Part 3: Goals or What the heck is Financial Freedom in my case, exactly?
3.1 Get clarity on what you need and want in life
Part of growing up into an adult is knowing what you need and want and knowing the difference. Investing starts with saving money. But saving and investing for what? Not having clarity on this means you are likely to spend on things that give you instant gratification but mean little after an instant. How are you going to stop doing this?
By the time we are about 18 years old, the official age to be called an adult we all face the problem that Alice faces; what do we do now that we’ve ‘grown up’, what do we want to be, to become? The dreams that we have while growing up were fun, but soon its decision time.
Some decisions take us down a path from where it becomes difficult to change course, eg choosing what to pursue as higher studies opens up some career choices but also virtually closes others. But we can’t keep our options open forever, we are required to take the decision by some deadline.
Fortunately, you have a little more flexibility with investing and we can shift the money invested for one goal to fund another and build a revised plan. However, you need to be investing to begin with, investing ‘adequately’ and as the Cat said investing long...........Read More
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MoneyWorks4Me method for rating and ranking mutual funds for SIP
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and
ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the
various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Performance Consistency: This is measure based on whether the fund has beaten the benchmark index consistently. For
this we compare the 3-year rolling returns of the fund with the benchmark for a minimum of 5 years and preferable 10
years. The period of rolling is one month and holding period is 3 years. Fund are color-coded Green on Performance when
the fund beats the benchmark more than 90% of the time. It is Orange if it beats 80% to 90% of the time and Red if less
than 80%. Funds with less than 5 year data are color-coded Grey.
Quality of Portfolio Holding: Moneyworks4Me has color-coded stocks as Green, Orange and Red based on whether the
company's performance has generated a ROCE above a threshold level (cost of capital) over 10 years (minimum 6 years) and
generated positive Free Cash Flow. For Banks it checks whether ROE is greater than 15% and sales has grown over previous
year. Stocks that perform consistently on these combined metrics are color-coded Green (min score 14 out of 20), Orange
(between 8 and 14) and Red (less than 8 out of 20).
Fund are color-coded Green provided the portfolio has 70% holding in Green stocks but not more than 10% in Red stocks.
Funds with more than 15% Red stocks in the portfolio are color-coded Red. The rest are Orange funds
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The
ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number
that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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