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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Weekend Jottings

Posted by Muthu on January 9, 2011

Last year it was moving away from home office and setting up a separate office. 

Now we would be moving away from MS-Office, finalising and investing in our back office software before end of this month.

Once we import our database to the software everyday from the respective RTAs (Registrar and Transfer Agents) servers, we should have all the required clients and internal MIS at one point.

Having back office software would significantly increase our bandwidth to handle the growth in profession.

We’re continuing to invest in profession in terms of time (continuous learning) and money.

The nature of financial planning and investment advisory profession is going through a very tough time and more than 80% of the individual advisors have quit the profession in the last 2 years.

Why someone should be interested in building or managing other’s wealth if there is no adequate financial incentive for him or her?

I can only hope market recognise the need for good and honest advisors and reward them suitably.

Otherwise crooks like the wealth manager involved in the recent Citi bank fraud case only would thrive. They directly appeal to the two strong negative emotions, greed and fear of the investors.

Recently saw Kamal’s movie ‘Manmadhan Ambu’. As one of my fellow practitioner who also saw the movie pointed out, as long as Kamal was genuine and advising the truth, his client (Madhavan) would not see any value and would not reward him. The moment he builds a story and make things look very complex, he would be amply rewarded.

If you reward honesty and competence, you would be helping yourself. As Kamal has penned the dialogue for the above movie, he would mention ‘Honesty is the ultimate luxury’.

On a lighter note, he has also penned ‘Alimony is better than matrimony’.

It was indeed moving to see him forgive a girl who was inadvertently responsible for the death of his wife.

It is an average movie. People who like Kamal may see it once.

Media houses have their own preferences and biases. I’m talking about Gujarat. From whatever data and information I could dig out, Gujarat looks like the best performing state in the entire country. I do not know how many outside Gujarat are aware of it.

I think the media has totally blacked out the positive side of Gujarat post 2002.

2002 is big black mark on Gujarat and the entire country. No doubt that who are all involved in the incidents, irrespective of religion, should be brought to justice.

What I’m unable to understand is why media completely ignore lot of good things which has happened in the state post 2002 and only keep highlighting the negatives.

I only hope that people  of all religions get the benefit of growth in Gujarat and some are not pushed on the sidelines on the basis of communal colour. May be media can dig into this and get us the true and fair picture.

Anthony de Mello mentions that people who kill for ideas are most dangerous than people who kill for money or power.

He is absolutely right.

Did you notice the glorious smile on the face of the assassin of Pakistan’s Punjab Governor?

For humanity, beliefs are becoming more important than anything else and we do not mind sacrificing other human beings in the name of the same.

I suggest you a book. It was written by a political scientist by name Samuel P.Huntington in mid 1990’s. The name of the book is ‘The clash of civilizations and the remaking of the world order’. Amazing insights.

We have already started seeing the happenings of what he wrote then.

Which are the civilizations that would survive and which may become extinct?

Only God knows.

I made an error in calculating a mutual fund’s return in my last article.

The same has now been corrected and updated in our portal.

Some who read the last article could not believe Rs.10,000 invested in Wipro in 1980 becoming Rs.465 crores now.

You should not simply multiply 1980 price and today’s price for one share. Unlike real estate, a financial asset like shares keeps multiplying both in numbers and in value.

Real estate only multiplies in value.

Here is the break up details.

Suppose you invested in Wipro Rs.10,000- 100 shares each @ Rs.100 in 1980

1981 – 1:1 Bonus =200 shares

1985 – 1:1 Bonus =400 shares

1986 stock split to  Rs.10 face value =4000 shares

1987- 1 :1 Bonus =8000 shares

1989-  1:1 Bonus =16000 shares

1992 – 1:1 Bonus =32000 shares

1995 – 1:1 Bonus =64000 shares

1997 – 2:1 Bonus =1,92,000 shares

1999 stock split to Rs. 2 face value =9,60,000 shares

2004 – 2:1 Bonus =28,80,000 shares

2005- 1:1 Bonus =57,60,000 shares

2010 – 3:2 Bonus =96,00,000 shares

Value of one Wipro share on last Friday is Rs.477.

So your investment is worth around Rs.458 crores today. The difference of Rs.7 crores in value from my previous article is due to severe fall in the markets for the last few days.

Please note that the above data do not capture the dividend income earned during the last 30 years at all. For example in last year the dividend declared was Rs.6 per share. So you would have earned  Rs.5.76 crores last year alone as dividend income.  Not bad for a Rupees ten thousand investment!

Power of equity and compounding! Hope you make best use of it.

One Response to “Weekend Jottings”

  1. Vikas Sharma said

    Is it wise to invest rs.10000 in wipro shares today and leave it and forget it for another 36 years?
    Will it become atleast 100 crores after 36 years?
    I’m thinking of doing it this way…
    I already have sip’s and mip’s…
    Please guide.

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