Mr. Sukhbinder Sarnal has a roadways business in Kolkata and often travels to Chandigarh and Mumbai. He
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bonds to minimise my tax-burden.” In the mean time, Vikram, the son of Sukhbinder asks his father “Papa, do you know the answer to this?” Vikram is looking for an answer to a puzzle, which he explains to his father “There is an old lady with her pet tiger, a goat and a stack of grass, who wants to cross a river. But there is a small problem. The lady cannot move alone anywhere. In her presence, the tiger will not attack the goat nor will the goat consume the grass but in her absence, there is a chance that the tiger can eat the goat or the goat can eat the grass. Now she wants to cross the river and there is only one boat, which can take only two of them at a time. How can the lady cross the river in four attempts?”Sukhbinder thinks for a while and tries to ignore his son saying “Beta, you ask Nimmo. She will tell you.” Sukhbinder comes back to the discussion. He wanted to convince Martin that his portfolio is a good one as it promises to fetch best earnings, liquid in nature although it does not consider safety and tax minimisation. Sukhbinder says to Martin “You know Mr. Martin, this argument between portfolio for long-term and portfolio for short-term always remind me one basic question-Why do we invest?” Sukhbinder continues, “Because, we need to earn more but more earnings are possible only if you take more risk, which in turn implies less safety. And you also require liquidity for your investment.Considering all these factors, there cannot be something like an ideal investment portfolio. Martin defends his views “No, Mr Sukhbinder, an ideal investment portfolio never clashes with the approaches to build an ideal investment portfolio.” “What does that mean?” asks Sukhbinder. Martin replies “Your investment portfolio could be meant for different kinds of objectives like one may look for regular returns from his portfolio and one may like to see his portfolio growing consistently with time. However, even in the trajectory of these two objectives, your approach for building the suitable portfolio must be same. That is, you need to maintain a good balance among your earnings, safety, liquidity and tax savings. Balance is the most crucial aspect.
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