From cars to investing: navigating choices

Alto is hailed supreme for a reason. It’s not just about navigating treacherous mountain roads–the kind you see in countless Instagram reels with bigger cars struggling–but its ability to glide through the real battlefield: the potholed, dug-up, traffic-choked streets of Bengaluru.

Ever since I moved here, I’ve fully embraced the idea of a compact car whose sole job is to smartly GPS its way through narrow bylanes, dodging main-road bottlenecks and getting you to your destination faster. So, now that I am back in the market for a car, I find myself torn. Do I stick with a small car that does well in city chaos or upgrade to something bigger that also lets me explore the outskirts more comfortably?

For an auto enthusiast, this comparison may seem silly, but for a utilitarian, it’s a real dilemma. The timing hasn’t helped. Rising oil prices that can potentially push fuel costs and tightening emission norms have made the decision more complex. The fuel type itself has now become a key variable and I find myself seriously considering whether electric is the way forward. In this context, Ashwin Moorthy argues that a mix of economic and regulatory trends is steadily making petrol and diesel vehicles less attractive in India.

Higher crude prices and stricter emission norms are not only increasing upfront costs but also pushing up the total cost of ownership over time. EVs, in comparison, come with their own challenges, like limited charging infrastructure and higher upfront costs. But they are fast emerging as a hedge against fuel-price volatility and policy shifts. The story is a must-read for anyone in the market for a car and drowning in similar confusion.

In the investing space, Jash Kriplani looks at a growing trend: PMS offerings increasingly built around mutual funds. As mutual funds gain popularity even among HNIs, rivaling traditional PMS and other curated products, some portfolio managers are choosing not to compete, but to adapt. Their solution: PMS structures built using mutual funds. The pitch is straightforward. Investors get the familiarity and simplicity of mutual funds, combined with professional portfolio construction, management and execution. The typical investor profile: new-age entrepreneurs and senior corporate executives. There’s also a clear tax angle driving this shift. Budget 2024 raised the short-term capital gains (STCG) tax on equities from 15% to 20%, hitting traditional stock-based PMS strategies, especially those with high churn. In comparison, MF-based PMS offerings with lower churn and more tax-efficient structures are emerging as a viable alternative.

But the structure isn’t without cost. PMS providers charge fixed or performance-linked fees. A high-watermark ensures performance fees apply only after the portfolio surpasses its earlier peak. It's important to note that the PMS fee sits on top of the underlying expense ratios of the mutual funds themselves. In simple terms, you’re paying a professional to build and manage a basket of mutual funds on your behalf. Since this is still a relatively new category, most providers lack long track records, making it important to assess whether they truly have an edge in asset allocation and fund selection. Kriplani dives deeper into this evolving trend.

Also this week, Shipra Singh spoke to Kalpen Parekh on navigating choppy markets. Parekh’s playbook is simple: don’t chase past performance, let compounding do the heavy lifting and respect market cycles. His approach is rooted in asset allocation, mean reversion and ignoring market noise. According to Parekh, asset classes tend to mean revert and so, the right time to buy is during down cycles. The story details how he applies his learnings to his own finances.

Last week, we spoke to experts about navigating the current phase of uncertainty, and one consistent takeaway was the importance of maintaining a strong emergency fund. In that context, sweep-in accounts emerged as a no-brainer product for individuals.

Sweep-in accounts link your savings or current account to a fixed deposit (FD). When your balance exceeds a preset limit, the excess is automatically moved into an FD; and when you need extra liquidity, the FD is broken, partially or fully seamlessly. The result: you earn FD-level interest on surplus cash while retaining liquidity. Ananya Grover explains how sweep-ins work in detail.

And finally, an inspiring story on senior citizens by Ann Jacob. This story explores how seniors, a highly skilled group who may have stepped away from formal work but remain rich in experience, are using their second innings to give back to society with the modern economy enabling them to monetise their skills. In many households, retirement also brings a quieter shift: someone who was once the family’s breadwinner and deeply rooted in routine suddenly has ample time often leading to restlessness and frayed tempers. This story shows how that phase can be reimagined. Jacob spoke to individuals who are pursuing their passions while also creating meaningful income streams.

In our Money Guru series this week, Sandeep Tandon of Quant Mutual Fund explains why he believes the current environment could be the biggest buying opportunity since covid.

That’s all for this week. Until next time.