Compared to equity market, bond market is considered to be stable and less volatile. But events such as falling currency makes the market volatile, depreciation and appreciation of currency against dollar is the most happening event and most of the time regulator RBI take measure to balance it time to time. And such measures often affects the bond price movement adversely.

Certainly the volatility in debt market creates doubts in minds of investors about debt market and its functionality. The base of debt market is interest rate movement. Interest rate scenario affects bond prices and so debt funds return. There is an inverse relationship between interest rate and bond prices. As interest rate moves up, bond prices come down and vice versa. This is one of the reasons why bond funds delivered negative return recently with unexpected spike in short term rates due to RBI action. So investment in long duration bond funds is recommended when interest rates are likely to fall.

There are few important things to consider before investing in debt funds :

• Investment duration of investors
• Average maturity period of bond/debt fund
• Interest rate scenario
• Understanding of the product

If you want to invest for one year, you will go to bank and invest in 1 year bank F.D. In the same way if your investment horizon is 1 year, you should opt for debt fund suitable for 1 year investment horizon. Investing in long duration bond/gilt fund for 1 year can prove risky for retail investors. So matching investment horizon with category of bond fund is very essential for bond fund investor.

Short Term Money Market Funds:
These types of funds invest in very short maturity bond papers, typically less than 91 days maturity. So interest rate risk practically does not exist for this category of funds. These are ideally suited for investors who are looking for investment of less than 1 year with low level of volatility.

Long Term Bond Funds:

Duration Funds:
Duration based funds are the ones, which take long term call on interest rate movement. Fund manager of duration fund is active in bond trading and he/she takes call on bond portfolio based on interest rate movement. i.e. if interest rate scenario looks falling, fund manager increases the duration of the portfolio by buying long maturity bond paper and vice versa. Normally they hold long duration papers of above 5 year maturity.

Accrual Based Funds:
In Accrual based funds, fund manager does not play or rely on interest rate movement. Here they try to identify high yielding/high interest paying and high credit quality bond paper, and hold them till maturity. They play on accrual and not on interest rate movement. High yields earned on portfolio get reflected in fund performance. Normally the tenure of the bond paper remains on the shorter side, less than 3 years. So this category of bond fund is less vulnerable to interest rate risk.

Both duration funds and accrual funds are for little longer horizon of above 2 years and volatility remains on a little higher side in duration funds compared to accrual based funds.

As explained in the above matrix, as an investor one needs to match his/her investment horizon with a suitable product within debt fund category.

Conclusion:
As discussed, mutual funds have different products within debt fund category catering to investor requirements across time frame. Ranging from one day to 2 years, investors can look at debt funds, which suit their investment requirements to generate tax efficient return compared to other fixed income products.

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Parminder Singh and Bhupinder Singh are best friends. They have been brought up in the same neighbourhood, studied in the same class in the same school, and then they were benchmates in college. It was time for Parminder to leave for Pune as he took up a job there. So one day, before exchanging goodbyes, they were having a serious discussion about their future. They realized that with the ever increasing cost of living, it would be very difficult for them to realize their life goals, how will they sustain themselves after retiring kept hovering in their minds. They had their houses, which both of them inherited from their Parents. At that moment, they were 25 years old, unmarried. They both thought of investing for their retirement, which will happen 40 years later, when they will be 65 years old. Parminder moved to Pune and forgot about the discussion, but Bhupinder followed and made an investment of Rs 250,000 in an Equity Mutual Fund and he also started an SIP of Rs 1,000 a month in another equity mutual fund. Now, five years later Parminder came to Jalandhar and they met. The clock ticked and the topic of investments rolled in. Parminder had nothing to contribute, but Bhupinder did, since he did invest and the value of his lump sum investment of Rs 2.5 lacs has grown to Rs. 4.5 Lacs in addition to the SIP he is running.

Parminder was disheartened, since he has not saved even a penny for his retirement. But Bhupinder, being his true friend, encouraged him and said, "Pammi, it is never too late. You are still young, and can still invest for your retirement which is 35 years hence". Parminder agreed and he too invested Rs 4.5 Lacs (which is equal to the present value of Bhupinder's investment) in the same mutual fund for his retirement and he also started an SIP of Rs 1,000 a month. Now, let's see what would be the value of their investment 35 years later.

Parminder Lumpsum investment: Rs. 4.5 Lacs
Value at the age of 65: Rs. 2.78 Crores
SIP Investment: Rs. 4.2 Lacs (Rs 1,000*12*35)
Value at the age of 65: Rs. 55.10 Lacs
Total Investment: Rs. 8.7 Lacs
Total Retirement Fund Value: Rs. 3.33 Crores

Bhupinder Lumpsum investment: Rs. 2.5 Lacs
Value at the age of 65: Rs. 2.78 Crores
SIP Investment: Rs. 4.8 Lacs (Rs 1,000*12*40)
Value at the age of 65: Rs. 97.93 Lacs
Total Investment: Rs. 7.3 Lacs
Total Retirement Fund Value: Rs. 3.76 Crores

Analysis:
Parminder invested Rs 1.4 Lacs more than Bhupinder, yet his returns were Rs. 43 Lacs than Bhupinder.
Why?

Because he started 5 years late.
Inference from the story

Start Early: The sooner you start the better. The only reason why Bhupinder was the winner in the investment race was he started five years earlier. Firstly, he enjoyed the benefit of investing Rs 2 Lac less than his friend while eventually landing at the same value in case of lump sum investment. And in case of SIP, though he invested a little more, but at maturity he outperformed his counterpart by a staggering Rs 43 Lacs. The reason behind his win is the most powerful force in the universe "The Power of Compounding". The extra five years were a blessing for him.

It is never too late: The anecdote is not meant to discourage the ones who did not invest when they were 25. Though the best time was the one which has passed, yet there an ever brighter tomorrow. If Bhupinder wouldn't have invested even at 30, he wouldn't have had Rs 3.33 crores for his retirement life. All you have to do is for the love of yourself hit the start button.

So, whatever age you are. Go ahead, reach your advisor and start investing!

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You have finalised a challenging target for new SIPs for the quarter. You are all happy and gung-ho for it. But after a while, you stop thinking that it is possible. And at the end of the quarter, the target figures is itself lost somewhere. Sounds familiar? What do you think was the problem here?

Motivation. Perhaps it is one thing that distinguishes winners from followers more than anything else... William James, the father of modern psychology, once said something that we should remind ourselves on a daily basis: “I don’t sing because I’m happy; I’m happy because I sing.” In this very simple line, James seems to have summed up what motivation is all about. In spite of us knowing this universal truth, most of us are not even half as motivated as we can 'normally' be.

We all want to be and feel motivated at all times. It is a wonderful feeling, isn't it? Well the good news is that motivation is something that is 100% in our control. Nothing can take away your motivation if you decide to not let anyone or anything to do so. In fact, we can harness our energies and be motivated longer and more intensely than ever. In this piece, we present you a few tricks that you can follow...

1. Exercise & Refresh
   Getting up early and working out makes the day very energetic and efficient. Those who exercise daily will swear by it. Further, with better health, fitness and an agile, energetic mind, it is only natural that you feel more motivated and focused to accomplish bigger things. Overcoming physical hurdles of strength, stamina and endurance, encourages us to outperform in our endeavors.
2. Be Positive
   Negative people, thoughts and conversations often leave us feeling uninspired, critical and with lesser confidence in people and our goals. It is highly recommended that we stay clear of such negative vibes and don't participate or at least stay neutral in negative conversations. On the other hand, being with positive persons and participating in positive conversation and activities will only brighten our own thoughts and motivate us to think things positively.
3. Seek Motivation
   A very common source of motivation that we seek is the external, source. There are countless books, real life heroes, movies, motivational speeches / training sessions, etc. that we can access to get inspiration and motivation. The external source is a vital resource that we all can easily tap into to reenergise ourselves.
4. Create Necessity
   Long time ago someone told me to book a much expensive car. Apparently, doing so would keep me on my toes as I would need to maintain that car and that will be my new benchmark of standards in life. The underlying idea was to create a necessity in order to motivate ourselves. While it may not always work with everyone, there are surely those who would work hard, simply as a way to meet their newly adopted necessities.
5. Take Challenges
   Many of us are more motivated when we face challenges. The challenge serves as the target, an opportunity to test yourself and also to emerge victorious. The absence of challenge is like the absence of any spice or motivation for us. So, let us aim for challenges that are tough and worthy of our efforts.
6. Get Rewarded
   Linking rewards to outcomes is also a good trick to motivate ourselves. The rewards can be in the nature of materialistic gifts, things that give us pleasure and joy, and so on linked to desired results at a personal or professional level. Let us tell ourselves, if I accomplish this target by end of the quarter, I will take a holiday break in hills. The picture of the hills on your desk and the advance ticket bookings will be a mighty motivation booster for you.
7. Build Momentum
   A good momentum is when you are enjoying a continued good performance and you are accomplishing your targets. The reason can be attributed to your own good work or may be to markets or even fate. Whenever we get into this phase, we need to make the most of it by building up the momentum. This will motivate us to rise to ever higher goals.
8. Set Example
   Name and fame are human needs. We all internally desire to be greatly respected and renowned for our work. We desire that we inspire others and they feel like following us. Well we can start by doing things that will be set examples and inspire those around us, starting with our employees and clients. This habit or a character trait within us can be a source of self motivation within us as we would seek to find ways to inspire and do things that will command respect.
9. Think & Visualise
   Take at least a 30 minute break every week to think nothing but about yourself, your life, goals and your present situation. A deep soul searching is important in this fast paced life. It will help us stay focused, grounded and close to things that are most dear to us. When you are in difficulties, talk to self and remind how you and others have overcome difficult situations in past. Visualise things to do and the success thereafter. Motivation is just a few thoughts away...
10. Have A Higher Mission
    I am sure that most of us would want to contribute to a higher cause at some point of their lives. We are motivated to do something for others, selflessly. Well we can use our good intent as a motivating factor when we find a higher meaning, a mission in our present work as well. Think of the financial advisory practice as a way to solve people's problems, protect them and make them happy. Thinking of our business in this perspective, can take away a lot of negativity and tiredness we often may feel and give us satisfaction levels that will run deep.

Food For Thought:
We now present some good quotes we came across on motivation. Spare a few minutes to think about it...

• "Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible." - Francis of Assisi
• "Wanting something is not enough. You must hunger for it. Your motivation must be absolutely compelling in order to overcome the obstacles that will invariably come your way." - Les Brown
• "Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it." - Steve Jobs
• "Ability is what you're capable of doing. Motivation determines what you do. Attitude determines how well you do it." - Lou Holtz
• "There's always the motivation of wanting to win. Everybody has that. But a champion needs, in his attitude, a motivation above and beyond winning." - Pat Riley
• "Motivation will almost always beat mere talent." - Norman Ralph Augustine
• "Motivation is what gets you started. Habit is what keeps you going." - Jim Ryun
• "Once something is a passion, the motivation is there." - Michael Schumacher

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