Why are long time tenants planning to buy a Shenoy home?

“It is better to wait than buy a house when it is not affordable and then take a huge loan. Right now, I am in favor of buying a house as I am financially comfortable,” Shenoy said during an interaction Peppermint For Guru Portfolio Series. In this series, leaders in the financial services industry share how they manage their money.

lifestyle changes

Shenoy says that he has transferred some of his funds to liquid funds. When his family finalizes a house, he will use the money to buy the property. Shenoy says he prefers to buy a house that is ready to move in, rather than one that is under construction. He says that his affordability funda is that even if he has to take an 80% loan to buy the house, the EMI (Equated Monthly Installment) should be less than 30% of his monthly income. However, Shenoy says that he may not even have to take a loan for this purchase.

“I never plan to invest in real estate unless I want to make it a business. Real estate is a business where you need capital to buy at least 10-15 houses; Need capital to renovate, resell them at a different time, pick the right location, maybe different city. That’s when you look at real estate as a business. As far as I’m concerned Yes, I don’t have the time. I feel stocks have a better return profile. There can be far more diversification in stocks than in real estate. So I don’t see myself investing in real estate anytime soon. To stay A house is meant for consumption, not for investment.

Another lifestyle change Shenoy is looking forward to is buying a new car. “We want to upgrade from our existing car. So we are exploring that as well. Again, I have transferred some money to liquid funds for this,” he says.

investment strategy

Shenoy maintains an asset allocation mix of 85:15 across equity and debt. His equity exposure was reduced due to weakness in the stock markets, but he has restored it to his original asset allocation target. All his equity investments and most of his debt investments are through his own PMS (Portfolio Management Service) product, where 40-45% of the equity portfolio is in large caps, 32-37% in mid and small caps and 8% in in the US market.

Due to the weak performance of the US market last year, their exposure to the US market has come down to a little less than 10% earlier. Meanwhile, his exposure to large caps has increased to 40% from 30% earlier.

His equity portfolio was down 6.7% in the last year (April 2022-March this year), given the correction in mid and small caps, as well as US markets. His debt portfolio grew by 4-5% during the same period. But it is the debt side where Shenoy has been more active in changing its portfolio mix.

Following an amendment in the Finance Bill to remove this benefit on new investments from April 1, Shenoy restructured the loan portfolio in his PMS before March 31 to ensure that his clients and his own loan investments Get the benefit of long term capital gains.

He has shifted some allocation to longer duration debt funds as he is not sure whether the returns are going to increase meaningfully from here. He has also invested in Target Maturity Fund. “It is a strategic allocation as there is some surplus which I do not need right now,” he said.

According to Shenoy, the debt market is currently in a state of flux, so it is not wise to bet on any particular tenor segment. “For the first time in 4-5 years, bank fixed deposits (FDs) are giving higher returns than government bonds for almost the same duration. After a year or two, it should reverse again. Banks can go back to lower deposit rates, government bonds can give higher returns and corporate bonds can give higher returns,” he says.

He says this is why he has ended up with a terraced approach on the debt side. He has some investments in the maturity buckets of 3-year, 10-year and 10-year-plus.

Shenoy was also very active in the corporate bond market till last year. But, now they say that their allocation has come down significantly. He attributes this to the fact that the corporates he favors are no longer issuing bonds at yields that can offer good post-tax returns.

He says this could change in future as corporate bonds start yielding higher rates again. In the corporate bond market, it is in a wait-and-see mode.

Shenoy says that when it comes to choosing a corporate bond, he does not blindly go by the grading given by the rating agencies. “A double A-rated corporate bond may not be a good investment and an A-rated bond may not be a bad investment. Therefore, I have my own way of assessing the creditworthiness of a bond issuer. I look at the underlying business, financial, In the case of NBFCs (non-bank financial companies), I look at disclosures like potential credit losses. Even if all parameters are borderline, I look at the track record of the parent company,” he says.

health and leisure

Shenoy and his family had gone to Australia last year. He says, “We could not take much leave because of my son’s Class 10 exams. East Asia for their holiday plan.

“Every year, we try to take at least one holiday abroad and in one country. This year, we are trying to think of a domestic holiday apart from our trip to Goa, which we try to do almost every year.”

On the health front, Shenoy has just started intermittent fasting. He says it helps him manage his asthma. Also, he has set a target of reducing his weight from the current 91.5 kg to 75 kg by December 2024.

family and finance

Shenoy says that his wife has now started taking an active interest in the family’s finances. “He is very involved in our home buying plans and is aware of our investments. Earlier he was not much interested. Now, we regularly discuss our finances. I bought a family Dropbox account, family Google Drive account where I created folders and shared all my life insurance and medical insurance policies. I’ve also shared emergency contacts in these family folders in case something happens to me, my account details, etc,” he says.