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Over the years, you might have heard a lot of advisors or "self-proclaimed" advisors suggesting that you really don't need to buy any annuity products and that they actually cause more harm than good to your portfolio. 
And to be frank, that is true, to a certain extent. 
Most annuity products would provide you a CAGR in the range of 3-5%, even though once in a while there will be an outlier when you make around 6-7 ish as well. But to put it blandly, it will be in the prior range. 
Like, you will have guessed, even an FD will make a higher corpus over time right? True. 
But we are all guilty of neglecting things when we can't visualize the possible impacts right? 
So before you proceed with the newsletter, I want to publicly claim that I have been guilty of this and have criticized this product too. Probably a lot more than you have. 
So what changed? Dive in: 
First, for folks who don't know what annuity products are, here is a quick overview: 
What are Annuity Products?
Annuities provide guaranteed income for a lifetime.
You pay the premium once and the insurance companies pay you a pre-defined amount for the rest of your life.
Remember the LIC agent asking you to pay for the next 10 years, and you will receive 'X' amount per year, for the rest of your life? Yup, that's an annuity product.
Typically there are 3 types of products: 
Joint life annuity
Annuity for life with return of premium
Annuity for life (covered above)
But, if the returns are sub-par, why should you still invest in it? 
Cause these products are amazing for dealing with one type of risk that no one talks about Wrong-Way Risk (WWR).
Most often we use Excel (theoretically) to just depict that vast difference in the corpus that is created if you compare the same amount of investments in different assets. 
So if you are paying 10 lakhs for 5 years in an Annuity Product, showcase the juxtaposed results against the same investment in Equity/FD or any other, and the compounding of the corpus.
And you'll see that there is a really huge difference in corpus right? But you missed WWR.
So, what is Wrong Way Risk?
Quite literally, Wrong Way Risk refers to the increased likelihood of counterparty default when the value of the exposure and credit quality of the counterparty are positively correlated. This occurs because as the value of the exposure increases, the credit quality of the counterparty deteriorates, increasing the risk of default.
See, understand that the basic reason for buying an annuity is the fixed cash flow it provides despite any turmoils going on in the world. 
So how does an annuity product deal with this? 
Consider that you make 1 lakh a month. You buy an annuity that pays you 5K per month from the 5th year, or you invest this in the equity markets, and you compare the equivalent corpus you have built till then. 
You need this monthly money for paying a 5K bill for eg. 
In the case of A, you don't need to worry since that is a product payout.
In the case of B, you probably signed up for an SWP (Systematic Withdrawal Plan) or simply decided to pull out that money every year from equity markets, but in the same year, the markets tanked by 50%. Now what? 
All those Excel calculations are down the drain. Plus, your expected corpus from equity will be nowhere close since when the markets pull back up, you will have withdrawn cash. 
So now you know why to buy this product. But yet, should you still buy this? 
Buy this product for the following reasons:
If you are unsure of the cash flow during that timeframe and the cashflows from the annuity product will cover your outflows.
If you have job insecurities and have greater responsibilities.
Cheers!

​Wisdom Nuggets from our current read:
​“Everywhere there is a large commission, there is a high probability of a rip-off.” - Charlie Munger


Buy this book - https://amzn.to/3TGljHq


​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:
​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: Twitter, Linkedin!

<div class="mirror-content">​Over the years, you might have heard a lot of advisors or &quot;self-proclaimed&quot; advisors suggesting that you really don&#x27;t need to buy any annuity products and that they actually cause more harm than good to your portfolio. ​And to be frank, that is true, to a certain extent. ​Most annuity products would provide you a CAGR in the range of 3-5%, even though once in a while there will be an outlier when you make around 6-7 ish as well. But to put it blandly, it will be in the prior range. ​Like, you will have guessed, even an FD will make a higher corpus over time right? True. ​But we are all guilty of neglecting things when we can&#x27;t visualize the possible impacts right? ​So before you proceed with the newsletter, I want to publicly claim that I have been guilty of this and have criticized this product too. Probably a lot more than you have. ​So what changed? Dive in: ​First, for folks who don&#x27;t know what annuity products are, here is a quick overview: <h2>​What are Annuity Products?</h2>​Annuities provide guaranteed income for a lifetime.​You pay the premium once and the insurance companies pay you a pre-defined amount for the rest of your life.​Remember the LIC agent asking you to pay for the next 10 years, and you will receive &#x27;X&#x27; amount per year, for the rest of your life? Yup, that&#x27;s an annuity product.​Typically there are 3 types of products: <ul><li>​Joint life annuity</li><li>​Annuity for life with return of premium</li><li>​Annuity for life (covered above)</li></ul>​But, if the returns are sub-par, why should you still invest in it? ​Cause these products are amazing for dealing with one type of risk that no one talks about Wrong-Way Risk (WWR).​Most often we use Excel (theoretically) to just depict that vast difference in the corpus that is created if you compare the same amount of investments in different assets. ​So if you are paying 10 lakhs for 5 years in an Annuity Product, showcase the juxtaposed results against the same investment in Equity/FD or any other, and the compounding of the corpus.​And you&#x27;ll see that there is a really huge difference in corpus right? But you missed WWR.<h2>​So, what is Wrong Way Risk?</h2>​Quite literally, Wrong Way Risk refers to the increased likelihood of counterparty default when the value of the exposure and credit quality of the counterparty are positively correlated. This occurs because as the value of the exposure increases, the credit quality of the counterparty deteriorates, increasing the risk of default.​See, understand that the basic reason for buying an annuity is the fixed cash flow it provides despite any turmoils going on in the world. ​So how does an annuity product deal with this? ​Consider that you make 1 lakh a month. You buy an annuity that pays you 5K per month from the 5th year, or you invest this in the equity markets, and you compare the equivalent corpus you have built till then. ​You need this monthly money for paying a 5K bill for eg. ​In the case of A, you don&#x27;t need to worry since that is a product payout.​In the case of B, you probably signed up for an SWP (Systematic Withdrawal Plan) or simply decided to pull out that money every year from equity markets, but in the same year, the markets tanked by 50%. Now what? ​All those Excel calculations are down the drain. Plus, your expected corpus from equity will be nowhere close since when the markets pull back up, you will have withdrawn cash. ​So now you know why to buy this product. But yet, should you still buy this? ​Buy this product for the following reasons:<ul><li>​If you are unsure of the cash flow during that timeframe and the cashflows from the annuity product will cover your outflows.</li><li>​If you have job insecurities and have greater responsibilities.</li></ul>​Cheers!<hr/><h2>​​Wisdom Nuggets from our current read:</h2>​​“Everywhere there is a large commission, there is a high probability of a rip-off.” - Charlie Munger<img alt="Image" class="image" src="https://images.lumacdn.com/cdn-cgi/image/format=auto,dpr=2,quality=85,width=200/editor-images/sv/d61fb98c-cb73-446f-8d05-cc8fe97ee5c1" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/><div style="text-align:center;margin-bottom:1rem"><a href="https://amzn.to/3TGljHq" class="btn" style="background-color:#de3163;color:#ffffff;border:1px solid transparent;padding:0.75rem 1.5rem;border-radius:8px;font-size:1rem !important;line-height:1 !important;word-break:break-word;display:inline-block;text-align:center;font-weight:bold;text-decoration:none !important">Buy this book</a></div><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Over the years, you might have heard a lot of advisors or "self-proclaimed" advisors suggesting that you really don't need to buy any annuity products and that they actually cause more harm than good to your portfolio. 

And to be frank, that is true, to a certain extent. 

Most annuity products would provide you a CAGR in the range of 3-5%, even though once in a while there will be an outlier when you make around 6-7 ish as well. But to put it blandly, it will be in the prior range. 

Like, you will have guessed, even an FD will make a higher corpus over time right? True. 

But we are all guilty of neglecting things when we can't visualize the possible impacts right? 

So before you proceed with the newsletter, I want to publicly claim that I have been guilty of this and have criticized this product too. Probably a lot more than you have. 

First, for folks who don't know what annuity products are, here is a quick overview: 

Annuities provide guaranteed income for a lifetime.

You pay the premium once and the insurance companies pay you a pre-defined amount for the rest of your life.

Remember the LIC agent asking you to pay for the next 10 years, and you will receive 'X' amount per year, for the rest of your life? Yup, that's an annuity product.

Typically there are 3 types of products: 

Cause these products are amazing for dealing with one type of risk that no one talks about Wrong-Way Risk (WWR).

Most often we use Excel (theoretically) to just depict that vast difference in the corpus that is created if you compare the same amount of investments in different assets. 

So if you are paying 10 lakhs for 5 years in an Annuity Product, showcase the juxtaposed results against the same investment in Equity/FD or any other, and the compounding of the corpus.

And you'll see that there is a really huge difference in corpus right? But you missed WWR.

Quite literally, Wrong Way Risk refers to the increased likelihood of counterparty default when the value of the exposure and credit quality of the counterparty are positively correlated. This occurs because as the value of the exposure increases, the credit quality of the counterparty deteriorates, increasing the risk of default.

See, understand that the basic reason for buying an annuity is the fixed cash flow it provides despite any turmoils going on in the world. 

So how does an annuity product deal with this? 

Consider that you make 1 lakh a month. You buy an annuity that pays you 5K per month from the 5th year, or you invest this in the equity markets, and you compare the equivalent corpus you have built till then. 

You need this monthly money for paying a 5K bill for eg. 

In the case of A, you don't need to worry since that is a product payout.

In the case of B, you probably signed up for an SWP (Systematic Withdrawal Plan) or simply decided to pull out that money every year from equity markets, but in the same year, the markets tanked by 50%. Now what? 

All those Excel calculations are down the drain. Plus, your expected corpus from equity will be nowhere close since when the markets pull back up, you will have withdrawn cash. 

So now you know why to buy this product. But yet, should you still buy this? 

Buy this product for the following reasons:

“Everywhere there is a large commission, there is a high probability of a rip-off.

​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:

​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: 

​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: 

​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: 

When should you buy Annuity Products?

For passive shareholders, Sidecar Investing has been one of the only strategies that create the possibility (though far from an assurance) of obtaining fantastic wealth.  Not just retiring comfortably, but earning life-changing returns.
The common thread is partnering with exceptional people that eat their own cooking. Not just smart people, but 10-100x people that are just wired differently than most.

Buffett is the best-known example. But there are hundreds of others - Cumming/Steinberg, Al Nahmad, Bill Foley, Mark Leonard, Jay Hennick, Norm Asbjornson, Rales brothers, Brian Jellison, the Markel family - who quietly built tremendous value for shareholders over time.
But the investor has to be as committed as a private business partner would.  Maybe more so.  There will be times when management makes real mistakes and challenges your patience.  You could sell with the push of a button but have to ignore your liquidity. There will also be times when the stock is demonstrably expensive. Be willing/able to hold through these.  Doing the right thing will feel like the wrong thing.  These investment opportunities are rare and selling the stock to buy back later takes you out of the game.
The business itself will also change over time - providing another reason to sell - but it has to stay relevant.  Danaher is a great example. They shed their skin multiple times but the focus on long-term value creation has not wavered.
How to identify these people? 
Buffett provides some guidance:
“People give themselves away… When someone comes to me with a business, the very things they talk about, what they regard as important – there are a lot of clues that come as to subsequent behavior”
Do they focus on quarterly earnings or long-term strategy?  Obsess over competitors or customers?  Brush mistakes under the rug or address head-on?  Discuss size of the company or per-share value?  Are they flashy or humble?  Use technical jargon or are they plain-spoken?
So if it’s so simple why doesn’t the “smart money” use this approach?
They can’t go to clients and say “This is an extraordinary business run by unusually talented people and I’m going to ride their coattails for decades” and go golfing, although it may be the clearly rational thing to do.  Clients would also think they could do it themselves.
Doesn’t “the market” know these are exceptional people and price it in? 
That’s the beauty - skilled capital allocation is systematically mispriced (hypothesis). An unknown, yet positively skewed future can’t be predicted or modeled - undervaluing and hiding it in plain sight.
An investor pursuing this strategy will also invest in duds from time to time, and that’s okay.  The goal is not to make money on every position but to maximize the return on the portfolio.  Getting too cute is tempting and will likely lead to unforced errors.
All that said, there is no guarantee of success.  The best an investor can do is put themselves in a position where compounding their money at a high rate for a long period of time is at least on the table.  Sidecar investing may be the most accessible approach that does so.
So would you implement this or stay on your current course?
Cheers!

​Wisdom Nuggets from our current read:
​“A stockbroker is someone who invests other people’s money until it’s all gone.” - Woody Allen


Buy this book - https://amzn.to/3TGljHq


​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:
​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: Twitter, Linkedin!

<div class="mirror-content">​For passive shareholders, Sidecar Investing has been one of the only strategies that create the possibility (though far from an assurance) of obtaining fantastic wealth. Not just retiring comfortably, but earning life-changing returns.​The common thread is partnering with exceptional people that eat their own cooking. Not just smart people, but 10-100x people that are just wired differently than most.<img alt="Image" class="image" src="https://images.lumacdn.com/cdn-cgi/image/format=auto,dpr=2,quality=85,width=358/editor-images/pi/3bd6206d-5a20-4ac7-8678-f51f862a9b5e" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/>​Buffett is the best-known example. But there are hundreds of others - Cumming/Steinberg, Al Nahmad, Bill Foley, Mark Leonard, Jay Hennick, Norm Asbjornson, Rales brothers, Brian Jellison, the Markel family - who quietly built tremendous value for shareholders over time.​But the investor has to be as committed as a private business partner would. Maybe more so. There will be times when management makes real mistakes and challenges your patience. You could sell with the push of a button but have to ignore your liquidity. There will also be times when the stock is demonstrably expensive. Be willing/able to hold through these. Doing the right thing will feel like the wrong thing. These investment opportunities are rare and selling the stock to buy back later takes you out of the game.​The business itself will also change over time - providing another reason to sell - but it has to stay relevant. Danaher is a great example. They shed their skin multiple times but the focus on long-term value creation has not wavered.<h2>​How to identify these people? </h2>​Buffett provides some guidance:​“People give themselves away… When someone comes to me with a business, the very things they talk about, what they regard as important – there are a lot of clues that come as to subsequent behavior”​Do they focus on quarterly earnings or long-term strategy? Obsess over competitors or customers? Brush mistakes under the rug or address head-on? Discuss size of the company or per-share value? Are they flashy or humble? Use technical jargon or are they plain-spoken?<h2>​So if it’s so simple why doesn’t the “smart money” use this approach?</h2>​They can’t go to clients and say “This is an extraordinary business run by unusually talented people and I’m going to ride their coattails for decades” and go golfing, although it may be the clearly rational thing to do. Clients would also think they could do it themselves.<h2>​Doesn’t “the market” know these are exceptional people and price it in? </h2>​That’s the beauty - skilled capital allocation is systematically mispriced (hypothesis). An unknown, yet positively skewed future can’t be predicted or modeled - undervaluing and hiding it in plain sight.​An investor pursuing this strategy will also invest in duds from time to time, and that’s okay. The goal is not to make money on every position but to maximize the return on the portfolio. Getting too cute is tempting and will likely lead to unforced errors.​All that said, there is no guarantee of success. The best an investor can do is put themselves in a position where compounding their money at a high rate for a long period of time is at least on the table. Sidecar investing may be the most accessible approach that does so.​So would you implement this or stay on your current course?​Cheers!<hr/><h2>​​Wisdom Nuggets from our current read:</h2>​​“A stockbroker is someone who invests other people’s money until it’s all gone.” - Woody Allen<img alt="Image" class="image" src="https://images.lumacdn.com/cdn-cgi/image/format=auto,dpr=2,quality=85,width=200/editor-images/sv/d61fb98c-cb73-446f-8d05-cc8fe97ee5c1" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/><div style="text-align:center;margin-bottom:1rem"><a href="https://amzn.to/3TGljHq" class="btn" style="background-color:#de3163;color:#ffffff;border:1px solid transparent;padding:0.75rem 1.5rem;border-radius:8px;font-size:1rem !important;line-height:1 !important;word-break:break-word;display:inline-block;text-align:center;font-weight:bold;text-decoration:none !important">Buy this book</a></div><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

For passive shareholders, Sidecar Investing has been one of the only strategies that create the possibility (though far from an assurance) of obtaining fantastic wealth.  Not just retiring comfortably, but earning life-changing returns.

The common thread is partnering with exceptional people that eat their own cooking. Not just smart people, but 10-100x people that are just wired differently than most.

Buffett is the best-known example. But there are hundreds of others - Cumming/Steinberg, Al Nahmad, Bill Foley, Mark Leonard, Jay Hennick, Norm Asbjornson, Rales brothers, Brian Jellison, the Markel family - who quietly built tremendous value for shareholders over time.

But the investor has to be as committed as a private business partner would.  Maybe more so.  There will be times when management makes real mistakes and challenges your patience.  You could sell with the push of a button but have to ignore your liquidity. There will also be times when the stock is demonstrably expensive. Be willing/able to hold through these.  Doing the right thing will feel like the wrong thing.  These investment opportunities are rare and selling the stock to buy back later takes you out of the game.

The business itself will also change over time - providing another reason to sell - but it has to stay relevant.  Danaher is a great example. They shed their skin multiple times but the focus on long-term value creation has not wavered.

“People give themselves away… When someone comes to me with a business, the very things they talk about, what they regard as important – there are a lot of clues that come as to subsequent behavior”

Do they focus on quarterly earnings or long-term strategy?  Obsess over competitors or customers?  Brush mistakes under the rug or address head-on?  Discuss size of the company or per-share value?  Are they flashy or humble?  Use technical jargon or are they plain-spoken?

So if it’s so simple why doesn’t the “smart money” use this approach?

They can’t go to clients and say “This is an extraordinary business run by unusually talented people and I’m going to ride their coattails for decades” and go golfing, although it may be the clearly rational thing to do.  Clients would also think they could do it themselves.

Doesn’t “the market” know these are exceptional people and price it in? 

That’s the beauty - skilled capital allocation is systematically mispriced (hypothesis). An unknown, yet positively skewed future can’t be predicted or modeled - undervaluing and hiding it in plain sight.

An investor pursuing this strategy will also invest in duds from time to time, and that’s okay.  The goal is not to make money on every position but to maximize the return on the portfolio.  Getting too cute is tempting and will likely lead to unforced errors.

All that said, there is no guarantee of success.  The best an investor can do is put themselves in a position where compounding their money at a high rate for a long period of time is at least on the table.  Sidecar investing may be the most accessible approach that does so.

So would you implement this or stay on your current course?

​“A stockbroker is someone who invests other people’s money until it’s all gone.”

Side-Car Investing: A guide for Passive Wealth Creators

Do dividend-paying stocks outperform the market?
A study by Blackrock found that between 1978 to 2022 companies that either grew or initiated dividends outperformed the S&P 500 and non-dividend payers with less risk.
Here's a visual by CommonStock highlighting the excess returns created by dividend-paying stocks: 


So how can these create an impact on your portfolio?
Dividend-paying stocks can be a great way to generate passive income and compound your wealth over time. By receiving regular payouts from companies that share their profits with shareholders, you can create a steady stream of cash flow that can help you cover your expenses, reinvest in more stocks, or save for your future goals.
But dividends are not just about income. They can also signal a company's financial health and growth potential. Companies that pay dividends tend to be more established, profitable, and shareholder-friendly than those that don't. They also tend to have more disciplined management, better corporate governance, and more stable earnings.
As a result, dividend-paying stocks have historically outperformed non-dividend-paying stocks in many markets and sectors.
According to a study by Hartford Funds, dividend-paying stocks in the S&P 500 index outperformed non-dividend-paying stocks by an average of 2.5% annually from 1972 to 2018. This may not sound like a lot, but it can add up to significant gains over time.
Moreover, dividend-paying stocks can also be less volatile and risky than non-dividend-paying stocks, especially in bear markets or recessions. (refer to the image above)
Because they offer a cushion of income and support, they can help investors ride out the ups and downs of the market with more confidence and less emotional stress. They can also provide a signal of value and quality to investors who seek stability and consistency in their portfolios.
Of course, dividend-paying stocks are not a panacea, nor a guarantee of success.
They still require careful research, analysis, and diversification, just like any other investment. They also have their risks and challenges, such as the possibility of dividend cuts, high valuations, or limited growth prospects. 
But for investors who seek a reliable and rewarding way to build wealth over time, dividend-paying stocks can be a smart choice.
​Cheers!

​Wisdom Nuggets from our current read:
​“Knowing what you don’t know is more useful than being brilliant.” - Charlie Munger


Buy this book - https://amzn.to/3TGljHq


​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:
​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: Twitter, Linkedin!

<div class="mirror-content">​Do dividend-paying stocks outperform the market?​A study by Blackrock found that between 1978 to 2022 companies that either grew or initiated dividends outperformed the S&amp;P 500 and non-dividend payers with less risk.​Here&#x27;s a visual by CommonStock highlighting the excess returns created by dividend-paying stocks: <img alt="Image" class="image" src="https://images.glow.app/https%3A%2F%2Fpbs.twimg.com%2Fmedia%2FFscK8A7WAAAUOs4%3Fformat%3Djpg%26name%3Dmedium?ixlib=js-3.8.0&amp;w=800&amp;dpr=2&amp;s=e1597a55bd6cc5b7e6ac3ebc0c9e2a1e" style="display:block;max-width:100%;max-height:400px;margin:24px auto"/>​<h2>​So how can these create an impact on your portfolio?</h2>​Dividend-paying stocks can be a great way to generate passive income and compound your wealth over time. By receiving regular payouts from companies that share their profits with shareholders, you can create a steady stream of cash flow that can help you cover your expenses, reinvest in more stocks, or save for your future goals.​But dividends are not just about income. They can also signal a company&#x27;s financial health and growth potential. Companies that pay dividends tend to be more established, profitable, and shareholder-friendly than those that don&#x27;t. They also tend to have more disciplined management, better corporate governance, and more stable earnings.​As a result, dividend-paying stocks have historically outperformed non-dividend-paying stocks in many markets and sectors.​According to a study by Hartford Funds, dividend-paying stocks in the S&amp;P 500 index outperformed non-dividend-paying stocks by an average of 2.5% annually from 1972 to 2018. This may not sound like a lot, but it can add up to significant gains over time.​Moreover, dividend-paying stocks can also be less volatile and risky than non-dividend-paying stocks, especially in bear markets or recessions. (refer to the image above)​Because they offer a cushion of income and support, they can help investors ride out the ups and downs of the market with more confidence and less emotional stress. They can also provide a signal of value and quality to investors who seek stability and consistency in their portfolios.​Of course, dividend-paying stocks are not a panacea, nor a guarantee of success.​They still require careful research, analysis, and diversification, just like any other investment. They also have their risks and challenges, such as the possibility of dividend cuts, high valuations, or limited growth prospects. ​But for investors who seek a reliable and rewarding way to build wealth over time, dividend-paying stocks can be a smart choice.​​Cheers!<hr/><h2>​​Wisdom Nuggets from our current read:</h2>​​“Knowing what you don’t know is more useful than being brilliant.” - Charlie Munger<img alt="Image" class="image" src="https://images.lumacdn.com/cdn-cgi/image/format=auto,dpr=2,quality=85,width=200/editor-images/sv/d61fb98c-cb73-446f-8d05-cc8fe97ee5c1" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/><div style="text-align:center;margin-bottom:1rem"><a href="https://amzn.to/3TGljHq" class="btn" style="background-color:#de3163;color:#ffffff;border:1px solid transparent;padding:0.75rem 1.5rem;border-radius:8px;font-size:1rem !important;line-height:1 !important;word-break:break-word;display:inline-block;text-align:center;font-weight:bold;text-decoration:none !important">Buy this book</a></div><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Do dividend-paying stocks outperform the market?

A study by Blackrock found that between 1978 to 2022 companies that either grew or initiated dividends outperformed the S&P 500 and non-dividend payers with less risk.

Here's a visual by CommonStock highlighting the excess returns created by dividend-paying stocks: 

So how can these create an impact on your portfolio?

Dividend-paying stocks can be a great way to generate passive income and compound your wealth over time. By receiving regular payouts from companies that share their profits with shareholders, you can create a steady stream of cash flow that can help you cover your expenses, reinvest in more stocks, or save for your future goals.

But dividends are not just about income. They can also signal a company's financial health and growth potential. Companies that pay dividends tend to be more established, profitable, and shareholder-friendly than those that don't. They also tend to have more disciplined management, better corporate governance, and more stable earnings.

As a result, dividend-paying stocks have historically outperformed non-dividend-paying stocks in many markets and sectors.

According to a study by Hartford Funds, dividend-paying stocks in the S&P 500 index outperformed non-dividend-paying stocks by an average of 2.5% annually from 1972 to 2018. This may not sound like a lot, but it can add up to significant gains over time.

Moreover, dividend-paying stocks can also be less volatile and risky than non-dividend-paying stocks, especially in bear markets or recessions. (refer to the image above)

Because they offer a cushion of income and support, they can help investors ride out the ups and downs of the market with more confidence and less emotional stress. They can also provide a signal of value and quality to investors who seek stability and consistency in their portfolios.

Of course, dividend-paying stocks are not a panacea, nor a guarantee of success.

They still require careful research, analysis, and diversification, just like any other investment. They also have their risks and challenges, such as the possibility of dividend cuts, high valuations, or limited growth prospects. 

But for investors who seek a reliable and rewarding way to build wealth over time, dividend-paying stocks can be a smart choice.

“Knowing what you don’t know is more useful than being brilliant.” - Charlie Munger

The Power of Dividends: Why They Can Boost Your Stock Returns

Charlie Munger, the Vice Chairman of Berkshire Hathaway and partner to Warren Buffett is a legendary investor with a unique philosophy that has helped him achieve incredible success in the world of finance. Munger's investing approach is centered on key principles that have proven highly effective over the years.
Here are three of Charlie Munger's investing philosophies that every investor should know:
1: Invest in great businesses
Charlie Munger believes in investing in great businesses with durable competitive advantages. These companies have a strong brand, a loyal customer base, and a sustainable business model. Munger has famously said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." By investing in great businesses, you can benefit from their long-term growth potential and enjoy the rewards of compounding returns.
2: Seek out the value
Munger also believes in seeking out value investments. This means looking for companies that are undervalued by the market. Munger has said, "The best thing a human being can do is to help another human being know more." By doing your own research and seeking out value investments, you can take advantage of opportunities that others might have missed.
3: Practice patience
Finally, Munger's investing philosophy emphasizes the importance of patience. Munger has said, "The big money is not in the buying and selling. But in the waiting." In other words, successful investing requires a long-term perspective and the ability to stick to your investment plan even when the market is volatile.
By following these investing principles, you can learn from the wisdom of Charlie Munger and improve your own investment results.
So, whether you're a seasoned investor or just getting started, take a page from Charlie Munger's book and invest in great businesses, seek out value, and practice patience. Your portfolio will thank you for it.
Cheers!

Wisdom Nuggets from our current read: 
“When I came out to California, there was this playboy and he spent all his time drinking heavily and chasing movie stars. His banker called him in and said that he was very nervous about his behavior. He told his banker, ‘Let me tell you something: my municipal bonds don’t drink.’ ” - Charlie Munger on future of good company's performance


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<div class="mirror-content">​Charlie Munger, the Vice Chairman of Berkshire Hathaway and partner to Warren Buffett is a legendary investor with a unique philosophy that has helped him achieve incredible success in the world of finance. Munger&#x27;s investing approach is centered on key principles that have proven highly effective over the years.​Here are three of Charlie Munger&#x27;s investing philosophies that every investor should know:​1: Invest in great businesses​Charlie Munger believes in investing in great businesses with durable competitive advantages. These companies have a strong brand, a loyal customer base, and a sustainable business model. Munger has famously said, &quot;It&#x27;s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.&quot; By investing in great businesses, you can benefit from their long-term growth potential and enjoy the rewards of compounding returns.​2: Seek out the value​Munger also believes in seeking out value investments. This means looking for companies that are undervalued by the market. Munger has said, &quot;The best thing a human being can do is to help another human being know more.&quot; By doing your own research and seeking out value investments, you can take advantage of opportunities that others might have missed.​3: Practice patience​Finally, Munger&#x27;s investing philosophy emphasizes the importance of patience. Munger has said, &quot;The big money is not in the buying and selling. But in the waiting.&quot; In other words, successful investing requires a long-term perspective and the ability to stick to your investment plan even when the market is volatile.​By following these investing principles, you can learn from the wisdom of Charlie Munger and improve your own investment results.​So, whether you&#x27;re a seasoned investor or just getting started, take a page from Charlie Munger&#x27;s book and invest in great businesses, seek out value, and practice patience. Your portfolio will thank you for it.​Cheers!<hr/><h2>​Wisdom Nuggets from our current read: </h2>​“When I came out to California, there was this playboy and he spent all his time drinking heavily and chasing movie stars. His banker called him in and said that he was very nervous about his behavior. He told his banker, ‘Let me tell you something: my municipal bonds don’t drink.’ ” - Charlie Munger on future of good company&#x27;s performance<img alt="Image" class="image" src="https://images.lumacdn.com/cdn-cgi/image/format=auto,dpr=2,quality=85,width=200/editor-images/10/7fddb30b-8c60-459d-80f6-0bb71ee26fea" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/><div style="text-align:center;margin-bottom:1rem"><a href="https://amzn.to/3TGljHq" class="btn" style="background-color:#de3163;color:#ffffff;border:1px solid transparent;padding:0.75rem 1.5rem;border-radius:8px;font-size:1rem !important;line-height:1 !important;word-break:break-word;display:inline-block;text-align:center;font-weight:bold;text-decoration:none !important">Buy This Book</a></div><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Charlie Munger, the Vice Chairman of Berkshire Hathaway and partner to Warren Buffett is a legendary investor with a unique philosophy that has helped him achieve incredible success in the world of finance. Munger's investing approach is centered on key principles that have proven highly effective over the years.

Here are three of Charlie Munger's investing philosophies that every investor should know:

Charlie Munger believes in investing in great businesses with durable competitive advantages. These companies have a strong brand, a loyal customer base, and a sustainable business model. Munger has famously said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." By investing in great businesses, you can benefit from their long-term growth potential and enjoy the rewards of compounding returns.

Munger also believes in seeking out value investments. This means looking for companies that are undervalued by the market. Munger has said, "The best thing a human being can do is to help another human being know more." By doing your own research and seeking out value investments, you can take advantage of opportunities that others might have missed.

Finally, Munger's investing philosophy emphasizes the importance of patience. Munger has said, "The big money is not in the buying and selling. But in the waiting." In other words, successful investing requires a long-term perspective and the ability to stick to your investment plan even when the market is volatile.

By following these investing principles, you can learn from the wisdom of Charlie Munger and improve your own investment results.

So, whether you're a seasoned investor or just getting started, take a page from Charlie Munger's book and invest in great businesses, seek out value, and practice patience. Your portfolio will thank you for it.

“When I came out to California, there was this playboy and he spent all his time drinking heavily and chasing movie stars. His banker called him in and said that he was very nervous about his behavior. He told his banker, ‘Let me tell you something: my municipal bonds don’t drink.’

” - Charlie Munger on future of good company's performance

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Invest Like Charlie Munger and Multiply Your Wealth

As we celebrate the festival of #GuddiPadwa, let's take a moment to learn and analyze the synonymity between Guddi Padwa and investing:
The festival of Guddi Padwa marks the beginning of the new year in the Hindu calendar. It is celebrated with great enthusiasm and vigor by people across the country. As we celebrate this auspicious occasion, let's take a moment to reflect on an important lesson that can help us become better investors.
Just like how Guddi Padwa marks a new beginning, every investment is an opportunity for a fresh start. It's important not to let past failures or successes cloud our judgment. Instead, focus on making informed decisions based on data and research.
On this day, people clean their homes and decorate them with colorful rangolis. Similarly, as investors, we should clean our portfolio of any bad investments and decorate it with quality stocks. Diversification is the key to balancing out risk and reward.
The festival of Guddi Padwa also marks the onset of the harvest season. As investors, we too should sow the seeds of investment in good companies and reap the rewards in due time. Investing in companies with strong fundamentals and ethical practices can go a long way in generating long-term wealth.
Just like how Guddi Padwa celebrates the victory of good over evil, as investors, we should invest in companies that align with our values and have a positive impact on society. Responsible investing can not only generate returns but also make a difference in the world.
Guddi Padwa is also a time for family and community bonding. Similarly, as investors, we should join investment clubs and forums to gain valuable insights and ideas. Collaborating with like-minded investors can help us make better investment decisions.
Finally, just like how the festival of Guddi Padwa is a time for introspection and reflection, take the time to review your investment strategy and make necessary changes to align with your goals. Stay disciplined, keep learning, and enjoy the journey.
In conclusion, the festival of Guddi Padwa teaches us important lessons about starting anew, cleaning up our portfolio, diversifying our investments, responsible investing, community building, and self-reflection.
Let's apply these principles to become better investors and make the most of our investments.
Happy Guddi Padwa! 🤗
Cheers!

​​​​​​​​​​​​​​​​​​​End-Week Wisdom:


​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:
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​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
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<div class="mirror-content">​As we celebrate the festival of #GuddiPadwa, let&#x27;s take a moment to learn and analyze the synonymity between Guddi Padwa and investing:​The festival of Guddi Padwa marks the beginning of the new year in the Hindu calendar. It is celebrated with great enthusiasm and vigor by people across the country. As we celebrate this auspicious occasion, let&#x27;s take a moment to reflect on an important lesson that can help us become better investors.<ul><li>​Just like how Guddi Padwa marks a new beginning, every investment is an opportunity for a fresh start. It&#x27;s important not to let past failures or successes cloud our judgment. Instead, focus on making informed decisions based on data and research.</li><li>​On this day, people clean their homes and decorate them with colorful rangolis. Similarly, as investors, we should clean our portfolio of any bad investments and decorate it with quality stocks. Diversification is the key to balancing out risk and reward.</li><li>​The festival of Guddi Padwa also marks the onset of the harvest season. As investors, we too should sow the seeds of investment in good companies and reap the rewards in due time. Investing in companies with strong fundamentals and ethical practices can go a long way in generating long-term wealth.</li><li>​Just like how Guddi Padwa celebrates the victory of good over evil, as investors, we should invest in companies that align with our values and have a positive impact on society. Responsible investing can not only generate returns but also make a difference in the world.</li><li>​Guddi Padwa is also a time for family and community bonding. Similarly, as investors, we should join investment clubs and forums to gain valuable insights and ideas. Collaborating with like-minded investors can help us make better investment decisions.</li><li>​Finally, just like how the festival of Guddi Padwa is a time for introspection and reflection, take the time to review your investment strategy and make necessary changes to align with your goals. Stay disciplined, keep learning, and enjoy the journey.</li></ul>​In conclusion, the festival of Guddi Padwa teaches us important lessons about starting anew, cleaning up our portfolio, diversifying our investments, responsible investing, community building, and self-reflection.​Let&#x27;s apply these principles to become better investors and make the most of our investments.​Happy Guddi Padwa! 🤗​Cheers!<hr/><h2>​​​​​​​​​​​​​​​​​​​​End-Week Wisdom:</h2><blockquote>​&quot;I think that, every time you see the word EBITDA, you should substitute the words bullshit earnings.&quot; - Charlie Munger</blockquote><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

, let's take a moment to learn and analyze the synonymity between Guddi Padwa and investing:

The festival of Guddi Padwa marks the beginning of the new year in the Hindu calendar. It is celebrated with great enthusiasm and vigor by people across the country. As we celebrate this auspicious occasion, let's take a moment to reflect on an important lesson that can help us become better investors.

In conclusion, the festival of Guddi Padwa teaches us important lessons about starting anew, cleaning up our portfolio, diversifying our investments, responsible investing, community building, and self-reflection.

Let's apply these principles to become better investors and make the most of our investments.

​​​​​​​​​​​​​​​​​​​End-Week Wisdom:

​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:

Gudi Padwa Special: Festival Investing Wisdom

Over the past year, Nifty has been range-bound delivering less than an FD. The markets have neither dropped significantly nor are they showing any indications of the next bull swing.
So does investing during this range-bound time frame make sense, when markets have no clear direction?
When it comes to equity, we can always seek some hope by looking at past scenarios. 
Whenever Nifty has been range bound, and not dropped more than 10%, the markets have given an annualized return of 10.5% over the next 3 years. 
Here is a good chart prepared by Capitalmind to showcase the performances by tracing back all instances of a similar occurring through the years: 

Another fact to take into account is, currently, the Nifty 50 stocks have reported an aggregated 19% increase in net profits, whilst the nifty has only increased by 3%. 
As the saying goes, the markets are a weighing machine in the long run, even though they might be unrealistic in the short run. 
Thus, with companies improving their earnings, and Nifty being range-bound, it does weigh in on the positive side stating that the market's next leg, will generate a greater amount of returns for all participants who are holding on.
Cheers!

​​​​​​​​​​​​​​​​​​End-Week Wisdom:


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<div class="mirror-content">​Over the past year, Nifty has been range-bound delivering less than an FD. The markets have neither dropped significantly nor are they showing any indications of the next bull swing.​So does investing during this range-bound time frame make sense, when markets have no clear direction?​When it comes to equity, we can always seek some hope by looking at past scenarios. ​Whenever Nifty has been range bound, and not dropped more than 10%, the markets have given an annualized return of 10.5% over the next 3 years. ​Here is a good chart prepared by Capitalmind to showcase the performances by tracing back all instances of a similar occurring through the years: <img alt="Image" class="image" src="https://images.lumacdn.com/cdn-cgi/image/format=auto,dpr=2,quality=85,width=559/editor-images/wc/70dc7462-989a-4a83-8d12-a3d348b8575e" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/>​Another fact to take into account is, currently, the Nifty 50 stocks have reported an aggregated 19% increase in net profits, whilst the nifty has only increased by 3%. ​As the saying goes, the markets are a weighing machine in the long run, even though they might be unrealistic in the short run. ​Thus, with companies improving their earnings, and Nifty being range-bound, it does weigh in on the positive side stating that the market&#x27;s next leg, will generate a greater amount of returns for all participants who are holding on.​Cheers!<hr/><h2>​​​​​​​​​​​​​​​​​​​End-Week Wisdom:</h2><blockquote>​​&quot;Time is your friend, only when the stock picked is right.&quot; - Unknown</blockquote><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Over the past year, Nifty has been range-bound delivering less than an FD. The markets have neither dropped significantly nor are they showing any indications of the next bull swing.

So does investing during this range-bound time frame make sense, when markets have no clear direction?

When it comes to equity, we can always seek some hope by looking at past scenarios. 

Whenever Nifty has been range bound, and not dropped more than 10%, the markets have given an annualized return of 10.5% over the next 3 years. 

Here is a good chart prepared by Capitalmind to showcase the performances by tracing back all instances of a similar occurring through the years: 

Another fact to take into account is, currently, the Nifty 50 stocks have reported an aggregated 19% increase in net profits, whilst the nifty has only increased by 3%. 

As the saying goes, the markets are a weighing machine in the long run, even though they might be unrealistic in the short run. 

Thus, with companies improving their earnings, and Nifty being range-bound, it does weigh in on the positive side stating that the market's next leg, will generate a greater amount of returns for all participants who are holding on.

​​​​​​​​​​​​​​​​​​End-Week Wisdom:

​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:

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Nifty's struggle, can you make money?

With one of the largest bond defaults of this year, are we headed into a full-blown recession? 
If big fintech is burning, could it lead to yet another Global Financial Crisis? 
Probably not. Cause here is the full picture:
Property values are dropping in Europe as rising interest rates put off buyers until a clearer picture of how far rates will rise emerges. That’s led to wide gaps between bids and offers, crimping deal volumes and putting pressure on owners with loans that are maturing. About a third of all loans in commercial-mortgage-backed securities maturing in 2023 and 2024 face high refinancing risks, according to a study published by Scope Ratings in January. 
Concerns about how far values could fall are encouraging lenders to push for sales more quickly, while borrowers would prefer more time to seek higher offers for their properties. The drop in prices has so far not led to widespread credit losses, so some creditors are betting that rapid sales can still ensure the debt is fully repaid.
Blackstone, the global asset management giant, has defaulted on part of a €531M bond backed by a commercial portfolio owned by Finnish property investment firm Sponda, which it acquired in 2017. Even though the private equity firm has repaid almost half of that figure, closer to €300M. Currently, €297.1M of the loan remains outstanding, secured against 45 properties in Finland, mainly offices and stores.
Blackstone earlier sought an extension from holders of the securitized notes so that it could sell the assets and repay the debt, but the commercial mortgage-backed security has since matured without being repaid. The asset management giant and prolific real estate investor sought an extension from the bondholders to repay the debt, but they voted against it, according to a report citing people familiar with the matter.
The portfolio represents approximately 10%-15% of Sponda's overall portfolio. The asset sale process was impacted by COVID-related disruptions, the Ukraine war, and wider market volatility said a source familiar with the situation. The source also mentioned that the rest of the portfolio had been refinanced recently.
In response to the default, shares of Blackstone fell 1.6%. However, the company expressed confidence in the core Sponda portfolio and its management team.
Cheers!

​​​​​​​​​​​​​​​​​End-Week Wisdom:


​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:
​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: Twitter, Linkedin!

<div class="mirror-content">​With one of the largest bond defaults of this year, are we headed into a full-blown recession? ​If big fintech is burning, could it lead to yet another Global Financial Crisis? ​Probably not. Cause here is the full picture:​Property values are dropping in Europe as rising interest rates put off buyers until a clearer picture of how far rates will rise emerges. That’s led to wide gaps between bids and offers, crimping deal volumes and putting pressure on owners with loans that are maturing. About a third of all loans in commercial-mortgage-backed securities maturing in 2023 and 2024 face high refinancing risks, according to a study published by Scope Ratings in January. ​Concerns about how far values could fall are encouraging lenders to push for sales more quickly, while borrowers would prefer more time to seek higher offers for their properties. The drop in prices has so far not led to widespread credit losses, so some creditors are betting that rapid sales can still ensure the debt is fully repaid.​Blackstone, the global asset management giant, has defaulted on part of a €531M bond backed by a commercial portfolio owned by Finnish property investment firm Sponda, which it acquired in 2017. Even though the private equity firm has repaid almost half of that figure, closer to €300M. Currently, €297.1M of the loan remains outstanding, secured against 45 properties in Finland, mainly offices and stores.​Blackstone earlier sought an extension from holders of the securitized notes so that it could sell the assets and repay the debt, but the commercial mortgage-backed security has since matured without being repaid. The asset management giant and prolific real estate investor sought an extension from the bondholders to repay the debt, but they voted against it, according to a report citing people familiar with the matter.​The portfolio represents approximately 10%-15% of Sponda&#x27;s overall portfolio. The asset sale process was impacted by COVID-related disruptions, the Ukraine war, and wider market volatility said a source familiar with the situation. The source also mentioned that the rest of the portfolio had been refinanced recently.​In response to the default, shares of Blackstone fell 1.6%. However, the company expressed confidence in the core Sponda portfolio and its management team.​Cheers!<hr/><h2>​​​​​​​​​​​​​​​​​​End-Week Wisdom:</h2><blockquote>​&quot;Building wealth is one of the primary inputs to a good life – money unlocks access to a lot of experiences that would otherwise not be possible. However, most experiences are best had (or in some cases, only possible) at certain phases of life.&quot; - Unknown</blockquote><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

With one of the largest bond defaults of this year, are we headed into a full-blown recession? 

If big fintech is burning, could it lead to yet another Global Financial Crisis? 

Probably not. Cause here is the full picture:

Property values are dropping in Europe as rising interest rates put off buyers until a clearer picture of how far rates will rise emerges. That’s led to wide gaps between bids and offers, crimping deal volumes and putting pressure on owners with loans that are maturing. About a third of all loans in commercial-mortgage-backed securities maturing in 2023 and 2024 face high refinancing risks, according to a study published by Scope Ratings in January. 

Concerns about how far values could fall are encouraging lenders to push for sales more quickly, while borrowers would prefer more time to seek higher offers for their properties. The drop in prices has so far not led to widespread credit losses, so some creditors are betting that rapid sales can still ensure the debt is fully repaid.

Blackstone, the global asset management giant, has defaulted 

 of a €531M bond backed by a commercial portfolio owned by Finnish property investment firm Sponda, which it acquired in 2017. Even though the private equity firm has repaid almost half of that figure, closer to €300M. Currently, €297.1M of the loan remains outstanding, secured against 45 properties in Finland, mainly offices and stores.

Blackstone earlier sought an extension from holders of the securitized notes so that it could sell the assets and repay the debt, but the commercial mortgage-backed security has since matured without being repaid. The asset management giant and prolific real estate investor sought an extension from the bondholders to repay the debt, but they voted against it, according to a report citing people familiar with the matter.

The portfolio represents approximately 10%-15% of Sponda's overall portfolio. The asset sale process was impacted by COVID-related disruptions, the Ukraine war, and wider market volatility said a source familiar with the situation. The source also mentioned that the rest of the portfolio had been refinanced recently.

In response to the default, shares of Blackstone fell 1.6%. However, the company expressed confidence in the core Sponda portfolio and its management team.

​​​​​​​​​​​​​​​​​End-Week Wisdom:

​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:

​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: 

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The Blackstone Saga:

On Saturday'25th Feb, Warren Buffet released his annual shareholder letter. And as always, the crowd was in awe of his jaw-dropping wisdom. 
In his newsletter, he stated that forecasting is really - a loser's job. It's quite impossible to predict, and almost impossible to state with any percent of certainty. 
This got me thinking, it's true, isn't it?
As a matter of fact. Consider this piece from Morgan Housel back in 2019:
"There are more than 200,000,000 businesses in the world. Three hundred trillion dollars of financial assets. Ninety trillion dollars of GDP. Almost 200 countries, thousands of cultures, and norms. With seven billion people, a rough calculation shows there are about two tons of pure serotonin careening through the global economy at every moment. Economists try in earnest to model all of this in Excel.
Wrapping your head around the global economy – predicting recessions, bubbles, GDP growth, and the like – is nearly impossible. There are too many moving parts.
But that doesn’t mean we should give up trying to understand it. It just means we should keep things broad and simple.
One of my favorite quotes is from John Reed, who writes in his book Succeeding:

This is so applicable to economics, where there are infinite details but a few core principles that explain a lot of what’s going on."
Despite the complexity, things do keep on being pursued. 
However, how often do you see forecasts being right? Rarely.
This is an image of the forecast made by the Fed right before the GFC in 2008. They also stated that forecasts by economists rarely work.

As long as forecasts are broad scale, it could make sense to have a slight inclination towards believing them. But remember, the more precise the forecast, the higher probability of it being wrong. 
Whether it makes sense or not, it's tough to say. But if you are a retail investor, it really doesn't matter one bit. 
No one can get longer hauls right. But you can always be prepared for the worst.
Cheers!

​​​​​​​​​​​​​​​​​End-Week Wisdom:


​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:
​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: Twitter, Linkedin!

<div class="mirror-content">​On Saturday&#x27;25th Feb, Warren Buffet released his annual shareholder letter. And as always, the crowd was in awe of his jaw-dropping wisdom. ​In his newsletter, he stated that forecasting is really - a loser&#x27;s job. It&#x27;s quite impossible to predict, and almost impossible to state with any percent of certainty. ​This got me thinking, it&#x27;s true, isn&#x27;t it?​As a matter of fact. Consider this piece from Morgan Housel back in 2019:​&quot;There are more than 200,000,000 businesses in the world. Three hundred trillion dollars of financial assets. Ninety trillion dollars of GDP. Almost 200 countries, thousands of cultures, and norms. With seven billion people, a rough calculation shows there are about two tons of pure serotonin careening through the global economy at every moment. Economists try in earnest to model all of this in Excel.​Wrapping your head around the global economy – predicting recessions, bubbles, GDP growth, and the like – is nearly impossible. There are too many moving parts.​But that doesn’t mean we should give up trying to understand it. It just means we should keep things broad and simple.​One of my favorite quotes is from John Reed, who writes in his book Succeeding:<blockquote>​When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles – generally three to twelve of them – that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles.</blockquote>​This is so applicable to economics, where there are infinite details but a few core principles that explain a lot of what’s going on.&quot;​Despite the complexity, things do keep on being pursued. ​However, how often do you see forecasts being right? Rarely.​This is an image of the forecast made by the Fed right before the GFC in 2008. They also stated that forecasts by economists rarely work.<img alt="Image" class="image" src="https://cdn.lu.ma/cdn-cgi/image/format=auto,dpr=2,quality=85,width=800/editor-images/o9/0d27faeb-b35b-4f29-9c80-09da667fc792" style="display:block;max-width:100%;max-height:400px;margin:24px auto"/>​As long as forecasts are broad scale, it could make sense to have a slight inclination towards believing them. But remember, the more precise the forecast, the higher probability of it being wrong. ​Whether it makes sense or not, it&#x27;s tough to say. But if you are a retail investor, it really doesn&#x27;t matter one bit. ​No one can get longer hauls right. But you can always be prepared for the worst.​Cheers!<hr/><h2>​​​​​​​​​​​​​​​​​​End-Week Wisdom:</h2><img alt="Image" class="image" src="https://images.glow.app/https%3A%2F%2Fpbs.twimg.com%2Fmedia%2FFp5l20GWIAIxItJ%3Fformat%3Djpg%26name%3Dmedium?ixlib=js-3.8.0&amp;w=800&amp;dpr=2&amp;s=f709606b6b39ae36d0913c150a8e8945" style="display:block;max-width:100%;max-height:400px;margin:24px auto"/><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

On Saturday'25th Feb, Warren Buffet released his annual shareholder letter. And as always, the crowd was in awe of his jaw-dropping wisdom. 

In his newsletter, he stated that forecasting is really - a loser's job. It's quite impossible to predict, and almost impossible to state with any percent of certainty. 

This got me thinking, it's true, isn't it?

As a matter of fact. Consider this piece from Morgan Housel back in 2019:

"There are more than 200,000,000 businesses in the world. Three hundred trillion dollars of financial assets. Ninety trillion dollars of GDP. Almost 200 countries, thousands of cultures, and norms. With seven billion people, a rough calculation shows there are about two tons of pure serotonin careening through the global economy at every moment. Economists try in earnest to model all of this in Excel.

Wrapping your head around the global economy – predicting recessions, bubbles, GDP growth, and the like – is nearly impossible. There are too many moving parts.

But that doesn’t mean we should give up trying to understand it. It just means we should keep things broad and simple.

One of my favorite quotes is from John Reed, who writes in his book 

This is so applicable to economics, where there are infinite details but a few core principles that explain a lot of what’s going on."

Despite the complexity, things do keep on being pursued. 

However, how often do you see forecasts being right? Rarely.

This is an image of the forecast made by the Fed right before the GFC in 2008. They also stated that forecasts by economists rarely work.

As long as forecasts are broad scale, it could make sense to have a slight inclination towards believing them. But remember, the more precise the forecast, the higher probability of it being wrong. 

Whether it makes sense or not, it's tough to say. But if you are a retail investor, it really doesn't matter one bit. 

No one can get longer hauls right. But you can always be prepared for the worst.

Why do people forecast when it doesn't work?

Mortgage Applications to buy a house just collapsed to an index level of 147.

That's the lowest level of buyer demand in 28 YEARS. Lower than anything we saw in the 2008 Crash. Down 41% from last year. (Source: Mortgage Bankers Association)
Collapsing Mortgage Demand is a huge problem for the US Housing Market. Because despite all the reports of "cash offers", they still only represent 29% of home sales. The other 71% still require a Mortgage to complete the transaction. (Source: NAR)
Why is Mortgage Demand collapsing so much? 
Because both Home Prices AND Mortgage Rates are way too high. Creating a situation where the monthly payment for a homebuyer (Mtg+Tax+Insurance) is now over $2,500/month.
In the 2006-07 Bubble, it peaked at $1,400/month.

And Income Growth has NOT kept up with these increases in the cost to buy a house. Right now the House Payment / Median Income Ratio is 40%. Meaning the typical American family CANNOT AFFORD to buy a house. 
This isn't a "choice". It's simple math.
This makes the propaganda being spewed about a "recovery" in the Housing Market absolutely laughable. Nothing in the fundamental data supports a recovery. In fact, quite the opposite when you consider a Recession, and increased foreclosures are likely on the horizon.
As the old adage goes - "Something has to break". The current state of the US Housing Market with 1) Near record high prices. 2) 7% Mortgage Rates. 3) Sellers refusing to cut the price. Will not last. Something will break.
Let's see how it pans out. 
​​​Cheers!

​​​​​​​​​​​​​​​​End-Week Wisdom:


​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:
​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: Twitter, Linkedin!

<div class="mirror-content">​Mortgage Applications to buy a house just collapsed to an index level of 147.<img alt="Image" class="image" src="https://cdn.lu.ma/cdn-cgi/image/format=auto,dpr=2,quality=85,width=437/editor-images/u5/81a58710-fbed-4110-b2f6-30c7ad2bfba1" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/>​That&#x27;s the lowest level of buyer demand in 28 YEARS. Lower than anything we saw in the 2008 Crash. Down 41% from last year. (Source: Mortgage Bankers Association)​Collapsing Mortgage Demand is a huge problem for the US Housing Market. Because despite all the reports of &quot;cash offers&quot;, they still only represent 29% of home sales. The other 71% still require a Mortgage to complete the transaction. (Source: NAR)<h2>​Why is Mortgage Demand collapsing so much? </h2>​Because both Home Prices AND Mortgage Rates are way too high. Creating a situation where the monthly payment for a homebuyer (Mtg+Tax+Insurance) is now over $2,500/month.​In the 2006-07 Bubble, it peaked at $1,400/month.<img alt="Image" class="image" src="https://cdn.lu.ma/cdn-cgi/image/format=auto,dpr=2,quality=85,width=406/editor-images/z0/c93c15a6-b6d7-4a54-92da-061ed4cd3172" style="display:block;max-width:100%;max-height:100%;margin:24px auto"/>​And Income Growth has NOT kept up with these increases in the cost to buy a house. Right now the House Payment / Median Income Ratio is 40%. Meaning the typical American family CANNOT AFFORD to buy a house. ​This isn&#x27;t a &quot;choice&quot;. It&#x27;s simple math.​This makes the propaganda being spewed about a &quot;recovery&quot; in the Housing Market absolutely laughable. Nothing in the fundamental data supports a recovery. In fact, quite the opposite when you consider a Recession, and increased foreclosures are likely on the horizon.​As the old adage goes - &quot;Something has to break&quot;. The current state of the US Housing Market with 1) Near record high prices. 2) 7% Mortgage Rates. 3) Sellers refusing to cut the price. Will not last. Something will break.​Let&#x27;s see how it pans out. ​​​​Cheers!<hr/><h2>​​​​​​​​​​​​​​​​​End-Week Wisdom:</h2><blockquote>​​&quot;In the pursuit of wisdom, we must read much more of what has endured over time (such as history or biographies) than what is ephemeral (such as daily news, social media trends, and the like).&quot; - Gautaum Baid</blockquote><hr/>​​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Mortgage Applications to buy a house just collapsed to an index level of 147.

That's the lowest level of buyer demand in 28 YEARS. Lower than anything we saw in the 2008 Crash. Down 41% from last year. (Source: Mortgage Bankers Association)

Collapsing Mortgage Demand is a huge problem for the US Housing Market. Because despite all the reports of "cash offers", they still only represent 29% of home sales. The other 71% still require a Mortgage to complete the transaction. (Source: NAR)

Why is Mortgage Demand collapsing so much? 

Because both Home Prices AND Mortgage Rates are way too high. Creating a situation where the monthly payment for a homebuyer (Mtg+Tax+Insurance) is now over $2,500/month.

In the 2006-07 Bubble, it peaked at $1,400/month.

And Income Growth has NOT kept up with these increases in the cost to buy a house. Right now the House Payment / Median Income Ratio is 40%. Meaning the typical American family CANNOT AFFORD to buy a house. 

This makes the propaganda being spewed about a "recovery" in the Housing Market absolutely laughable. Nothing in the fundamental data supports a recovery. In fact, quite the opposite when you consider a Recession, and increased foreclosures are likely on the horizon.

As the old adage goes - "Something has to break". The current state of the US Housing Market with 1) Near record high prices. 2) 7% Mortgage Rates. 3) Sellers refusing to cut the price. Will not last. Something will break.

​​​​​​​​​​​​​​​​End-Week Wisdom:

​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:

​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: 

​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: 

​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: 

Why everyone's worried about the US Housing Market?

Most hedge funds have a 2-and-20 fee structure: A 2% management fee on the assets—a 20% performance fee on the profits. Whether the market goes up, down, or sideways, the management fee is paid. In the long run, it's even worse.
The higher the management fee, the lesser you will have after 40 years. In reality, it's even worse - No hedge fund can guarantee a constant return of 8%. Turnover costs and taxes will further reduce your returns.
Suppose you invest $100k at age 25 with a hedge fund that makes an 8% profit every year. You are charged 1.5% on assets, and a 20% performance fee. When you retire at 60, you will have $764k. But your manager will have $1.24MM - at no initial investment!


On the other hand, with a low-cost ETF that returns just 6% with an expense ratio of 0.1%, you will make $933k after 40 years - $280k more than a 2&20 fund. A hedge fund will beat you in 17 years on average. But an ETF would take 1500+ years to do the same!
Classic Warren:
Warren Buffett always recommends buying into the S&P 500 over picking stocks. But in 2005, he raised the stakes with a $500k bet: "Nobody can select a set of at least 5 hedge funds that would match the S&P500 over ten years." Only one person took up the bet - Ted Seides.
So what happened to Buffett's bet? 
Ted Seides picked 5 funds-of-funds, investing in over a 100 hedge funds. In 10 years, the 5 funds made 2.2% on average - before fees. 60% of those gains were diverted to managers. The S&P500 returned 7.1% - and won hands down.
Not all active funds underperform - But for the average investor, it's very hard to pick the right ones. In fact, Buffett believes so strongly in the S&P 500 that 90% of what he leaves for his wife will be invested in the S&P 500, not even Berkshire Hathaway!
If you're invested in a low-cost ETF, good for you. 
If not, maybe it's time to take another look at those fees.
In conclusion: 
You have two options to invest your money long-term: A hedge fund with an 8% return and an ETF with a 6% return. 
Choosing the right one can save you $280k more before retirement. 
That's an extra ten years of spending! 
So which one should you choose?
​​Cheers!

​​​​​​​​​​​​​​​End-Week Wisdom:


​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:
​​​​​​​​​​​​​​​​​​​​​Please drop us an email: advisoira@gmail.com

​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: Visit Website
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<div class="mirror-content">​Most hedge funds have a 2-and-20 fee structure: A 2% management fee on the assets—a 20% performance fee on the profits. Whether the market goes up, down, or sideways, the management fee is paid. In the long run, it&#x27;s even worse.​The higher the management fee, the lesser you will have after 40 years. In reality, it&#x27;s even worse - No hedge fund can guarantee a constant return of 8%. Turnover costs and taxes will further reduce your returns.​Suppose you invest $100k at age 25 with a hedge fund that makes an 8% profit every year. You are charged 1.5% on assets, and a 20% performance fee. When you retire at 60, you will have $764k. But your manager will have $1.24MM - at no initial investment!​<img alt="Image" class="image" src="https://cdn.lu.ma/cdn-cgi/image/format=auto,dpr=2,quality=85,width=800/editor-images/qw/481a064f-e1ec-4620-93c5-3301069a3ca5" style="display:block;max-width:100%;max-height:400px;margin:24px auto"/>​On the other hand, with a low-cost ETF that returns just 6% with an expense ratio of 0.1%, you will make $933k after 40 years - $280k more than a 2&amp;20 fund. A hedge fund will beat you in 17 years on average. But an ETF would take 1500+ years to do the same!<h1>​Classic Warren:</h1>​Warren Buffett always recommends buying into the S&amp;P 500 over picking stocks. But in 2005, he raised the stakes with a $500k bet: &quot;Nobody can select a set of at least 5 hedge funds that would match the S&amp;P500 over ten years.&quot; Only one person took up the bet - Ted Seides.<h2>​So what happened to Buffett&#x27;s bet? </h2>​Ted Seides picked 5 funds-of-funds, investing in over a 100 hedge funds. In 10 years, the 5 funds made 2.2% on average - before fees. 60% of those gains were diverted to managers. The S&amp;P500 returned 7.1% - and won hands down.​Not all active funds underperform - But for the average investor, it&#x27;s very hard to pick the right ones. In fact, Buffett believes so strongly in the S&amp;P 500 that 90% of what he leaves for his wife will be invested in the S&amp;P 500, not even Berkshire Hathaway!​If you&#x27;re invested in a low-cost ETF, good for you. ​If not, maybe it&#x27;s time to take another look at those fees.<h2>​In conclusion: </h2>​You have two options to invest your money long-term: A hedge fund with an 8% return and an ETF with a 6% return. ​Choosing the right one can save you $280k more before retirement. ​That&#x27;s an extra ten years of spending! ​So which one should you choose?​​​Cheers!<hr/><h2>​​​​​​​​​​​​​​​​End-Week Wisdom:</h2><blockquote>​&quot;Fees never sleep.&quot; - Warren Buffett</blockquote><hr/>​​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Most hedge funds have a 2-and-20 fee structure: A 2% management fee on the assets—a 20% performance fee on the profits. Whether the market goes up, down, or sideways, the management fee is paid. In the long run, it's even worse.

The higher the management fee, the lesser you will have after 40 years. In reality, it's even worse - No hedge fund can guarantee a constant return of 8%. Turnover costs and taxes will further reduce your returns.

Suppose you invest $100k at age 25 with a hedge fund that makes an 8% profit every year. You are charged 1.5% on assets, and a 20% performance fee. When you retire at 60, you will have $764k. But your manager will have $1.24MM - at no initial investment!

On the other hand, with a low-cost ETF that returns just 6% with an expense ratio of 0.1%, you will make $933k after 40 years - $280k more than a 2&20 fund. A hedge fund will beat you in 17 years on average. But an ETF would take 1500+ years to do the same!

Warren Buffett always recommends buying into the S&P 500 over picking stocks. But in 2005, he raised the stakes with a $500k bet: "Nobody can select a set of at least 5 hedge funds that would match the S&P500 over ten years." Only one person took up the bet - Ted Seides.

Ted Seides picked 5 funds-of-funds, investing in over a 100 hedge funds. In 10 years, the 5 funds made 2.2% on average - before fees. 60% of those gains were diverted to managers. The S&P500 returned 7.1% - and won hands down.

Not all active funds underperform - But for the average investor, it's very hard to pick the right ones. In fact, Buffett believes so strongly in the S&P 500 that 90% of what he leaves for his wife will be invested in the S&P 500, not even Berkshire Hathaway!

If you're invested in a low-cost ETF, good for you. 

If not, maybe it's time to take another look at those fees.

You have two options to invest your money long-term: A hedge fund with an 8% return and an ETF with a 6% return. 

Choosing the right one can save you $280k more before retirement. 

​​​​​​​​​​​​​​​End-Week Wisdom:

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Why do Hedge Funds and PE don't make sense?

Growing up, we are often propelled to be optimistic at all times. A quote by Naval: "Pessimists might sound intelligent but it's optimists that really make it in life."
So what do we intend to mean by saying be optimistic? 
Being optimistic does not mean everything is fun, happy, and glowing at all times. It does not mean that once our current problems have subsided, there will be peace and calm at great lengths. 
Instead, optimism essentially implies that, when things turn black again, there shall be light again. 
The reason things tend to get better is that there are so many blunders, screw-ups, and disasters to learn from. You can’t separate one from the other. Evolution doesn’t teach by showing you what works, but by destroying what doesn’t.
That’s why the Great Depression unleashed a surge of productivity, and World War II produced a staggering number of technological breakthroughs, from nuclear energy to jets to penicillin. The biggest innovations don’t occur when everyone is happy and gainfully employed; they happen when there’s enough stress to push people into gear, forcing problem-solving. 
Nassim Taleb says, “The excess energy released from overreaction to setbacks is what innovates!”
It sounds callous, but one version of a pessimistic world is one where nothing breaks, no accidents occur, no mistakes are made, no mishaps happen, and every new endeavor is successful. As comfortable as it sounds, all motivation to improve would diminish – which is the opposite of optimism. There are 100 things to be pessimistic about, but remember, you only need to win once, to overcome all previous defeats.
​Cheers!

​​​​​​​​​​​​​​End-Week Wisdom:


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<div class="mirror-content">​Growing up, we are often propelled to be optimistic at all times. A quote by Naval: &quot;Pessimists might sound intelligent but it&#x27;s optimists that really make it in life.&quot;​So what do we intend to mean by saying be optimistic? ​Being optimistic does not mean everything is fun, happy, and glowing at all times. It does not mean that once our current problems have subsided, there will be peace and calm at great lengths. ​Instead, optimism essentially implies that, when things turn black again, there shall be light again. ​The reason things tend to get better is that there are so many blunders, screw-ups, and disasters to learn from. You can’t separate one from the other. Evolution doesn’t teach by showing you what works, but by destroying what doesn’t.​That’s why the Great Depression unleashed a surge of productivity, and World War II produced a staggering number of technological breakthroughs, from nuclear energy to jets to penicillin. The biggest innovations don’t occur when everyone is happy and gainfully employed; they happen when there’s enough stress to push people into gear, forcing problem-solving. ​Nassim Taleb says, “The excess energy released from overreaction to setbacks is what innovates!”​It sounds callous, but one version of a pessimistic world is one where nothing breaks, no accidents occur, no mistakes are made, no mishaps happen, and every new endeavor is successful. As comfortable as it sounds, all motivation to improve would diminish – which is the opposite of optimism. There are 100 things to be pessimistic about, but remember, you only need to win once, to overcome all previous defeats.​​Cheers!<hr/><h2>​​​​​​​​​​​​​​​End-Week Wisdom:</h2><blockquote>​​&quot;The world is driven by envy, not greed.&quot; - Charlie Munger</blockquote><hr/>​​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries:​​​​​​​​​​​​​​​​​​​​​Please drop us an email: <a href="mailto:advisoira@gmail.com" target="_blank" rel="nofollow noopener">advisoira@gmail.com</a><hr/>​​​​​​​​​​​​​​​​​​​​​Create your financial plan in less than 3000 Rupees: <a href="http://www.advisoira.com/" target="_blank" rel="nofollow noopener">Visit Website</a>​​​​​​​​​​​​​​​​​​​​​​You can also follow us here: <a href="https://twitter.com/partha0799" target="_blank" rel="nofollow noopener">Twitter</a>, <a href="https://www.linkedin.com/in/parthadeshpande/" target="_blank" rel="nofollow noopener">Linkedin</a>!</div>

Growing up, we are often propelled to be optimistic at all times. A quote by Naval: "Pessimists might sound intelligent but it's optimists that really make it in life."

Being optimistic does not mean everything is fun, happy, and glowing at all times. It does not mean that once our current problems have subsided, there will be peace and calm at great lengths. 

Instead, optimism essentially implies that, when things turn black again, there shall be light again. 

The reason things tend to get better is that there are so many blunders, screw-ups, and disasters to learn from. You can’t separate one from the other. Evolution doesn’t teach by showing you what works, but by destroying what doesn’t.

That’s why the Great Depression unleashed a surge of productivity, and World War II produced a staggering number of technological breakthroughs, from nuclear energy to jets to penicillin. The biggest innovations don’t occur when everyone is happy and gainfully employed; they happen when there’s enough stress to push people into gear, forcing problem-solving. 

Nassim Taleb says, “The excess energy released from overreaction to setbacks is what innovates!”

It sounds callous, but one version of a pessimistic world is one where nothing breaks, no accidents occur, no mistakes are made, no mishaps happen, and every new endeavor is successful. As comfortable as it sounds, all motivation to improve would diminish – which is the opposite of optimism. There are 100 things to be pessimistic about, but remember, you only need to win once, to overcome all previous defeats.

​​​​​​​​​​​​​​End-Week Wisdom:

​​​​​​​​​​​​​​​​​​​​​​If you want to know about something related to finance, or have any queries: