, who are lured into purchasing equities due to their outsized recent returns, often end up disappointed. This leads to widespread aversion towards equities, which in turn sows the seeds of the next bull market.

While shifts in market cycles rarely coincide with the turn of a calendar year, this is as good a time as any to re-orient ourselves and jettison certain calcified behavioural tendencies which may be detrimental to our financial well-being. Continue reading

Small Savings Schemes – Semi-deregulated interest rate regime ahead

Jayant Pai | jayant@ppfas.com

By now you must be aware that the interest rates on Government Small Savings Schemes (SSS) have been increased. Newspapers are going around town proclaiming that this is a bonanza for small investors. Well, it is true that soon (Most probably from December 1, 2011) you will be earning more by investing in these instruments but in a way this move is similar to the recent deregulation of bank savings account rates by the Reserve Bank of India .  Continue reading

The path to your wallet is through your heart

Which of these sales pitches do you find more appealing?

1. A product which proudly states that had you invested in it since inception you would have earned a Compound Annual Growth Rate (CAGR) of 17.82%, thereby giving you a ‘Real’ return of 9.27%.


2.A product which vividly depicts what it can do for you in the future if you purchase it today. This could involve images of you gifting an expensive cycle to your nine year old grandchild, you beaming with pride at your child’s graduation ceremony, etc.  Continue reading