Financial Planning

Oil markets witnessed a historic moment on Monday when WTI crude for May delivery fell more than 100 percent, settling at around -$37/bbl indicating that producers would have to pay traders to take oil off them. Difference between Brent and WTI Crude WTI or Western Texas Intermediate is extracted from oil fields in the United States. It is primarily extracted in Texas, Louisiana and North Dakota and is then transported via pipeline to Cushing, Oklahoma for delivery. Cushing was a major spot for oil for decades, and has been the delivery spot for contracts and price settlements for WTI for more than 30 years. It contains 0.24% of sulfur. WTI futures contracts are traded on the New York Mercantile Exchange (NYMEX) Brent crude is extracted from oil fields in the North Sea. ‘Brent Crude’ refers to a blend of four crude oils - Brent, Forties, Osberg, and Ekofisk which together are known as BFOE. It contains 0.37% of sulfur. Brent futures contracts are traded on the Interco...

Very often I have seen ‘EXPERTS’ suggesting to run the SIP for the entire period till the beginning of the goal period in print and electronic media. Every time I picked up the topic to write against this idea some time procrastination and sometimes data was not there to substantiate my thoughts. Not that I was praying for this crash to happen so that I could write a note on this  However, on a serious note, let’s look at few data points and WHY it makes sense to lock the gain 18-24 months prior to start of the goal and park the amount in risk free asset class to avoid any crash like the recent one. Say if the GOAL was to create a corpus of 30 lakhs for education in April 2020 and if the advisor suggested SIP of Rs. 10,000 p.m. for 12 years, i.e., 144 instalments with assumption of 12% CAGR, the future value would be Rs. 31.9 lakhs, which is very comforting for both investor and advisor as it is almost 2 lakhs more that the required amount but a crash like recent on...