Tuesday, 16 September 2014

Lightbringer saga by Brent Weeks

A friend brought my attention to this amazing series, Lightbringer, by Brent Weeks. It was originally intended to be a trilogy, but that didn't quite work out. So it's now a 4-book series. It is a fantasy-fiction novel with loads of strategy, action, magic, comedy and drama packed in. The series contains the following books:

  1. The Black Prism
  2. The Blinding Knife
  3. The Broken Eye
  4. The Blood Mirror

The Broken Eye was recently released, in August 2014, which leaves us with only the series finale book unpublished. Judging by the frequency with which the 3 books were launched, I suspect it will be a 2-year wait before the final book is out.

The Lightbringer series is quite well written with an appropriate mix of sarcasm, comedy, and strategy, slightly short on action and a tad extra bit of drama and magical history. The number of characters introduced in just right, no extra characters which suddenly drop off later in the book and no unnecessary introductions that seem to waste your reading time. Suffice to say, you won't stop unless you are done with all the books. Thinking it to be a trilogy, I read through the books at breakneck speeds, only to find that Brent Weeks will be launching another book to complete the story. Pretty harsh considering I have to wait 2 years to finish this series.
The humor is amazing - witty, wry, sarcastic, that is bound to make you laugh out while reading the books. The action is intense when it occurs, but I feel this is slightly rare for the sort of book it is. It's possible that we'll see quite a bit of it in the final book(fingers crossed). Brent's description of action scenarios are amazing and it's just a little disappointing to find so few of those in the 3 books. At times, I felt that he discussed details about the historical and theological aspects associated with the fantasy world, and although it's not bad, but it didn't align with the environment created in the book - he could have discussed some other aspects in my opinion. There are bits and pieces of drama packed in too and it is just in the right amount at the right stages of the book. This was deftly handled by him.

In the fantasy world created by Brent Weeks, some people, called drafters, can use light to perform magic (creating and using material called luxin). Since light has different spectral components, different types of luxin can be created and hence different sorts of magic pertaining to these colors. It is believed that this ability is provided by a God, called Orholam. From here on out, there are similarities with any other religion or its consequences. For example, since there can be different interpretations of a God's will, there will be multiple factions with varying faiths, which causes wars. You will find equivalents of Prophets, Seers, Popes etc. in the book too, except there's magic involved :). I'd say it's a great series to read and you'll find your time to be well spent.

I'll provide a book by description below. If you haven't read any of the books, you might want to avoid the section below. If you are returning to a book from the series after a long hiatus, you might want to take a look to jog your memory so you can proceed with the series. Needless to say, there will be SPOILERS below.

The Black Prism
The first book follows the story of Kip, the bastard son of the Prism Gavin Guile. His town is attacked by the King of his province, Garadul and he manages to escape, in the process discovering that he is a drafter. He is later found by the Prism Gavin(who is in fact Dazen Guile - the real Gavin Guile is held prisoner by Dazen in a cell under his apartment) and Karris White Oak, a member of the Blackguard, who take him to Chromeria. Here, he begins learning drafting under Liv(Aliviana Danavis). The attack on Kip's town signals an oncoming war and the Prism attempts to direct the Spectrum to head out to war before the enemy grows strong, but this plan fails. So, the Prism, along with Kip, Ironfist(Blackguard Commander) and Liv head out to defend the first city expected to be besieged by King Garadul. The Prism enlists the help of his friend from the False Prisms' war, General Corvan Danavis, to protect the city. With the help of other drafters, the Prism builds a wall made entirely out of luxin, around the city, but King Garadul and his army manage to breach the wall. When Kip learns that Karris is hostage to King Garadul, he heads out to infiltrate their camp and rescue her, in order to repay his father Gavin for his kindness. He is helped by Liv in this attempt. Although his attempt at infiltration fails, he is aided by Ironfist later to make his escape with Karris, however Liv gets caught and is held by the Color Prince(Koios White Oak, who was thought to be killed in a fire, at the hands of Dazen). The battle between King Garadul/Color Prince and the Prism continues at Garriston, leading to Garadul's death at the hands of Kip. However, the Prism loses due to the overwhelming power of the Color Prince and his drafters and they escape by sea, with an entire city's residents in tow. During this escape attempt, the Prism gets stabbed(by the Blinding Knife) for a brief moment by Zymun in the back and then Kip throws Zymun overboard. The book ends with Gavin breaking out of the blue prison and ending inside the green one, while Dazen loses the ability to draft blue. Karris figures out that Gavin is, in fact, Dazen.

The Blinding Knife
The Prism sends Kip with Ironfist to Chromeria to become a Blackguard, while he heads out to Seers Island to create an establishment for the refugees from Garriston. He speaks with the Seer on the island and heads out to search and destroy the blue bane(drafters/wights with great power over that color in a huge area around them). Meantime, Kip is in Chromeria, attending Blackguard classes and training. However, Gavin's father, Andross Guile(Red member of Spectrum) is judging Kip's potential and playing Nine Kings with him with stakes. Since Kip doesn't know the game, he ends up losing most of the times(in spite of studying the game in the library) until he meets a Mirror, Janus Borig, who teaches him about the game and the cards, their origins etc. Kip finds that the original cards made by the mirrors have memories and are powerful artifacts. Gavin returns, but has lost the green color(prisoner Gavin escapes green prison and ends up in yellow), and rallies the Spectrum for war. He kills his brother in the yellow prison and marries Karris. The green bane is forming at the next battle point, near Ru. The Color Prince captures Ru and sheds green light on the green bane. This strongly empowers them. The Prism and Ironfist form two groups, one to defeat the bane and other to capture the Ru fortress. The Prism, Karris and Kip attack the bane and manage to defeat it with Ironfist's team attacking it with cannon shells. Kip's use of the Blinding Knife removes the drafting ability of the wights and bane and thus helps them defeat it. When the teams return back to their ships, Kip realizes that Andross Guile is a wight and attacks him with the Knife during an argument between Andross and Gavin. He briefly stabs him, when a tussle starts between Andross, Kip, Gavin and Grinwoody, leading to Gavin getting stabbed with the Knife and falling overboard into the sea. Kip jumps in to rescue Gavin but they both get captured by Gunner. Gunner grabs the Knife(which looks like a musket-sword) and throws Kip overboard, only to be captured by Zymun(Kip's half-brother, Karris' son). Andross is no longer a wight but Gavin is totally color-blind.

The Broken Eye
Gavin is a slave on Gunner's ship and his job is to man the oars. After a long span of time on the oars, he is rescued by Antonius Malargos and taken to Eirene Malargos. He is held captive there and tortured by Eirene and the Nuqaba. The Knife is held by one of the oarmates who was freed during the rescue. Meantime, Kip escapes from Zymun and finds his way back to Chromeria, where he makes peace with Andross. White employs Karris to be her spy and relinquishes her of Blackguard title/duties. Kip trades information on Zymun with Andross in exchange for sending scouts out to look for Gavin and access to restricted libraries. A great deal of the book now focuses on Kip reading in the library with his squad(about Lightbringer, history, theology etc.), personal training with Karris and training in the Prism's practice room. The Order of the Broken Eye recruits Teia as a spy due to her paryl drafting abilities. She speaks to the White and becomes a double agent. The book deals with her exploits with the Order. During this time, Andross used Murder Sharp to cement his place at the Spectrum and becomes promachos. He also tries to get the Spectrum under his control, through murders, bribes etc. Marissia learns that Gavin is held prisoner by Eirene Malargos and heads out with Ironfist and few other Blackguards to rescue him. While Gavin is being blinded by the Nuqaba, Karris rescues him in a dramatic fashion but he has already lost one eye to a hot iron poker. Once they return to Chromeria, Karris heads back to the Spectrum meeting to find that White is dead, Zymun is Prism-elect and she participates in the ceremony to become the next White. Meantime, Zymun sets the Lightguard against Kip and his squad, who manage to escape with Tremblefist's help(who succumbs grievous injuries). Andross has a deal with Kip which requires him to marry Tisis Malargos and be his spy in their care, for which he will bring him back to Chromeria at a later time. Andross finds that the real Gavin was killed by Dazen and the Prism thus far has been Dazen. He captures Dazen and puts him in the blue color prison made by him. Grinwoody is found to be the head of the Order of the Black Eye and is acting as spy in Andross' household. Ironfist is a spy to Grinwoody and he reports that he believes Kip is the real Lightbringer.

Sunday, 14 September 2014

Portfolio Analysis - September 2014

Well folks, it's now time for the September Portfolio Analysis. For those of you who may have missed the other Portfolio Analysis posts, these are the April and July posts.

So, let's get our hands dirty with numbers immediately.

Figure 1: Portfolio Asset Allocation

  • The PFs continue to decline as I am unable to add funds to this asset. This should get resolved around December as I pump funds into my PPF account for Tax Savings.
  • Nothing noteworthy to comment on the RE asset as this will continue to increase at a pre-defined rate, based on the Amortization of the House Loan.
  • The equity markets have been acting strangely these last couple of months. Subsequent to the last post, the markets underwent a substantial correction and have just rebounded back to reach a new all-time high. I haven't been able to make noteworthy contribution of funds here either, since I had some high value expenses recently, in the form of books, travel expenses and life insurance premium payment.
  • Savings continue to remain at a desirable level, I expect I currently have 4 months of expenses covered.
  • Not much of a change with deposits either, this just contains one RD which adds a minuscule amount automatically every month. I call it my "Rainy Day" account. :D
  • Analysis - The portfolio allocations are looking good, on target in my opinion. The risk-reward ratio matches investor preferences and suitability criteria too. Although, it would be a good idea to reduce the Risk Free component and allocate those funds, mostly to Low Risk and partially to High Risk components. That would really balance the asset allocations out and make it an ideal portfolio. However, currently the Low Risk component aren't presenting a substantial returns advantage over the Risk Free component, and hence it will be a while before this change can be achieved.

Figure 2: Equity Portfolio

We have had a few roller-coaster months in the markets, mostly due to the global pandemonium due to the crises in Iraq and Ukraine, as well as some hiccups due to European economy. Looks like things are settling down again, at least as far as the markets are concerned. The domestic markets made a recovery over the last couple of months and hopefully the trend will continue.

  • Waiting on FSL and ZEELEARN to shoot up. Both the stocks are in the Technology sector and are generally driven by good quarterly results. ZEELEARN gave me a scare when it dropped 20% from my initial buy price, but I averaged it out gradually and it has recovered substantially following the last AGM.
  • GABRIEL has done phenomenally well, it is currently fetching me 100% returns. The auto sector stocks zoomed up recently and this one benefited from the euphoria. It is an auto ancillaries stock. Although, seeing such a fantastic response in this sector makes me wonder why I skipped on picking TVS Motors when I had the chance :(
  • GAYAPROJ is not a stock for the faint of heart. It dove to unnatural levels and has now returned back to my purchase price. Although I'm confident about the stock over the long term, I am considering reducing exposure to the stock. I will have to give some serious thought to this though. Just so you know, it was down 30% from my buy price and has since recovered. I know you are thinking why I was holding on to the stock and waiting for it to drop by 30%, but it's very hard to maintain stop-loss levels on this stock as it highly volatile. Besides, it has tremendous potential for growth.
  • ITC is a defensive, I am not really bothered whether it moves much or not. It's meant to provide stability to my portfolio. Same goes with SUNPHARMA, however that recently spiked up due to great results and is now nearly 40% up from its purchase price. Feels great to see a defensive stock contribute so much to your portfolio :)
  • L&T, RELIANCE and SBIN are all growth stocks, large-caps, meant to be held for long term again. They are primarily result driven and have been performing well. There is a lot of potential for L&T if the construction and manufacturing sectors in India pick up under the new Government. RELIANCE is a slightly longer term pay-off as it is expected to reap rewards 2 years from now, when it starts receiving returns on the investments it has made over the last few years.
  • Analysis - Well, the portfolio continues to outperform the NIFTY index, although the performance was hampered this time around by GAYAPROJ. The risk allocations look good too, I don't think I'd want to change anything there.

Sunday, 20 July 2014

Portfolio Analysis - July 2014

I started the Portfolio Analysis series with the April post. Looks like I can find time for quarterly reports in this series. I was trying for a report every two months, but just couldn't make that happen in June. Let's see how I can take this going forward.
For now, let's analyse the Portfolio status in July, how close I am to meeting the targets, what kind of changes need to be done etc.

Before I continue, I would like to point out that compared to the April post, there is a slight change in approaching the Current Value for Real Estate Holdings (RE), namely Property Investments. Instead of basing it on cost value, it will henceforth be based on the principal value of the loan paid back to the lender (note that it's just the principal component, not the interest component). I have adjusted the April portfolio as well in this regard.

Figure 1: Portfolio Asset allocation 

  • There is a marginal drop in the PFs section and will continue to be so for a few more months since I don't plan on investing here until the end of year, for tax purposes. Although there are monthly EPF contributions, their value isn't enough to keep up with the investments in other investment vehicles.
  • To prevent skewing of the portfolio towards Real Estate, here on out, RE Investments will be considered as per the contribution towards the Principal Component of the loan. If you have any queries here, I will be writing a post soon on home loan payment system. If you feel this approach is incorrect, please leave a comment below :)
  • As I had mentioned, at this stage of life, I can afford High Risk investments and should in fact prefer it. This is reflected in the Equity component as well. The fact that the equity markets are expected to be bullish on a medium-long term basis, this strategy should fit well. However, I do feel that the current allocation of 40% to equity is sufficient, maybe I'll keep it between 40-50% so I have some margin to work with.
  • My savings earlier were meagre at best, meeting only 1 month's expenses. As mentioned in my post on being financially sexy, it is essential to have funds available for 3-6 month's expenses, to account for any unforeseen circumstances. As of today, I am close to having 3 month's expenses covered in my Savings account, maybe a quarter or two more to cover for 6 month's expenses.
  • One of my deposits matured in the first week of June and I used those funds for the Savings and Equity allocations. The interest rates for deposits are too low to consider this as a good investment asset. I, however, prefer to use this as an emergency fund, in case my Savings account falls short. Besides, it prevents me from making unnecessary expenditures (resist that temptation to buy something when find your bank balance so high!).
  • There is a net change of +15.66% in the total asset value of my portfolio. This is not indicative of growth since there is a continuous influx of funds, but doesn't hurt to know.
  • Analysis - I think, from risk perspective, the portfolio is in a favourable position. I would have preferred the Low Risk allocation to be about the same as the Risk Free allocation, but I don't think that'll happen. Firstly, the returns on deposits (low risk) are only marginally higher than those on PFs (about 1% difference). Secondly, the added benefits of investing in PFs far outweigh the investment in short-term deposits for the incremental 1% returns. The PF benefits will be covered in other post (work in progress) as well.

Figure 2: Equity Portfolio

The above investments are in the Indian Equity Market, NSE. Since my last post, the Government has changed and the Union Budget for the country was announced recently, hence my portfolio underwent several changes to make the most of these opportunities.
Primary focus of the budget was education, rural development and infrastructure growth (as far as I remember). So, the changes in my portfolio are meant to target these opportunities for optimizing the portfolio growth and value. To do this, I have added a few midcap stocks for increasing growth prospects and increased allocation in a largecap stock for maintaining portfolio stability while still targeting the budget opportunity.

  • ENGINEERSIN, FSL, GABRIEL, GAYAPROJ, ZEELEARN are all budget picks for medium to long term. ENGINEERSIN will probably be removed soon, to increase allocation in other stocks. It's currently sitting at a 10% profit, I intend to wait for another 10-15% increase before exiting that counter.
  • HCLTECH was removed since I hold FSL (same industry, IT) and it was proving to be a better buy. The sale proceeds would be of better use in sectors benefiting from the budget.
  • There is a substantial increase in L&T - this is the largecap I was referring to that would benefit hugely from the budget.
  • Marginal decrease in ITC (tobacco industry) due to budget risks and SUNPHARMA, but the long term growth is still intact. Besides, they provide much needed stability to an otherwise volatile portfolio.
  • RELIANCE is a fresh buy and it is a very long term pick. The company has been making investments for the past 2 years and returns on these investments are expected a year or two from now. As we all know, stock prices react to future events in advance and I don't want to miss that ride :). Besides, this is a great stock to have in a portfolio, diversified company in some ways but primarily based in the Oil and Refineries industry. I intend to increase allocation here over time, buy on dips sort of strategy.
  • I did add quite a lot of funds to make sure I didn't miss the bull run. Hence the high value for Newly Added Funds.
  • Analysis - Portfolio Value change in 3 months is about 47%, which includes the 15% funds added. So, were we to discount that, there is an increase of almost 30% in the portfolio value in one quarter. During this time, the index (NIFTY) rose by 12%. I would say that the portfolio has done quite well in this regard. The risk is paying off :)
  • Risk and Growth stocks are almost evenly allocated at around 40% with Defensives at 20%. Just from the portfolio perspective, this may look very risky, but if you take the entire portfolio into consideration (non-equity investments as well), this doesn't seem so bad. The role of the equity portfolio here is to provide as high a return as possible, so this would entail higher risks. This is possible because of high asset allocation for Risk Free investments (47%).

Well, the portfolio seems to be doing well, and gradually I am getting closer to the target portfolio. I reiterate, it helps to chart down your portfolio holdings in order to create an optimal portfolio.

Tuesday, 22 April 2014

Legal Novels you must read

Over a decade ago, I read an amazing legal novel, dealing with murder, mystery and court case. It was a huge book and I had a flight to catch at dawn, but I just couldn't bring myself to put down that book. I sat through the day, finished the book at 0300 and dressed up to catch that taxi!
Since then, I have managed to read only a handful of legal novels that I really enjoyed.
  1. The Thirteenth Juror by John Lescroart
  2. The Firm by John Grisham
  3. The Client by John Grisham
  4. The Runaway Jury by John Grisham
The Thirteenth Juror
This is one of the Dismas Hardy books and the first novel I read belonging to this genre. Unlike most legal novels, this one provides greater coverage of the courtroom drama that is required in such novels. This is what distinguishes a legal novel from other fiction novels, and I feel, authors should try to take advantage of this. As far as this book goes, we have the protagonist Dismas Hardy defending multiple homicide charges against a wife. The prosecution claims that she has murdered her husband and her 8-year old son. This book is loaded on twists, suspense, sentiment and legal drama. When reading such books, one is usually able to root for the innocent or determine the innocent/guilty too - that is certainly not possible in this book. The reader's dilemma in this book extends right to the end and that is truly exhilarating.

The Firm
Strictly speaking, this wouldn't classify as a legal novel(most Grisham books don't, I feel), but it just has to do with a bunch of lawyers in a legal firm. This is more of a thriller/suspense and action kind of book, with some really strange happenings at the firm. A college graduate, Mitch, has offers from the top firms in New York, Chicago etc. but decides to join a small tax firm in Memphis (offers loads of cash/perks). The accidental deaths of multiple lawyers working at the firm has him unsettled and this is where things begin to heat up. Suffice to say, once you have reached this stage, you definitely won't put down the book. There is a great deal of lying, deceit, planning, killing, running etc in this book. It does seem a bit far-fetched when you are done with it, but it's entertaining nonetheless. This is a good one-time read book.

The Client
This book is about a kid who witnesses a suicide and gets caught up in a whole jungle of affairs regarding the dead man's problems. If you've heard the idiom "dead men tell no tales", it certainly does not apply here. With the kid's life at risk, and multiple parties(good and bad) wanting to talk to him about the dead man, he hires himself a lawyer with $1 (what a nice lawyer!). From here on out, it's a wonderful read. That kid is smart, very very smart. With a keen understanding of life and the people around him, the decisions he makes are simply astonishing. This is truly a remarkable read, with a little bit of legal stuff thrown in from time to time.

The Runaway Jury
Grisham aptly explains the manner in which lawyers(their advisers really) obtain information on the jury candidates, to filter them out and pick the perfect jury for their case. The book starts off with a major case for which the jury is picked and this process is covered in sufficient detail. What makes this book worthwhile - in spite of all that research into the jury candidates, among the jury members picked, there is one person who has hidden motives to swing the verdict in a particular direction. Once the lawyers get a whiff of this intent, book explodes with entertainment. This is definitely a worthwhile read. Although it's a little slow to build up and progress, the satisfaction you obtain when the secrets unfold is immense.

FYI, for all the Grisham books listed above, a movie has been released.
As for the books in this genre currently on my reading list, I don't plan on reading any more Grisham. His books don't truly qualify for the legal novel genre(they are excellent thrillers nonetheless) I enjoyed in The 13th Juror. I'll look forward to reading "To Kill a Mockingbird, by Harper Lee"(highest rated novel in this genre) and the other Dismas Hardy books by John Lescroart next.

Sunday, 13 April 2014

Portfolio Analysis - April 2014

It is extremely important to have the ideal portfolio, one that matches the risk-reward ratio appropriately. This matching would be dependent on your age, your ability and preference to bear risks, risk or reward probabilities for other investments etc.
One's portfolio should have a proper balance between risk-free investments, low-risk/low-return and high-risk/high-return investments. This balance will naturally change over time. As one ages and approaches the retirement age, the portfolio will move from high-risk towards low-risk.

In this regard, I intend to periodically(most likely on a quarterly basis) record my portfolio standing. This will help me out in several ways:

  1. Identify the risk-reward balance for the portfolio at a given point in time and modify it accordingly.
  2. Identify the portion of savings allocated to the different investment types and correct that allocation over time.
  3. Monitor the growth of the investments over time and restructure if needed.

Figure 1: Asset allocation including Real Estate(RE) investment through loan

I purchased a flat at a very early stage of life(I'm nearly 24 years old) and this has skewed my portfolio heavily towards that investment. I have provided an asset allocation excluding the RE investment as well, but that's below. Let's take a look at this one first.
  • The High Risk investment comprises of the Equity and Receivables(money lent to others) components.
  • The Low Risk investment comprises of the balance in the Savings bank account as well as the Deposits(a few Recurring Deposits(RDs)).
  • The Risk Free investment comprises of the RE and PF(PPF and EPF contributions) components.
  • Change is currently recorded as 0. This value will get updated when the next period's analysis is done.
  • Analysis - As is obvious, considering the age factor and the ability to bear risk, the High Risk component is much lower than it should be. I feel that it should at least have 60% allocation of total investments. The remaining 40% can be divided between Low Risk and Risk Free investments. That said, I don't think that may be possible(certainly not in the near future) due to the heavy contribution from RE.

Figure 2: Asset allocation excluding Real Estate(RE) investment

Now, let's take a look at the asset allocation if we exclude the RE investment.

  • Analysis - The Low Risk and Risk Free components together account for about 65% of the total portfolio assets. This kind of a distribution is suitable for someone around the age of 50! In spite of removing RE from the calculation, the charts show that the portfolio is not designed as it should be.
  • The low allocation in High Risk is not because I can't handle the risk, it's because the portfolio is not designed correctly. It requires restructuring to amplify potential returns(at the cost of increased risk, which I can bear).
  • Since Equity is the only High Risk favourable investment(hate the idea of Receivables increasing) and the PF contribution is already quite high, every opportunity I get to deploy surplus funds should be two purposes - Savings(to meet Emergency Fund requirements, more on that here) and Equity(increasing potential returns). Another challenge is that, every month, a fixed amount from my income is earmarked for PF(EPF) by the company, so I'd have to trump that amount to alter the current portfolio allocation - no easy task considering the EMI I pay for the RE.

Figure 3: Equity Portfolio

Since Equity investment is a critical component of my future investments aimed towards obtaining a well-structured portfolio, I felt it would be a good idea to monitor the Equity Portfolio as well and tailor it to meet my requirements.

  • The Defensives include SUNPHARMA and ITC.
  • Risky bets includes FSL and GAYAPROJ.
  • Growth includes HCLTECH, L&T and SBIN.
  • NIFTY is the EOD index value (for Nifty) against which we will compare the portfolio. We will also record the equity net worth change over time.
  • Newly Added funds refers to the funds added between the two periods that we compare the portfolio. Deployable funds refers to the funds that is earmarked for equity investment but is currently held in cash with the brokerage firm.
  • Analysis - As I see it, Defensives allocation is quite high. Any funds that need to be deployed ahead should be put in Growth or Risky bets. I feel that not more than 20% of the portfolio should be held in Risky bets(I've often had ill luck with these). Besides if the Growth stocks net substantial returns, then there won't be a need to over-expose the portfolio to the Risky bets.
  • Strictly speaking, I am a long-term investor and seldom do I attempt short-term trades to book quick profits. So I anticipate we'll see low returns in the near future, but over a period of time, the returns should be decent enough(if fortune favours me). However, that is for the future, let's just see how things move from here.
  • I don't like to hold portfolios with a lot of stocks since they don't really help with risk reduction through diversification beyond a certain point. I am not saying I know what that magic number is, but I tend to draw the line at 6 to 8 stocks, considering that the absolute amounts I am investing are not very high. Guess I'll just have to learn with time and find this magic number out myself.

Well, it is obvious that this portfolio needs a lot of work! Until I started this exercise, I never imagined that my portfolio would be so biased towards Low-Risk investments. I probably knew it, but just didn't want to accept it. Charting the portfolio and writing this down definitely helped. I suggest everyone should maintain a track record of their investments to ensure that the portfolio is structured the way it is meant to be(or required to be) structured.

Do let me know your thoughts and suggestions.

Are you Financially Sexy?

I came across this post which spoke about being "Financially Sexy" and immediately liked it. Thought I'd share the gist with you guys, while adding my opinions to it.

It's not that someone who earns a lot or has a lot of luxuries at his disposal is financially sexy, as the myth is, because we all know the numerous rich people who have applied for bankruptcy, or gambled away their riches. So what is financial sexiness and how do you achieve it? Well, there are certain criteria that you have to meet in order to become financially sexy.

  • High Credit Score
It is vital that you have a very high credit score, preferably more than 85% of the maximum score. If the score is calculated up to a scale of 1000, your score should be above 850. With a high score, not only is it easier to get a loan, but you get them at lower interest rates too.
I haven't run my score yet, gotta put it on the agenda and get it done as well.
  • Savings >= 15% of  Gross Income
This is a critical measure that very few people realise. The general tendency is to consume during the month and the leftovers are the savings. I prefer to set aside 15% of the income at the start of the month and the remaining can be made available for consumption. If there are leftover funds at the end of the month, they can be added to the savings as well. This is especially essential since the American consumerism has spread all over the world and credit cards have became a necessity for some, rather than a convenience. The next measure highlights this as well.
I generally save about 15% of my income every month, unless some unexpected large expenses come by. But I'd like to save some more, and increase my investment pool now.
  • Credit card utilization at 35%
People tend to utilize the entire credit limit that is available to them, which is a risky proposition and would be avoided by a financially sexy person. One should try to utilize not more than 50% of the credit card limit, and a financially sexy person would limit this to 35%. This not only reduces the risk on the credit, but also boosts the credit score.
Fortunately, I don't have a credit card. But I don't see myself exceeding the 35% threshold even if I do get one in the future.
  • Healthy Emergency Fund
I strongly suggest that one should have at least 3 months of living expenses worth of liquid funds stashed aside for emergencies. I am aiming at 6 months of living expenses to cover me, because you never know how the tables might turn on your fortune. The simplest example that comes to mind is the recession of 2008.
I did have a good fund until a few months back which unfortunately got used up to meet some investment needs. That was wrong on my part and I am already working on getting that fixed. I have about a month's worth of savings in emergency funds, which I'll increase to six months at the earliest and hold it there.
  • Debt to income of 35% or less
This ratio represents the amount of debt you owe to the amount of income you earn on a monthly basis. The 35% figure is sufficient to give you some flexibility with your future choices, should you opt for anything different. But a lower ratio would certainly be preferable. The lower ratio also provides the added benefit of obtaining additional loans with comparable ease.
I do have a pretty high debt, about 50% of my income, in the form of home loans. Over a year or two, hopefully, I will be able to bring it down to 35%.
  • Portfolio with appropriate risk-reward relationship
This is a pretty debatable topic because it depends on individual financial conditions. What I am trying to put across here is that you should not only be comfortable with your portfolio allocation, but should also be right about it. For example, a person aged 60 should not have a greater chunk of his portfolio in high risk investments - on account of his retirement, he should preferably have a steady source of income from pension accounts, or rental incomes or any other source of steady income that is not susceptible to drastic losses unexpectedly. More on portfolio allocation in a future post.

So, what do you think? Are you financially sexy or will you have to make some changes to fix up your financial situation? Do you think there are any additional criteria that should be considered here?

Friday, 4 April 2014

The Three Musketeers trilogy

Now who could possibly not have heard of or read "The Three Musketeers" by Alexandre Dumas! Reading this book in the school library was one of my favourite activities. So I decided to read it up once again, and to my surprise, found that it had sequels. I was compelled to write this blog after having read those sequels. In a word, they are brilliant!
The trilogy for the series is as follows:

  1. The Three Musketeers
  2. Twenty Years After
  3. The Vicomte of Bragelonne: Ten Years Later
The Three Musketeers
This book introduces us to the three famous musketeers, Athos, Porthos and Aramis. It is written from the perspective of the protagonist, D'Artagnan, who is aspiring to be a musketeer. I don't want to share any more than this since the description of the characters is really fun to read.
This book is loaded with friendship, adventure, chivalry, honour, action and timely shouts of "all for one, one for all". Rest assured, you'll be immersed in this book until you put it down.

Twenty Years After
This is a sequel to The Three Musketeers and follows the story of the musketeers 20 years after the events of the first book. This book doesn't live up to Dumas' work standards but it does well for a sequel. It acts as a good bridge between The Three Musketeers and The Vicomte of Bragelonne.

The Vicomte of Bragelonne
This is a truly a masterpiece. It is the largest book of the three, probably thrice as big as The Three Musketeers and thrice as enriching, at the very least. Dumas maintained an unusual writing style in this book, which he hadn't explored in either of the prequels, thus making it an exciting read. A good deal of the book has exploits driven by romantic needs and loyalty, and at times, a conflict between the two. We see politics, diplomacy, treachery and deceit at its fullest. This book truly is one of a kind.

It's a daunting task to read all those books at a stretch. I was tired by the time I was done with the third book. I suggest taking a break and reading some other book after completing a section or two of the final book. But, by no means, is this a trilogy that can be missed out on.