Understanding these numbers
The returns shown here are for two hypothetical investors
Investor A – Invested Rs 1 lac every month starting on Jan1, 2017 in the Bharosa equity picks and sold everything on Mar 1, 2018. Rs 14 lacs were invested, and this grew to Rs 15,99,291. Rs 3582 was paid in Bharosa fees so the net amount was Rs 15,95,710 for an absolute gain of Rs 1,95,710 at an XIRR of 22.95%.
Investor B – Invested Rs 1 lac every month starting on Jan1, 2017 in the Scripbox equity picks and sold everything on Mar 1, 2018. Rs 14 lacs were invested, and this grew to Rs 15,52,848 for an absolute gain of Rs 1,52,848 at an XIRR of 17.85%.
The ten-year target of 16.67% pretax returns will give 15% post tax returns in the highest tax bracket. We analyzed 2982 dates from Jan 1, 2000 to Feb 28, 2008 and calculated the ten-year point to point returns. 70% of these returns were higher than 16.67% so we feel quite confident that the hypothetical investor will achieve 16.67%. Over ten years the investor will invest Rs 1.2 crores. At 16.67% this will grow to 2.875 crores for a gain of Rs 1.675 crores. For smaller or larger amount of investments you can scale these figures.
Bharosa v/s Scripbox
We compared with Scripbox because they publish their picks. We have used their picks for 2017 and 2018 for doing the comparison.
Bharosa absolute gain was better by Rs 42,861. Bharosa XIRR was better by 5.1%. There is no assurance that Bharosa will always beat Scripbox but Bharosa has a few built-in advantages. Its fees are lower than the hidden fees in Scripbox and it monitors its portfolio monthly. It also puts 30% in small and midcap funds.
Bharosa believes that delivering performance is vital for an advisor and makes it easy for its members to combine their wisdom with Bharosa wisdom so Bharosa members can do even better than the Bharosa model portfolio performance.
We will update these numbers and commentary monthly. The next update is on April 1, 2018. You will see that the percentages for Bharosa and Scripbox returns will change a lot because the investment time period is short. The target will not change.
1. Use stocks or equity mutual funds to create wealth but do not get over excited with high numbers or panic with low numbers. Stay invested for at least ten years
2. Monitor performance of your portfolio. If you are doing great without an advisor why pay fees. Bharosa believes that its model portfolio will beat 95% of investors who invest on their own without advice or use other advisors offline or online, for mutual funds or stocks. Bharosa will also beat 95% of equity PMS (Portfolio Management Schemes)
3. The #1 determinant of your wealth is how much you invest in equities and how long you stay invested. After that your choice of advisor matters