Sunday, April 25, 2021

Investments

This post is going to have a drastically different theme than my other posts. I am going to talk about investing money in India. This, however, does not constitute any financial advice. This post just captures and contrasts the result of a particular investment I made a few years ago to another one I could have made instead at that time. So let us begin from the beginning.

After my postdoc at NTU ended in early 2017, I returned to India along with all the money I saved up there. (I think ~NT$100 still remain in the bank at NTU as some interest was deposited after I had left. “Why didn’t I close the account there?”, you ask. That’s because the lady cashier helping me with my international transfers and clearing up my account convinced me that if I decided to come back, I could start using this bank account again, so no need to close it!). These savings were transferred to my NRI account in India. Having returned to India, that account could no longer be called NRI (Non-Resident Indian) so I had to visit the branch and convert the NRI account to an ordinary RI account. The branch manager was fine with doing that but also suggested that I invest most of those savings in a Mutual Fund (MF) instead of just keeping them in the Savings Account (SA) or putting them in a Fixed Deposit (FD). I was thinking of parking these savings in FD, but this guy again convinced me to try this one particular MF, which he said was very much like a FD with almost no risk, and would have some tax benefits. He showed me this demo table to highlight what he was talking about (click on the image to see a high-res version):

FD vs MF Demo

The main takeaway was that after taking into account the Indian taxation rules, the MF would have an effective annualized return rate of 7.1% vs. FD’s 4.9%, even if FD enjoyed 7% pre-tax interest rate. Let’s keep this difference of 2.2% in mind.

One problem was as much as he wanted to say “no risk”, the mutual funds are of course “subject to market risks” so there is no guarantee of returns like there is with deposits in SA or FDs. Another problem was that the money I would put in this MF would be locked for 3.25 years! At that time, I did not yet have an offer from SINP and locking away funds seemed risky from this perspective too. But then everything has an associated risk and the history of these particular types of MF hadn’t seen anything bad so I planned to give it a go. Obviously not with ₹10 Lakhs (≡₹1 Million) as written in the demo table but with half of it.

Yet another problem was that I wouldn’t be “someone in highest tax slab” so was not sure how much tax benefit I would actually get. As has turned out over the years, I am “someone in almost-tax-exempt tax slab” so I think I will get almost no tax benefit from this as can be seen in the table below made in the same format as the demo table (click for hi-res image):

FD vs MF for me

The takeaway from the table above is that the tax benefit for me is none whatsoever. The capital gain after 3.25 years from my ₹500K investment is barely ₹97K, which means the actual effective annualized return rate for this MF is 6.2% compared to 7.1% of the demo table. Adding to that disappointment, an FD created for the same duration with actual pre-tax interest rate of 6.5% would have an effective rate of 7.7% compared to 4.9% of the demo table. So the difference is –1.5% (i.e., an FD would have been a better choice for me than this MF) compared to 2.2% of the demo table.

Anyway, just for completeness sake, let us also look at the actual outcome for someone in the highest tax slab (again, click for hi-res image; the footnotes are same as in the previous table):

FD vs MF for Highest Tax Slab

In this scenario, the tax benefit is there but it is just (6.2-5.4)% = 0.8% compared to 2.2% shown in the demo table.

So the final takeaway is “Mutual Funds are subject to market risks and / or pandemics”. That’s all for this post. I will leave you with

SBI FD Interest Rates

Saturday, March 27, 2021

Holi, Moli, Roli

These are quite important words around this time of the year. The first one refers to the upcoming festival (of colour) ‘Holi’, in which people (mostly sisters) tie threads called ‘Moli’ around other people’s (mostly brothers) wrists, and mix red powder called ‘Roli’ with water to put on foreheads as Tika. There is also the other aspect of Holi, where people play with water and colours and colours mixed in water by drenching and colouring each other. Others, who like to keep some distance from this mess, fill bucket full of balloons with water (with or without colours) and throw them at others from a safe distance. As a kid, I was such a person. The routine for a couple of years during this time of the year was: wake up early in the morning, prepare a bucket full of water balloons (NO colour), go to the roof, and hurl them towards ‘victims’ walking on the roads. As one may expect, the devil is in the details. The (un)fortunate detail was that this house we lived in was basically surrounded by a vast field on three sides, and a wasteland on the other. The roads from where repercussions could not find a way to our house were beyond this field, and those were, obviously, the preferred roads for a kid to assault hapless pedestrians. But it also meant, that kid could never make the balloons land on the roads beyond the field, let alone on pedestrians! So that was how the ‘fun’ aspect of Holi played out for a few years in my childhood. And I feel my daughter is missing out on that. But that’s how it is… times change, people change, circumstances change, priorities change.

Colour Full

Even then, what does not change is the abundance of sweets on this occasion. And I am making sure that at least she experiences that aspect as much or as well as I did. In addition, she did get a toy water-pistol shaped like a dog from her mother yesterday. And she was enjoying it today morning with her menagerie of plastic toy animals. Now, I had never played with a water pistol in my childhood so I thought of joining her too. And she gladly handed the toy-pistol to me. Just after three presses of the trigger by me, the dog-shaped-water-pistol stopped working. If you foreshadowed this happening two sentences ago, kudos to you. I had not and neither had my daughter. But she turned out to be more mature in this situation than I expected. She did ask something like “did it break?”, but without using the pronoun ‘you’. And when I confirmed her assertion, she did not make a big deal out of it. She asked me to fill up the toy with a little more water and continued to tinker with it for a while as I briskly made a beeline towards the kitchen for my breakfast. I am assuming her mother will take care of the rest, or has already taken care of it. Who knows? The moral of the story: times may change, people may change, circumstances may change, priorities may change; but grown-ups screwing up childhoods never changes. And on that note,

Happy Holi

Thursday, February 18, 2021

What Futures Holds?

Those of you who think there’s some problem with grammar above, hold your horses. I am talking about “Nature Futures” column for sci-fi / futuristic stories and I can treat it as a singular noun, it being a name of the column.

So yeah, it’s been a while since I have talked about Futures on this blog. Not because the stories aren’t great any more, but because it is a weekly routine and after a while, one starts taking things for granted. So what’s special about February 2021, you ask!

Well, the latest story. Not really the story itself, but the author’s inspiration behind it or as Nature calls it “The Story Behind the Story”. That small snippet at the end of the story ends with the sentence “After all, people want what they want, and rarely what they need.”. We have all heard some variant of this sentence at least once in our lifetime but this sentence after this particular story struck some chord and here we are typing (or in your case, reading) away a blog post.

It led me to think what I want. My train of thoughts didn’t seem to go very far and my brain didn’t register a valid response. Then I thought about what I need. Again my train of thoughts resisted motion and my brain frowned at the dullness / stillness / motionlessness of it all. Maybe at the end of the day, I want a need. Or, is it the other way around, I need a want. Or there could be a third option and I may have transcended above all and मोक्ष (moksha) should be ready to receive me sometime soon.

Till then, I leave you with my second (ya, only second in a decade!) full-fledged 360° polorama.

2nd 360° Polorama

First 360° Polorama

Sunday, January 10, 2021

A Millenary of Chapters

As 2021 rolled in, the world of manga witnessed the 1000th chapter of One Piece. Yes, you read that right: One Thousandth chapter. More than 2 decades worth of weekly anticipation, sprinkled with nearly 3 years worth of (un)expected breaks by Eiichiro Oda, rolled into 1 giant realization that I’m not going to see the end of this marvellous adventure. But as people say, it’s the journey that counts, not the destination. To those people, I say, hell with you all. Because you have definitely not read One Piece.

Combined cover pages of Chapters 999 & 1000

Anyway, that is all I want to say for now. I feel this year will be big for mangas and we will talk about them once in a while as this year unfurls. Wishing Totan Kobako a complete recovery from his hand injuries and hoping this year finally sees his new work published. Meanwhile, I hope those lovely people who translated Sketchbook in the past can restart scanlating the rest of the chapters covering the last 3½ volumes. If everything else fails, I guess Google Lens will have to do the job. It’s a sad state of the world considering that “real-time translation” was one of the most promising features of the “MS Translator” app on Windows Phone 8/Mobile 10, which never materialized for Japanese in the 5 or so years of the OS’s existence/relevance.

Viz.com