Dharam Lessons News Quick Selling Skills Stories Story Selling Timeless Uncategorized

Understand Most Important Concept of Debt Funds

  1. Understanding the most difficult formula of Debt Funds

Most are confused by the Debt Funds formula that “When interest rates rise debt funds NAV drops and when interest rates fall debt funds NAV rise”.

How this happens perplexes most.

As they say Ghee jab seedhi ungli se nahi nikalti toh use tedhi ungli se nikalni padti hai.

So let’s understand this debt fund NAV relationship through an analogy.

Let’s say two friends Ram & Shyam take up similar jobs. The only difference is Ram’s job has him to sign up a bond or agreement of serving for at least 2 years while Shyam’s has it for a mere 5 months.

Both like their jobs and they work diligently.

However,  2 months later an amazing opportunity arises by way of another “job offer” paying double the salary they are currently drawing.

Now what do you think will happen to sentiments of Ram and Shyam.

Remember Ram has a 2 years contract / bond and only 2 months have elapsed.

Shyam on the other hand has a 5 months bond / contract  which is just 3 months away.

If there was an NAV that represented Positive & Negative sentiments what do you think would happen to the NAV of Ram and NAV of Shyam.

Ram would be extremely upset as he is bonded to his job for another 22 months and has no option but to let go the greatest offer of his life. His NAV representing his sentiments would drop significantly.

Shyam on the other hand has just 3 months for his bond/contract/agreement to expire and he believes he will be able to to grab the greatest offer of his life. He would be a little anxious because of the 3 months that he would have to manage but because 3 months isn’t that long a period his Happiness NAV would not be adversely affected.

This is exactly what happens in debt funds having either long duration or short duration investment papers when interest rates rise.

Rising interest rate is an opportunity to migrate to a higher yielding paper.

The long duration fund does not have an escape route and hence its NAV falls while the short duration fund has an exit route round the corner. Hence it’s NAV is less impacted.

Therefore when one is expecting interest rates to go up, one must move from long duration Corporate Bond Funds and Banking and PSU Bond Funds to Low Duration Funds.

Hope this explanation once for all puts at rest every confusion that arises out of the blindly followed formula “If Interest Rates go up NAV comes down and If Interest Rates come down NAV goes up”

Meme News Stories

CFP – Training for IFAs on June 9th

[wpforms id=”22340″ title=”false” description=”false”]

Dharam Lessons Financial Plannig Feed Meme Mutual fund news feed News Stories Timeless

Happy Easter

Dharmendra Satapathy and the NextLevel-Education Team

wishes its friends every prosperity and contentment on occasion of Easter. Let us learn how to Invest correctly. Let us gather knowledge that enables us Invest fruitfully in our great nation’s Economy. Let us find financial knowledge, for only knowledge ensures growth and happiness. 

Early News Story Selling


Misunderstood Profession
At a student Q&A, Buffett was asked what surprises him the most.

He replied pointing to Bill Gates who was standing next to him:

“People look at Bill Gates and think they can’t do what he did. They look at me and think they can do what I did”

For some reason, everyone believes they can manage their money proficiently even though history has a completely different story which says that while “investment” returns have been spectacular, “investors” have returned empty handed or abysmally little to talk about.

Perhaps the art of money management is misunderstood as a science.

1) Money management is to do a lot with undefined patterns that is harnessed by years of experience.

2) Money management is about taking action but also largely also about inaction. Money management is a lot about doing nothing and letting “boredom” win the battle for “patience” to win the war

3) Money management is more a science of human psychology and behaviour managment than a science of statistics that people believe algorithms/robots can conquer.

It is an irony that one assumes that “reading the offer document” is all that is needed to become an investor.

If a document and a TV channel could make investors proficient then all one would need would be a similar document and TV channel to manufacture successful doctors.

The truth is that even a doctor becomes proficient, not by earning his or her degree but because of years of experience of seeing countless patients.

As regards “malpractices”, the perpetrators of the same should to be booked but then one also needs to understand that “exceptions” cannot be turned into the pen that writes the rules for the rest.

Early News

Growth of Financial Assets in India

If one looks at the growth of financial assets in India between the Financial year 2016 and 2017, the impact of demonetisation stands out starkly. Cash is one of the only asset classes that has seen as massive shrinking of assets.

At 39.72% growth, Mutual Funds are leading the pack. With Mutual Fund Sahi Hai campaign and education efforts this growth rate is only posed to reach higher scales

Fixed deposits are 9.04% seems to be slipping and rightly so.

Overall growth has been very healthy for equities and unlisted equities

Current account deposits and savings deposits too have seen healthy growth but with FD growth getting curtailed  it indicates high mobilisation potential into equities and mutual funds.

The message for  IFAs is clear.

The opportunity is on the table for the take.

However one will have to put in the requisite effort to move the assets.

Early News


During the Mutual Fund Distributor’s Summit 2017 held recently at the NISM campus near Mumbai, a panel was set up to discuss the role of investor education in business growth. The panelists were :-

  1. Shri Manish Mehta, National Head of Sales & Distribution Alliances, Kotak Mutual Fund
  2. Shri K S Rao, Vice President, Birla Sunlife Mutual Fund
  3. Shri Premal Pampaliya, Head-L&D, Reliance Mutual Fund
  4. Shri Gaurav Suri, Sr. EVP and Head-Marketing, UTI AMC
  5. Shri Akhil Chaturvedi, National Head-Sales, Motilal Oswal MF

The 5 key takeouts from the panel discussion were:-

  1. Investor Education is a very powerful tool for acquiring new customers and hence for genuine business growth and industry sustenance.
  2. Distributors need to invest in themselves by learning the skills needed to conduct investor education. Depending upon AMCs and Trainers alone would be grossly insufficient.
  3. There is huge business growth potential but unless we harness the power of education we won’t be able to realise this potential
  4. While the popular campaign “Mutual Fund Sahi Hai” will get people positively inclined towards “Mutual Funds” and is necessary but the campaign by itself isn’t sufficient. It needs the support of IFAs who have to act as the foot soldiers to reach out education to the people on the ground
  5. Investor education isn’t a sales presentation. Never expect immediate returns from investor education. Make investor education a way of life. Enjoy the process of educating people and rise in the eyes of those you educate. Over a period of time the education efforts would certainly bear fruit and a large percentage of people whom you educate would approach you for their investment needs.


Some questions answered

1) How can I apply for cancellation of GST Registration? Is there any alternative way?

As of now, government didn’t enabled the closure process. We will have to wait for the update.

2) Whether I should file the GST retuns until the cancellation of GST registration? Can I file “Nil” returns?

Yes, you will have to file your NIL returns until the cancellation.


India – Story

India has now become the world’s most expensive market based on price-to-earnings ratio.

The Sensex’s P/E ratio on a trailing basis is 24.53 times compared with 19.67 for the Dow Jones, 23.32 for the UK and 17.04 times for the Shanghai composite.

SIP flows are robust and more and more people are investing in mutual funds because other asset classes no longer hold much potential.

Interest rates are inching downwards, real estate is likely to correct further and liquidity continues to be a very big issue with real estate. Gold as an ornament is losing demand amongst the new generation and it’s long term potential does not look promising. Remember “cash” is on its way to become history.

New AMFI chief N S Venkatesh predicts that the industry will grow by 20% to 25% over the next 3 years.

In this kind of momentum we need to be prepared to grow our business by

1) Using technology (both back office software and transaction software)

2) Forming a private Ltd company if you don’t have one. This will help you in your succession planning. Secondly it will help in valuation of your business and so on.

3) Creating and registering the brand name. This will protect your business several years down the road when your business grows larger

4) Creating a network of sub-brokers. India is a large country of mass customers and reaching out is the most important task

5) Building your personal brand. Without a brand no business is sustainable.

6) Conducting good quality “Investor Awareness Programs” and learning the skills to do so. Education is at the heart of our business. Unless we empower the customer forget about earning his trust

7) Focussing on the customer from a long term perspective. Unless we have his or her interest as our priority, there’s no question of earning well from his or her business because an advisor only earns over the years.

7) Investing in your business. Don’t wait for someone’s help. Help yourself. Time is of essence. Don’t lose it. Think long term. Your business isn’t only about up-front and trail. It is very much about valuation. Create that valuation by utilising the time available smartly.

This is a once in a life time opportunity.

The next 15 years will be India’s growth phase like it was in the nineties in the US.

The question hence, one needs to ask is

1) “Am I prepared?


2) If not, then am I doing enough to prepare myself?

Wish you the best of luck.



Sukanya Samriddhi Yojna

 ‘Sukanya Samriddhi Yojana’ (Girl Child Prosperity Scheme)

Sukanya Samriddhi Yojana (SSY) is a small deposit scheme for the girl child launched as a part of the ‘Beti Bachao Beti Padhao’ campaign and Launched on 22nd January 2015.

It is currently (2017-18) fetching an interest rate of 8.3 per cent and provides income-tax benefit.

A Sukanya Samriddhi Account can be opened any time after the birth of a girl till she turns 10, with a minimum deposit of Rs 1,000. A maximum of Rs 1.5 lakh can be deposited during the ongoing financial year.

A Sukanya Samriddhi Account can be opened in any authorised Post Office branch or authorised branches of commercial banks. Generally, all banks that provide the facility to open a Public Provident Fund (PPF) account offer one for Sukanya Samriddhi Yojana (SSY) too.

The account will remain operative for 21 years from the date of its opening or till the marriage of the girl after she turns 18.

To meet the requirement of her higher education expenses, partial withdrawal of 50 per cent of the balance is allowed after she turns 18.

Meme News