Below chart compares performance of SIPs in

  1. Fixed deposit
  2. Nifty ETFs
  3. Price to Earning (PE) based asset allocation strategy.

What does the strategy do?

The strategy decides whether to invest in Nifty ETFs or fixed deposits based on how expensive Nifty is. The decision is taken on a monthly basis. You invest in fixed deposit or equity at the end of the month. This strategy falls under Dynamic Asset Allocation in investing parlance.

The numbers in the chart are calculated using monthly savings of Rs 10,000 starting from 1999. The savings are adjusted for 6% inflation thereon. The strategy exits equities whenever Price to Earning level is very high compared to historical averages.

Current scenario (Jan’19)

Nifty trades at a PE level of 27+ and hence strategy signal is to stay in fixed deposits for now.



Indians have always invested in physical Gold and have been fascinated by it. Ever thought how the returns have been? We do a deep dive from 1980 onwards.

Assuming monthly SIP amount: 1000 (increased by 6% annually)
Current SIP amount (2018): 9819
Total investment outlay: 17.7 Lakhs
Current market value: 80L
Annual return (CAGR): 9.19%

(all numbers in INR)


Gold CAGR returns every 5 years

Periods Returns(%)
1980Sep-85 0.3
1986-90 8.7
1991-95 11.0
1996-00 1.2
2001-05 15.1
2006-10 22.7
2010-15 -4.7
2016-18 4.2
Average
StdDev
Min
Max
1y 5y 10y 1y 5y 10y 1y 5y 10y 1y 5y 10y
Gold 11% 10% 10% 14% 6% 4% -21% -4% 2% 64% 28% 21%
Nifty 16% 14% 13% 21% 6% 2% -52% -1% 6% 92% 44% 20%



Key points to note

Pre tax returns
After tax returns
Projected
10%-Bracket
20%-Bracket
30%-Bracket
Instruments 1y 5y 10y 1y 5y 10y 1y 5y 10y 1y 5y 10y
Cash 4% 4% 4% 4% 4% 4% 3% 3% 3% 3% 3% 3%
Fixed deposits 7% 7% 7% 6% 6% 6% 6% 6% 6% 5% 5% 5%
Liquid funds 7% 7% 7% 6% 7% 7% 6% 7% 7% 5% 7% 7%
PPF 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8%
Gold ETF 11% 12% 12% 10% 11% 11% 9% 11% 11% 8% 11% 11%
Equity Index ETF -10% 3% 9% -9% 3% 8% -9% 3% 8% -9% 3% 8%
Inflation 5% 5% 5%



Methodology