State of Indian Stock Markets – July 2019

This is the July 2019 update for the State of Indian Stock Markets. This update includes the historical analysis (since 1999, i.e. about 20+ years) and Heat Maps for the key ratios like P/EP/BV ratios and Dividend Yield for Nifty50 and Nifty500.

This time (and going forward) a new section on the last 12 month’s index movements and PE dynamics during the said period will also be analyzed. The analysis will be done on a rolling basis. That is, it will include monthly analysis (for each of the last 12 months) as well as analysis for specific periods like the last 1 month, last 3 months and last 6 months. This is being done to highlight (if any) the changes which become evident in market sentiment from a data perspective.

Before we move forward, please remember a few things:

  • The numbers shown in the analysis and tables below are averages of P/E, P/BV and Dividend Yield in each month (unless otherwise stated). Neither Nifty50 heat maps nor Nifty500 heat maps show the maximum or the minimum values for each month.
  • National Stock Exchange (NSE) publishes index level PE ratios based on standalone numbers and not consolidated numbers. It would be ideal to use consolidated numbers as many Nifty companies now have subsidiaries that have a significant impact on overall earning numbers. This has a much larger effect now than it would have had in yesteryears. And more importantly, this will matter more and more going forward. But NSE (as of now) continues to publish Nifty PE using its own set of criteria and decisions and sticks with standalone figures.
  • Its possible that at times, some of the sectors in index get far more weight than is prudent to give. And its also possible that at the very same time, their earnings may be unexpectedly high or low. If and when this happens, the index level earnings will be impacted accordingly due to higher-than-necessary sector weight – which in turn may skew the PE data at that point of time.
  • Similar to the point discussed above, it is also possible that at times, some (or few) individual index constituents might have high earning or market cap at an individual level(s) which might, to some extent, skew the PE data at the index level as well. The possibility of this happening is rare but still non-zero as the period under consideration is generally long term here.
  • Caution – Never make any investment decision based on just one or two ‘average’ indicators (here’s Why?) At most, treat these heat maps as broad indicators of market sentiments and a reference of market’s historical mood swings.

So here are the Nifty 50 Heat Maps…

Historical P/E Ratios – Nifty 50 (Monthly Average)

Historical Nifty PE 2019 July

P/E Ratio (on the last day of July 2019): 27.42

And if we were to look at the movement of Nifty’s PE in the last 12 months, then here is a graph depicting the same:

Nifty 12 Month PE Trend 2019 July

Now, let’s have a more detailed look at how the last 12 months have panned out when it comes to Nifty movements and its implications (alongwith earnings’) on PE ratio of the index.

I suggest you spend some time on the table below (which shows month-wise data cuts) to gauge its importance in highlighting the trends in the last 1 year:

Nifty Price PE Trends 12 Months Aug 18 Jul 2019

Now from month-wise depiction, let’s have a look at more aggregate time periods in the last few months. Let’s analyse the above-highlighted data points when period under consideration in aggregated to 3-months and 6 months (plus a 1-previous month for more comparative analysis):

Nifty Price PE 1 3 6 Month Trends Jul 2019

Now with PE of Nifty50 analysed in various cuts, let’s move ahead to the analysis of P/BV and Dividend Yields of the Nifty50

Historical P/BV Ratios – Nifty 50

Historical Nifty Book Value 2019 JulyP/BV Ratio (on the last day of July 2019): 3.45

Historical Dividend Yield – Nifty 50

Historical Nifty Dividend Yield 2019 JulyDividend Yield (on the last day of July 2019): 1.33%

That was all about Nifty50 – the more popular bellwether index of India.

Now let’s do a historical analysis of the larger space, i.e. Nifty500 companies…

As the name suggests, Nifty500 is made up of top 500 companies which represent about 96.1% of the free-float market capitalization of the stocks listed on NSE (March 2019). Nifty50, on the other hand, is an index of 50 of the largest and most frequently traded stocks on NSE. These represent about 66.8% of the free-float market capitalization of the NSE listed stocks (March 2019).

So obviously, Nifty500 is a much broader index than Nifty50.

So let’s see…

Historical P/E Ratios – Nifty 500

Historical Nifty 500 PE 2019 JulyP/E Ratio (on the last day of July 2019): 29.25

Historical P/BV Ratios – Nifty 500

Historical Nifty 500 Book Value 2019 July

P/BV Ratio (on the last day of July 2019): 3.14

Historical Dividend Yield – Nifty 500

Historical Nifty 500 Dividend Yield 2019 July

Dividend Yield (on the last day of July 2019): 1.29%

You can read the previous update here. The State of Markets section has also been updated with new Nifty heat maps (link).

For a detailed analysis of how much return you can expect depending on when the actual investments have been made (at various P/E, P/BV and Dividend Yield levels), it is strongly suggested that this article may be read and referred to regularly:


Can You Retire with Rs 1 Crore Today in India?

Recently, a friend told me that he had ‘finally’ managed to save Rs 1 crore (not including his real estate investments). And he was quite happy about this achievement as the first crore is a big milestone no doubt when it comes to us Indians.

In the course of our conversation, he casually asked a simple question –

Can I Retire with Rs 1 Crore in India today?

To me, it seemed that the bug of early retirement had bitten him too as he is just 33 – though the disease seemed in its infancy. 😉

But given my prior knowledge of his not-so-frugal lifestyle (despite good income), I knew that it won’t be possible. And I told him so. His reaction was that of a person who had been slapped hard. 😉

But this got me thinking…

What if someone had a comparatively more frugal lifestyle than my friend or was much older and nearing retirement (around 60), then would Rs 1 crore be enough to retire in India today?

Ofcourse it would depend on various factors. But what do you think?

Suppose you too had Rs 1 Crore today. Can you retire comfortably depending on where you are in life?

I can already hear the ‘No’ssss…

So let me disappoint you all a bit.

For most readers of Stable Investor, a corpus of Rs 1 crore will not be enough to retire.

Sorry. That’s the reality.

But let’s anyway see why Rs 1 crore may not be enough for most people’s retirement now. And if you too are thinking why I have chosen the figure of Rs 1 crore, then its more about the psychological attachment we Indians have with such large figures (more so with the word ‘Crore’) when it comes to saving for long term goals like retirement.

So let’s move on…

Is Rs 1 crore enough for 60-year old to Retire?

Some assumptions (for starters):

  • Annual Expenses – Rs 6 lakh (= Rs 40,000 monthly + additional Rs 1.2 lakh insurance / travel / medical / buffer / etc.)
  • Retirement Corpus Returns – 8% – portfolio mainly has debt (giving 6-8%) and some equity (giving 10-12%)
  • Average Inflation – 6%
  • Life Expectancy – 85 years

In this scenario, the money runs out by 79th year. Here is how:

Retire 1 crore India plan 1

So you see that Rs 1 crore is insufficient to provide for all expenses in 25 years of retirement (from age 60 to 85) in the given scenario.

Your options? Either reduce the expenses or don’t live long enough. Only the former is under your control as the latter (forcing yourself to not live long enough) is suicide and punishable under Indian laws.

But jokes apart, there are few important things to think about this above scenario:

First, in spite of regular expense being Rs 40,000 monthly or Rs 4.8 lac annually, an additional buffer of Rs 1.2 lac has been kept. You may feel that why am I overestimating the expenses, maybe unnecessarily? But this kind of overestimation or let’s say, having such buffers in retirement calculations is advisable. And that is because the retirement portfolio is open to some big risks:

  • Sequence of Returns Risk – In the calculations, it is assumed that corpus will generate 8% average returns each and every year. But in reality, when the corpus is deployed in a mix of equity and debt, some years you might get higher returns from equity while in other years, you might see lower (or even negative) returns. Even debt returns move around a bit. So the overall portfolio returns will fluctuate accordingly. And if the initial sequence of returns in first few years is bad (or less than our assumption of 8%), then the corpus will get depleted much faster due to withdrawals for regular expenses and much lower returns replenishing the corpus (or losses depleting the corpus).
  • Higher inflation Risk – We have assumed a reasonable (but more than the currently prevalent) 6% inflation in retirement years. But it is possible that the actual inflation in atleast few years may be unexpectedly higher. Who knows? This will naturally result in faster depletion of the retirement corpus if the retiree cannot reduce his expenses appropriately.
  • Longevity Risk – We have assumed that life expectancy (from corpus dependence perspective) is 85. It’s entirely possible that you or spouse or luckily both (!) live much longer. If that’s the case, then you don’t want to run out of money at that age. Isn’t it?
  • Unexpected and Uninsured Big Medical Expense – Its possible that an unexpectedly large medical expense (which is not fully covered by health insurance) might force you to dip into the retirement corpus (assuming no help from family/friends etc.). If that happens, then that too can compromise the corpus’s potential to last for full 25+ years.
  • Adverse Future Taxation – You never know when the tax regime may change for the worse. They might unexpectedly introduce some new taxes or clauses which will result in lower in-hand post-retirement income or need to withdraw more from the corpus as the in-hand after-tax figures will be less.

So it is for these reasons (potential risks) that you need to have some buffers while calculating the retirement scenarios.

Another aspect is, and you will agree with me here, that “8% return every year” is a hypothetical scenario.

A more realistic scenario would be the retiree parking the corpus of Rs 1 crore in a conservative portfolio with 25% equity and 75% debt. With equity returns fluctuating every year between very high (let’s say +49%) to very low (let’s say -27%) and debt returns ranging from 6% to 9%.

I have simulated a return sequence of 25-26 years which eventually delivers 8% CAGR (our original return assumption used earlier). Have a look below:

8 percent retirement returns portfolio

Spend some time on the table above. A portfolio of 25% equity and 75% debt sees fluctuating returns every year. So the actual portfolio return every year varies but the 25+ year CAGR works out to be just what we wanted – a neat 8%.

And this is the problem with the concept of CAGR – an average CAGR of 8% does not mean 8% every year. I have written about this phenomenon in detail here and here. A lot of people fail to understand it and make mistakes in their expectations. And that can be disastrous.

Let’s now use the above sequence of realistic fluctuating returns on the Rs 1 Crore retirement portfolio from which, withdrawals for retirement expenses are taking place.

Let’s see how long it survives now:

1 crore Retirement Portfolio Utilization

Coincidently, this also survives till the age of 79-80.

You might ask – nothing has changed from the earlier example. But remember that this is just one of the possible sequence of returns. There can be millions of other sequence of year-wise returns.

As I mentioned in the risks of getting a string (sequence) of poor returns in the initial years, it can suddenly destroy the retirement corpus and lead to a retirement failure. More so if the equity allocation is unnecessarily high to begin with.


Let’s simulate it:

  • Portfolio Allocation – 50% Equity & 50% Debt (not so conservative now)
  • Equity Returns in the first 4 years: (-)12% returns each in first 4 years
  • Equity Returns in later years: same as used in the above example
  • Debt Returns: same as in the above example
  • Expenses: same as in the above example

Have a look at the simulation below. The corpus struggles due to a bad sequence of returns in the first 4 years (and high allocation to that struggling asset, i.e. equity) and gets exhausted in just the 72-73rd year itself:

1 crore Retirement India Utilization

This is exactly what the Sequence of Return Risk is.

A poor sequence of returns in initial years can deplete the corpus very fast if exposure to the asset giving poor returns is high.

And you never know what would be the sequence of returns in the initial years of your retirement. It may be good. It may be bad. You cannot choose the sequence. So that risk is always there. There are ways to manage this risk to some extent.

So now you see the difficulty in answering optimistically to questions like Will Rs 1 crore last full life? Or, How long your Rs 1 crore will last?

If you too were looking for the perfect answer to Can I Retire With Rs 1 Crore in India today? then it really depends on a ton of factors. There are no simple thumb rules here.

Retirement planning isn’t exactly rocket science. But its fairly tricky and a little difficult.

And not because it involves number crunching, but because of the uncertainties associated with all the factors that impact it. It is really not just about punching numbers in an online retirement planner or excel retirement calculator that many people feel it is. It has been rightly called as the Nastiest Problem in Finance. Do read the linked article and you too will be stressed about the idea of retirement calculations themselves! My apologies for painting a bleak picture but I try to share realities on Stable Investor.

And please if you do get hold of any sample Rs 1 crore retirement plan, then remember that it is not necessary that it will be applicable in your case too. Copy-pasting doesn’t work in personal finance.

For all middle class and young people, even though Rs 1 crore sounds like a large number, it won’t be enough because of not-so-low inflation and lack of social security in India. It might still work in certain cases where there are other sources of income post-retirement (like rental, your or/and spouse’s pension, etc.). But if the dependency is only on the retirement corpus, then it can be safely said that:

Don’t retire with Rs 1 crore in India!

Make sure you give retirement planning (or early retirement planning) the serious thought it deserves.

Ideally, the very first step should be to separate the goal of retirement planning from all other short/medium-term goals like a house purchase, children’s higher education and marriage, travelling, etc. Keeping the goal of retirement separate from other goal ensures that you can give it the undivided attention it deserves and more importantly, you don’t end up dipping into the retirement savings like many people do without realizing its consequences.

And it may sound repetitive but its best to start early when saving for retirement. Here is a great example of how saving for 10 years works better than saving for 30 years if started earlier.

Is Rs 1 crore good enough for your retirement is not the right question. You should rather ask How much money is enough to retire in India?

Ideally, a methodical and mathematical approach should be followed for planning your retirement savings. If you can do it correctly (and you should first know what can go wrong and where – do not miss reading this to understand), then it is fine. Else, better to take good advice from an advisor for proper retirement planning. Or you can even consider full financial planning that among other things, will also take care of your retirement goal.

Whatever path you chose to put in place your retirement plan, make sure you do not delay it, don’t get your assumptions wrong and more importantly, begin soon.

NPS Calculator Excel-based (Free) Download

If you invest in NPS (National Pension System), then I am sure you would be interested in knowing the following:

  • How much money you can accumulate in NPS by retirement?
  • How much NPS retirement corpus will you have?
  • How much tax-free withdrawal is allowed from NPS at retirement?
  • How much will be your retirement NPS pension?

For answering such questions, I have created a small free excel NPS calculator. This NPS calculator acts as a tool that you can use to estimate the NPS retirement corpus and monthly pension when you retire at 60.

You can call it NPS maturity Value calculator or NPS family pension calculator or National Pension Scheme calculator or NPS monthly pension calculator too.

It is a simple, easy-to-use and can be used as a NPS Pension Calculator as well. It’s a basic version and hence, illustrates only the following:

  1. NPS Corpus accumulated by retirement (age 60)
  2. Tax-Free Lumpsum withdrawal available
  3. Pension amount or annuity payable on retirement (after the purchase of annuity using minimum 40% of the NPS corpus accumulated)

Under latest NPS rules 2019-20, you are not allowed to withdraw the entire amount at maturity and need to purchase annuities worth at least 40% of your accumulated NPS corpus at retirement. The remaining 60% of the corpus can be withdrawn tax-free. This annuity purchased is the source of pension income after retirement. Hence, once you are able to estimate your final retirement NPS corpus, you can then easily estimate post-retirement monthly pension using prevalent annuity rates.

So here is the link to download:

Download (Free) Excel NPS Pension Calculator


Note – The new pension scheme calculation formula is already embedded in the NPS calculator excel sheet but please remember that the calculations and figures shown by the NPS calculator are indicative only. Is this NPS Tier 1 and Tier 2 calculator? You can say that. Or just assume that Tier 1 (which is locked-in till retirement) is the one being used mostly for actual retirement planning.

This National Pension Scheme Calculator gives a reasonable idea of how much retirement savings can you do using NPS. A lot of people have been looking to download NPS excel calculator and hence, will find this useful as a pension calculator.

As you already know, the government gives extra tax benefits via additional deduction of up to Rs 50,000 per year to NPS investors under Section 80CCD (1B). This benefit is in addition to the Rs 1.5 lac limit of Section 80C.

By investing Rs 50,000 per year in NPS (or less than Rs 5000 per month in NPS), you can create a large enough corpus by the time you retire (assuming you start saving early). And since NPS can give market-based returns if you choose correct asset allocation between Equity, Corporate Bonds and Government Securities, it is a fairly decent product to have in your retirement savings portfolio.

With this NPS calculator, you will know how much Pension and tax-free lump sum amount you will get at retirement at 60.

As for the NPS Calculator Inputs, you need to provide the following:

  • Your current age (assumed you start investing at this age)
  • Retirement Age – fixed here at 60
  • Monthly NPS contribution
  • Annual increase in monthly contributions
  • Asset Allocation of NPS portfolio (to be provided for Equity, Government Bonds and Corporate Bonds)*
  • Starting Corpus if any (if you put lumpsum at the start of NPS)
  • Lumpsum withdrawal at retirement (can be between 0% to 60%)
  • Amount used for Annuity Purchase (can be between 40% and 100%)
  • NPS Annuity Rate % during the post-retirement period

* With regards to the choice of asset allocation in NPS, the NPS has 2 broad Investment options:

Active – Under NPS Active option, you decide how much to invest (exact percentages) in each asset (and their schemes). As of now, there are 4 asset classes:

  • Asset class E – Equity and related instruments
  • Asset class G – Government Bonds and related instruments
  • Asset class C – Corporate debt and related instruments
  • Asset Class A – Alternative Investment Funds

The total allocation across E, G, C and A asset classes must be equal to 100%. And the maximum permitted Equity Investment is 75% of the total asset allocation till the age of 50. Post that, the upper cap reduces by about 2.5% every year to 50% at the age of 60.

Auto – Under NPS Auto option, fund allocation takes place automatically. This option is best for those subscribers who do not have the required knowledge to manage their NPS investments. In this option, the investments are made in life-cycle funds and depending on the risk appetite of NPS Subscriber, there are three options available within ‘Auto Choice’:

  • Aggressive – LC75 – Aggressive Life Cycle Fund: This Life cycle fund provides a cap of 75% of the total assets for Equity investment. The exposure in Equity Investments starts with 75% till 35 years of age and gradually reduces and goes down to 15% by the age of 55 and beyond.
  • Moderate – LC50 – Moderate Life Cycle Fund: This Life cycle fund provides a cap of 50% of the total assets for Equity investment. The exposure in Equity Investments starts with 50% till 35 years of age and gradually reduces and goes down to 10% by the age of 55 and beyond.
  • Conservative – LC25 – Conservative Life Cycle Fund: This Life cycle fund provides a cap of 25% of the total assets for Equity investment. The exposure in Equity Investments starts with 25% till 35 years of age and gradually reduces and goes down to 5% by the age of 55 and beyond.

That was about the NPS portfolio allocation between various assets and schemes.

Now here is what the National Pension Scheme Calculator (or NPS calculator) calculates and shows as output once the inputs are provided:

  • The total amount invested (contributed) during the accumulation phase
  • The total corpus accumulated
  • Amount available as one-time tax-free withdrawal
  • Amount used for Annuity Purchase
  • Monthly Pension Amount during retirement years

Like any other investment product, NPS also benefits from compounding. So more the invested money, the more the accumulated amount and the larger would be the eventual benefit of the accumulated pension wealth. To find out the Best NPS Funds Managers (2019 2020) and to check returns generated by NPS schemes, please check out this link – NPS Scheme Fund Manager Returns.

Here again, is the link to download the calculator:

Download (Free) Excel National Pension Scheme Calculator


NPS is one of the few products that have been made specifically for retirement savings. Other good ones being PPF (Public Provident Fund Interest Rates and How to become a PPF Crorepati and Free PPF Calculator), EPF and doing regular long term SIP in Equity Funds. The investment in NPS also offers tax benefit under Section 80C (within Rs 1.5 lac per year) and extra benefit under Section 80CCD (1B) upto Rs 50,000 per year. This makes NPS as an attractive retirement solution for many people who are looking for NPS tier 1 and tier 2 tax benefits. As for NPS Tier 1 and Tier 2 which is better? Since Tier 1 has a lock-in practically till retirement, its better option for retirement planning. Tier 2 is best for non-retirement related savings – which can be for other financial goals as well.

But it must be noted that whether it should be the only retirement product that you invest in or not is debatable. There is a case for investing separately in equity funds for retirement as well.

Hopefully, this excel based NPS Pension calculator will help you understand the retirement savings product NPS better and also act as a decision-making tool to make informed investment decisions about how much to invest in NPS for retirement savings.

Mutual Funds Vs Real Estate – Which is better for Investing in India? (2019 Follow up post)

Note – This is a guest post by Ajay. He has previously written on this topic here. Since a few years had passed, he was kind enough to share his views again (with a useful real-life example). Ajay has also authored other interest posts here like How He created a corpus of Rs 3.7 Crore in just 10 years. So over to Ajay for this post…


A few years back, I had written on a controversial topic – Investing in Mutual Funds Vs Real Estate in India. I wanted to do a follow-up post on the topic as with each passing year, a new set of people begin asking the same questions:

  • Are mutual funds better than real estate for investing in India?
  • Can investing in real estate be better than investing in equity funds?
  • Mutual Funds Vs Real Estate – which is better
  • And similar versions asking the same things…

So let me try and address this again…

I once again reiterate that there will be many reasons for investing (or let’s say putting money) in real estate – such as peer pressure, family pressure, social status etc. and I am not debating the same. This question of whether you should invest in Real Estate (for investment) or Mutual Funds, can only be answered by you and you alone.

And therefore, this article should ideally be read in that spirit.

The intention of this post is to present facts based on the actual data, from both real estate and mutual funds from an investor’s perspective and ofcourse, my opinion on the same. 🙂

Also, as stated in the earlier post:

  • A home is a place to live and it should not be linked to one’s investment strategy. There should not be any second thought about buying your 1st property for self-occupancy whether with or without tax benefits.
  • I am aware and acknowledge the fact that being Equity and Equity Funds oriented investor, my views will tend to be biased towards Equity investments than Real Estate investments.
  • The experience and the actual investment returns of Real Estate investors vary from location to location. And therefore, many of you may not agree with the conclusion or findings of this post. Nevertheless, through this article, I have analyzed the actual data from the Real estate and mutual fund investments in India.

So let’s go ahead…

Real Estate Investment

In August-2010, a friend of mine decided to buy a 1200 Square feet (Sq.ft). Flat in the outskirts of Bangalore (@ Rs 2290 per Sq.ft.) through a housing loan. The details are as follows:

  • Cost of Flat (including Car parking, Utilities, Legal costs, Deposits etc.): Rs 31,39,500
  • VAT, Registration & Stamp paper: Rs 3,02,566

Total Cost of Flat (all Inclusive): Rs 34,42,066

To fund this purchase, he used:

  • His own money (Rs 12,42,066) and
  • Took a home loan for Rs 22,00,000 from a bank.

The loan EMI was Rs.21,343.

As like many of you committed individuals, he paid all the loan EMI on or before the due dates, and also increased the EMI amounts as his salary increased during the loan tenure. He also made part payments many times to accelerate the loan closure and to settle the loan as early as possible. He also put this house on monthly rental as he had to live in another city for professional reasons.

Kind of an ideal way of managing a home loan you can say.

Now let’s look at the numbers below (if you are interested in the actual loan cashflow data):

MF SIP vs Real Estate

Now the loan ended recently (in May-2019).

So I sat with my friend and re-calculated the actual cost of his flat:

Total Cost (Flat in Hand) – Rs 34.4 lac

Downpayment – Rs 12.42 lac

Loan – Rs 22.00 lac

Total EMI Paid – Rs 25.73 lac

Total Initial Downpayment & Prepayments – Rs 18.67 lac

Actual Cost of Flat (excl. rent)- Rs 44.40 lac

Rent Received – Rs 11.36 lac

Net Amount Paid for Flat – Rs 33.04 lac

These are real numbers. Real actual numbers.

Let’s move further.

With the loan completed in almost 9 years time, and with the general assumption of property appreciation, we expected the property to fetch at least double the investment (value) of net amount paid for the flat.

So we expected Rs 66 lac from the sale of the property.

However, we did not find a single buyer even at Rs 55 lac!!

From the local brokers and available market information, we got to know that the property could be sold immediately for Rs 40 to 42 lac and if we were lucky, it can be sold for a stretched value of Rs 45-48 lac (let’s say max Rs 50 lac). Also, there will be capital gains tax on the profit amount.

While it is concerning that there was no value appreciation despite the area is connected and having all the basic amenities in the near vicinity, I decided to take this as a case study to see an alternative scenario – where investments had been made in Mutual Funds. I wanted to know what would have been the outcome.

Mutual Fund Investment

I chose 3 funds to feed the investment data in MF (same amount invested as EMI, downpayment and prepayment on the same date as the loan payments were made).

The choice of funds were as follows:

  • 1 decent performing fund (Franklin India Equity),
  • 1 market performer (UTI Nifty 50 Index Fund), and
  • 1 worst performing fund (LIC Multi-Cap Fund)

Since the direct plans weren’t available in 2010, regular plan (i.e. ones with higher fee and lower returns) were chosen for data crunching. So here are the details below (or you can skip and go straight to the summary just after the table):

Mutual Fund SIP vs Real Estate India

Summary of the above investment table is as follows:

Mutual Fund SIP vs Real Estate 2019


From the table above, it is clearly evident that if instead of buying the flat, the investment was rather made in the worst performing mutual fund, it would still have given returns of Rs 55.5 lac against Rs 40-48 lac current market value of the flat.

Investment in the index fund would have fetched a much better Rs 67.94 lac. And if you luckily had invested in a very good fund, then it would have given you about Rs 78+ lac.

Not bad. Right?

I know what many of you might be thinking…

While we can debate the time of entry in mutual funds, time of entry or locality or high cost paid for the property etc., I still find merit in investing in Mutual Funds instead of Real Estate flats as an investment. And I very well know that irrespective of the above data favouring MFs, many will still argue in favour of the real estate. I leave the decision to you.

An important point that shouldn’t be missed in this Mutual fund vs real estate debate is the importance of selecting a good fund (or avoiding bad ones) for investment. And if we stretch this topic a little, it opens up another separate debate on the Active versus Passive Funds which I guess is best left for another post.

Note: In the calculation of Real Estate, the cost for Home Insurance, Home Maintenance, etc. was not included. Also, the Rs 2 Lac tax savings during this tenure was not considered as there will be a capital gain tax on property investment too. Equity investment until March-2018 were are tax-free and therefore, the tax implication would be negligible in case of equity investment in the above case study’s tenure.

Concluding Thoughts

As stated in the previous post on the debate of real estate vs mutual funds, I once again have the same concluding thoughts.

And this is a repetition of the earlier statement. One should not give any second thought about buying the 1st house/property for self-occupancy, whether it is with or without tax benefits.

However, based on the comparative analysis done above, one should think twice (or even ten times…) before buying a home for investment purpose. One should carefully weigh all the available data (Or as much reliable information you have) and then take a wise call.

Just because your friend or family members are investing in real estate does not mean that you should also do it.

Diversification aspect should also be looked at. But you should not avoid evaluating your own financial goals. This is extremely critical. And don’t just evaluate and feel helpless about it. Find out how you can plan to achieve them and then decide whether you actually need (or want) to ‘invest’ in real estate or not. Different people will get different answers.

Without doubt, a physical asset (like a house) will always give huge mental comfort and satisfaction over other financial assets like mutual funds. But it is also true that it may not always be the best available investment option. In fact, investing in house funded through a loan, is a huge long-term liability – which in many cases, chokes the person’s ability to save and invest for other goals in right instruments.

In my opinion (and it is mine so you can choose to ignore it), after the purchase of the 1st  property for self-use, if there is any surplus cash left to invest, you should invest it as per your asset allocation (which includes debt, equity, gold & real estate). If the asset allocation permits you to invest in real estate, you may very well do it. But if it doesn’t, then you should refrain from investing in it just because it’s what everyone else around you is doing.

And please, investing in real estate for the sake of saving taxes may not necessarily be the best thing to do. If need be, do not hesitate in taking financial advice to put in place a solid investment plan for your life.

As stated at the beginning of this article too, this is one hell of a controversial debate.

And there is no one straight-forward or logical answer to it. There are no thumb rules either. You and you alone can answer the question of Real Estate Vs Mutual Funds.

In this article (and in the earlier one), all I have tried is to attempt to clear the myth that “Real estate investing is the only best Investment Option” available for everyone. As you might have noticed (if you have spent some time reading the tables above), that all calculations have been done by estimating the returns net of expenses. We just cannot ignore expenses like those many who just tell you the number of times their property has appreciated in value. It’s not correct.

Hope you found this analysis interesting and useful.

Fee Only Financial Planner in India (Updated 2020)

Did you land on this page searching for Fee Only Financial Planners in India?

Then one thing is very clear – you already know Fee Only Financial Planner or Fee Only SEBI-registered Investment Advisor is the best option when it comes to taking financial advice in India

Now let me tell something upfront. I, Dev Ashish is a Fee-Only SEBI-registered Investment Advisor (SEBI RIA) and Finance Planner.

But irrespective of whether you make me or somebody else as your financial advisor, please do understand that it is in your best interest to take financial advice only from Fee-Only SEBI-registered Investment Advisors.

And I don’t want to get into the debate of who is the best Fee Only Financial Planner or the Best Fee Only Investment Advisor in India. Because what is best for someone may not be best suited for someone else. I have written about it here at Best SEBI Registered Investment Advisor – How to Find?

But first and if you have doubts, then understand the who exactly is a fee only financial planner and what is the difference between Fee-Only Financial Planners and Fee-Based Financial Planners?

As the name suggests, a Fee-Only Financial Planner charges a fee from clients for making financial plan and providing investment advisory to them. He does not receive any kind of commissions/incentives from mutual fund houses, insurance companies or any other financial company. Fee-only financial advisors only earn money through the fees  their clients pay.

And since he is in no way associated (or dependent for income) on Mutual Fund Companies, Insurance Companies, etc. you can be sure that the advice is conflict-free and unbiased.

On the other hand are those self-proclaimed financial advisors who in reality, are just sales-driven bank relationship managers, mutual fund distributors and insurance agents. They may seem to offer free financial advice. But fact is that they receive commissions from mutual fund houses and insurance companies to sell their products. And when you work with such fee-based planners, you can be sure that their fee advice is tailored to push their products mindlessly without trying to understand the client’s real financial requirements. The commissions these MF distributors and Agents get leads to an obvious conflict of interest. These people will always push products that earn them the best commissions.

And to give you a taste of how comprehensive a proper Fee-Only Financial Planning engagement can be and how much better it is from the free advice you get often, I suggest you do check Stable Investor’s Financial Planning Service.

You will be surprised to see how creating a proper Financial Plan can really sort out your financial life and help achieve some real financial goals that matter to you.

Not everybody needs a Financial Planner. But if you do need one, then I suggest you work only with SEBI Registered Investment Adviser (SEBI RIA). And be reminded that a Fee Only Financial Planner or a Fee Only Investment Advisor is better for you. Don’t get tempted by so-called free (wrong and biased) advice given by the Bank Managers, Mutual Fund Agents or Insurance Agents.

Are you looking for a List of Fee-only Financial Planners in India? Or are you looking for:

  • Fee Only Financial Planner Mumbai, or
  • Fee Only Financial Planner Bangalore, or
  • Fee Only Financial Planner Hyderabad, or
  • Fee Only Financial Planner Pune, or
  • Fee Only Financial Planner Chennai, or
  • Fee Only Financial Planner Delhi, or
  • Fee Only Financial Planner Gurgaon, or
  • Fee Only Financial Planner Noida, or
  • Fee Only Financial Planner Kolkata, or
  • Fee Only Financial Planner Near Me

Then you can contact Dev Ashish, who is a SEBI Registered Fee Only Investment Advisor and Financial Planner who works with clients from across India. Due to the use of Technology (online and telephonic), distances are no longer a barrier. Investment Advisory and Financial Planning can easily be delivered online. So if you want to really take control of your finances, maybe its time to contact me.

And let me remind you. Or rather ask you.

Do you really understand why you should not take free advice from Banks, Mutual Fund or Insurance agents?

Because they are just product sellers who want to earn the highest possible commissions. So they will sell you the product which gives them achieve their sales targets and help them earn the highest possible commission irrespective of whether the product suits you or not. For example – If they have two products A (gives 1.5% commission) and B (gives only 0.5% commission), then you can be sure that they will convince you to buy A – as it gives more commission. And that is even if they know (and chose not to tell) that B is better suited for you. It is for this reason that there are so many cases of misselling.

Another important aspect is that if you take random so-called advice from bank RMs, MF agents and Insurance agents, your portfolio will be scattered and directionless. And that does not help you. At the end of the day, you want your money to help you achieve your financial goals. Plain and simple. Right? And that is what Goal-based Investing is all about.

The MF Agents, Banks RMs and Insurance Agents all give biased advice in their fields (and concerning only the products they are selling). But once you take proper advice from Fee Only Financial Planner, he will help you see the big picture of your overall financial life and help fit all the pieces of the financial jigsaw puzzle.

Finding an investment advisor or financial who acts in your best interests is really important for you.

Dev Ashish is a ‘Fee-Only’ SEBI Registered Investment Advisor and Financial Planner. Dev or only gets paid by the client and there are no hidden commissions or sales incentives to influence investment recommendations and financial plan. So if you decide to engage for:

then you can be sure that you will get the proper advice which is best and customized for your unique financial situation and more importantly, unbiased and conflict-free (as there are no commissions or sales incentives) and most importantly, tailored to help you achieve your real financial goals.

How can you contact me?


Use this simple form to begin the conversation with Fee Only Financial Planner India 2020.


Do you want a Free Financial Plan?

Free – a word that attracts everyone. And when it comes to financial advice, the word ‘FREE’ has done more damage than even big stock market crashes.

I know this sounds odd but I am not lying.

The free financial plan, free financial advice or free investment advice isn’t actually free.

It always has to be paid.

Either in the form of the hidden commissions MF agents get & which reduces investor returns. Or it may be in the form of poor returns from wrong products sold by the insurance agents and insurance-selling uncles. And then, there are those friendly (or rather irritating) bank Relationship Managers, who call or show up every few months and try to sell you something or the other. Read this to know why you shouldn’t listen to bank RMs.

So my first small piece of advice is to stop looking for the free financial plan. Because if you do, you will end up in the hands of above-mentioned people who will mis-sell you something immediately!

To be honest, handling your personal finances isn’t very tough. Have a look at this 209 Word Financial Plan. You will realize it’s not that difficult.

But the problem is that many know what is the right thing to do. But still, very few do what’s right for them. And for one reason or the other, they keep making financial mistakes which stops them from growing wealthy in real sense.

This is where a good financial planner can help.

He will charge you a fee no doubt.

And in your interest, its best to find a planner who does charge fee as that way, you can be sure that he is not giving you biased advice to sell commission-earning financial products. So find yourself a Fee Only SEBI Registered Financial Planner.

How does this work?

It works on the simple yet powerful principle of Goal-based investing. Here is Super-detailed Guide on Goal-based Investing.

Instead of simply selling random financial products, a good financial planner will put your financial goals at the centre of the planning process. And once your goals are identified and prioritized (use this Free Excel-based Goal Planner if you want to try it on your own), the advisor will create a solid + actionable financial plan that tells you:

  • How much will each of your goals cost in future?
  • How much to invest periodically?
  • When exactly to invest (and for how long)?
  • Where to invest?

Aren’t these the questions you really wanted answers to?

A good financial planner can really help you take control of your financial life. Here is one example of how a financial plan sorts someone’s life.

And you know what? One of the biggest disadvantages of consuming free, mass-produced financial advice is that often it is too broad in scope and fails to account for each individual’s unique situation. And this is what most people fail to recognize.

So please stop looking for free financial planning and retirement planning advice. And forget about the free financial plan. It will only delay what you will realize much later – that free financial advice does not work.

And managing your personal finances is a life-long process full of challenges, opportunities and pitfalls. Though not everyone may require financial advice, there are still thousands who would actually benefit from getting some proper and effective financial advice.

I am a SEBI Registered Financial Planner. So if you want to have an idea about what happens in financial planning, then do check the detailed:

Stable Investor’s Goal-based Financial Planning Service


I won’t take more of your time now. I hope you do see why planning your finances as early as possible can help you.

People will still continue to search for free financial planning plan India or free financial advisor India and whatnot. We cannot stop them. But believe me, it’s not worth it. If you are still not sure whether you really need a financial planner, then I suggest you read the following:

Rs 90+ Lakh Anyone? A simple example of Wealth Creation from Indian Equities

Yesterday, I was talking to a young relative of mine about how Sensex had touched 39,000 for the first time and how it had created immense wealth for investors in past years.

But despite being young, this guy was somehow not too convinced about equity’s potential for wealth creation.

So I thought I will try to influence him with some simple data. And once I did that, his mind started working in ways that I liked. Mission accomplished. 😉

I thought of sharing that dataset here.

It’s fairly simple to understand:

Imagine you can invest Rs 1 lac every year. So over a period of 20 years, you would be investing a total Rs 20 lac.

Now, what would be the value of these investments over the years?

I took the Nifty50 returns data of the last 20 years (since 1997-98) and showed the below table to my relative:

Nifty invest 1 lac January

After investing Rs 20 lac over 20 years, the value of investments was about Rs 90 lac. This is when the investments were made in January every year.

A large figure of Rs 90 lac excited this relative of mine. But he had a valid question after that.

Since markets fluctuate, what would have happened if instead of investing in January, he invested in some other months?

So I showed him the data for months of April, July and October. Have a look.

By investing Rs 1 lac in April every year in Nifty50 for the past 20 years, the value of investments would have become Rs 87 lac. Not bad.

Nifty invest 1 lac April

By investing Rs 1 lac in July every year in Nifty50 for the past 20 years, the value of investments would have become Rs 92 lac. Not bad at all.

Nifty invest 1 lac JulyBy investing Rs 1 lac in October every year in Nifty50 for the past 20 years, the value of investments would have become Rs 94 lac. Not bad again.

Nifty invest 1 lac October

Ofcourse the figures differ depending on the months we invest in. But the final figure still is good enough to show how wealth is created over the years when investing in equity.

And just to drive home the point, I also compared this with Rs 1 lac investment in PPF for the last 20 years. Here is what I found:

PPF invest 1 lac every year

By investing Rs 1 lac every year in PPF for the past 20 years, the value of investments would have become approx. Rs 52 lac. Not bad but much lower than what was possible via equity.

(Source: PPF interest rate history)

Please don’t think that I am trying to portray PPF in a bad light. I personally like PPF and feel that PPF is a great debt product.

So if you understand the whole premise of asset allocation and also understand the need to have debt in the investment portfolio, then PPF is a great option. (Try this PPF excel calculator). But ignoring equities just because it can be volatile in short term is not wise.

Equity will go up as well as down. It is in its nature. It’s not a bank FD. But if you stick to it for long, the returns delivered are much higher than debt products.

And that is what I wanted to convince my relative about.

He seems to be convinced now. Whether he takes any action on this new found conviction is another matter.

I also shared with him the idea of investing on a monthly basis via SIP in equity funds if he (like most people) doesn’t have lumpsum amounts to invest. He got inspired by the several SIP success stories that one can easily find.

So if you too feel that someone needs a little push to consider equity for long term investments, then you can use the examples above to convince them.

Strong Early Returns Vs Strong Late Returns

You already know that the markets don’t go up or down in straight lines. What this means is that if an investor gets an average return of 12% in 10 years, it doesn’t mean that he will get:

12%, 12%, 12%, 12%, 12%, 12%, 12%, 12%, 12%, 12%

It instead means that he will get something like this:

-5%, 22%, 4%, 13%, -17%, 57%, 10%, 19%, -12%, 29%

Or let’s put it this way:

Average Vs Actual Returns in Stock Markets

Related to the actual sequence of return an investor gets in real life, I came across an interesting post that talks about how the end-portfolio size differs depending on whether the investor gets strong early returns vs strong late returns.

What is the difference you may ask…

This simply means that in one case, you get good returns in early years while in other, you get good returns in later years.

Does it matter?

Yes indeed… as you will see soon in the remainder of this post.

Let’s consider a simple example.

Suppose you are 30-year old planning to save for retirement at 60.

You have decided to invest Rs 20,000 per month or let’s say Rs 2.4 lakh every year for the next 30 years.

Now consider 2 different cases:

  • Good Later Years – You earn 7% every year in the first 15 years and 14% every year during the next 15 years, on your investments.
  • Good Early Years – You earn 14% every year in the first 15 years and 7% every year during the next 15 years, on your investments.

What will be the value of your portfolio after 30 years in either case?

  • Rs 5.81 crore after 30 years (for sequence 7% followed by 14%)
  • Rs 3.95 crore after 30 years (for sequence 14% followed by 7%)

That’s a large difference of about Rs 1.86 crore!

And that too for the same ‘average return’ during the 30 year period. Isn’t it?

Many of you may have guessed the reason.

It is because of the Sequence of Returns you get. That is, the order of annual returns that your portfolio is subjected to.

Strong early vs Strong Late returns

In the first case (where portfolio grows to a larger Rs 5.81 crore), you get strong late returns – due to which, a bigger corpus earns better returns (14%) in the later years. Whereas in the second case (where portfolio grows to a comparatively smaller Rs 3.95 crore), you get strong early returns – due to which, a smaller corpus earns better returns (14%) early on while the bigger corpus earns lower returns (7%) in later years.

And how do these two cases compare with the actual average return (10.5%)?

Here is how different the 3 scenarios end up looking, even though all have the same exact average returns:

Strong early vs Strong Late vs Average returns

And this is exactly what I wanted to highlight.

The sequence of returns that investor gets has a big impact on the final overall portfolio size.

You may be hoping to get a portfolio size based on your average return assumption. But the actual size may vary even though average returns are same, due to a different sequence of returns your portfolio undergoes. Averages and Actual differ (River Depth example).

And let’s take this a step further.

Let’s see how the actual investment in Sensex in the last 20 years fared when compared to the reverse sequence of returns.

In this scenario analysis, Rs 2.4 lakh (or Rs 20,000 per month) is invested in Sensex every year during the last 20 years. The sequence of returns that are given in the second column in the image below are the actual Sensex returns in the last 20 years. The value of portfolio changes as depicted by the green line in graph below. Also, a portfolio that runs on the basis of the reverse Sensex returns (the returns have been reversed in the third column) is shown as the blue line in the graph. 

Sensex last 20 years actual vs reverse returns

As you can see, depending on the different sequence of returns considered (one real other reversed), the portfolio value varies every year and also, the final values are different.

So the sequence of returns does matter a lot.

All said and done, can anything be done for this?

To be honest, it’s difficult.

You don’t get to decide what sequence of market returns you get in future.

I repeat.

You don’t get to decide what sequence of market returns you get in future.

This simply but unfortunately means that we have no control over the sequence of returns in the markets.

It is possible that some of you may get better markets early in your investing career and worse ones later. Or if powers above favour you, then you may have not-so-great market returns during initial years but super returns in later ones. This is the very reason why young investors should pray for bad markets in initial years. It may be painful and may not be for everyone, but it’s a wonderful thing for real long-term investors.

But even though we cannot control the sequence of returns, we can manage the risk to some extent.

At times, using market valuations as an indicator can help you estimate the possibility of a weak or a strong market in the coming years and rebalance your portfolio accordingly. By doing this, only a part of the portfolio may be exposed to market returns when required tactically.

This is not exactly a perfect strategy but works often as is proven by this detailed analysis of Market Valuations Vs Future Returns.

So to more practically manage the Sequence of Return Risk, you should be slightly conservative in your return expectations. It’s better to have lower return expectations and save more than having higher return expectations and saving less but getting shocked later on when it is already late to do anything.