Online discussions on taxes

The vast majority of online discussions about taxes, especially in India, is overly simplistic and often just plain dumb. The worst kind is reader comments to any post saying anything at all about taxes. Paying attention to those comments will not lead to anything productive; reading them only enrages us.

Preventing duplicate keystrokes from bluetooth keyboards

I bought a cheap wireless keyboard a few months ago. While the keyboard was mostly fine, it sometimes repeated the same letter twice or thrice. For example, every few minutes, when I type a word like “India”, I see “Indiia” on the screen with an extra i. It was a mild annoyance for a while, so I was living with it. When I started making typos in design documents that I was creating at work, it started to be severe enough to require a solution.

The issue went away when I connected the keyboard using a cable, so this was clearly a bluetooth issue. I asked Gemini what the problem could be, and it said that the following could be happening:

• The keyboard sends a keystroke to the computer over bluetooth.
• The bluetooth transmission is slow, probably due to interference. The computer doesn’t receive it within the expected time.
• The keyboard thinks the transmission was lost; it sends the same keystroke once again.
• But the initial keystroke eventually arrives. Quickly after, the retransmission also arrives.
• The keyboard thinks it sent only one keystroke (because the first transmission was lost), but the computer sees two keystrokes. Oops!

A solution

I feared I may have to buy a new keyboard. While a more expensive keyboard may be able to work more reliably despite interference, there is no guarantee that it will. Gemini suggested a different solution. Apparently there are software tools that can run in the background and drop duplicate keystrokes that arrive in quick succession. The KDE Plasma UI that I use has this feature built-in, but as an accessibility feature. It’s called Bounce Key. I enabled it with a timeout of 50ms. This configures the operating system UI to discard any duplicate keystrokes that are received within 50 milliseconds.

A nifty software solution for a hardware problem.

Children show a mirror to us

I was watching a video of Palki Sharma’s on YouTube. My daughter, 8 years old, looked at me and said, “You are always watching videos of this woman.”

Then she pointed at the first video on the recommendation list and said, “videos of this woman and this man. You are always watching their videos.” The video she pointed at was one of Richard Murphy’s.

Children show a mirror to us, in which we can see our own habits, tastes, and loyalties (among others).

Find your niche

I randomly remembered a line from a Tamil song, and I kept thinking about it for a few minutes. I wanted to make a drawing out of that line. I opened Google Gemini, entered an elaborate prompt, and got a pretty good image as the result.

The line from the song says, “Travelling on a cart, why are you carrying your things on your head? Put them on the cart, and the cart will carry them for you.”

I have had zero training in drawing. When I was a school student, drawing basic flowcharts using rulers and pencils would take me hours. I do not consider myself inclined or experienced in any way when it comes to drawing as an art.

Despite my lack of exposure and training, I was able to make this image fairly easily.

That’s the kind of enablement, or lowering the bar, generative AI has been doing. It has not made an artist overnight out of me. But it has enabled me to express myself in ways that were impossible before.

Technology increases quality of life

Back in the days, when electricity was not available everywhere, if someone had to listen to a song, there was no way other than to ask someone nearby to sing for them. Once electricity, cassette players, recorded songs (such as from movies) became prevalent, no one asked their friends or family to sing for them. Most people were able to listen to recorded performances of singers like TM Soundararajan or Lata Mangeshkar.

We can imagine that mediocre singers whose songs were accepted as “good enough” suddenly had to compete with Lata Mangeshkar and became “not” good enough. The advent of technology changed the world so that the quality of acceptable singing went way up.

Technology lowers the bar to entry

Technology benefited the experts by making them more accessible. But technology also lowered the bar to entry. (Not the same technology, but technology nonetheless.)

I am a good example for that. Without the internet and free publishing platforms, I may not have written as much as I have written in the past 20 years. As a writer I am not exactly good, but I have the platform I need to communicate, to share my ideas with others.

Generative AI agents are now lowering the entry bar even further: I was able to make an image just by describing it in words.

The importance of niches in the modern life

On the one side, the entry bar keeps getting lower—anyone can participate. On the other side, good stuff (such as content) keeps getting more accessible. The vast majority of content—blog posts, videos, podcasts, etc—will likely not find any audience at all. If you were an emerging creator, this can make you feel powerless. You can create, but most people may not find your work compelling.They would rather enjoy the works of the experts in your field.

There is a way to opt out of these impossible conditions: deliberately stop trying to compete with global (or even regional) superstars on their turf. Instead, find a niche where they are not even present.

Niches are, by definition, less crowded. It becomes relatively easier to find someone who likes what you create. Niches also tend to have less competition. A crude example: Richard Lindsay probably didn’t have to snatch Dido’s or Taylor Swift’s listeners for his Recorder in the Corner song. Dido listeners are not very likely to be present in Richard Lindsay’s niche.

If you are wondering what to do in life, maybe start by finding your niche. Unfortunately, finding your niche will also feel like an impossible task. Keep doing what you love and study the kinds of engagement you get. Your niche will likely be visible from the patterns you see in the engagement you get. You’ll often discover your niche only in hindsight, so keep creating and sharing what you create. Once you find your niche it can become easier.

Are niches only for artists?

Though I only mentioned singing and writing, finding a niche can help people in other professions too. Everyone, including the likes of plumbers, engineers, and tour operators, can—and should—focus on finding a niche where they can excel.

A software engineer’s fear of AI systems taking their job away

In a private Facebook group, a software developer expressed fear about losing their job to AI systems that can write code. As a software engineer who has been thinking about this for a while, I posted a reply to that post. I am so proud of that reply that I am persisting a copy of it here (with some minor edits). 🙂

Go back a few decades. When people moved from assembly language to high level languages, there could have been a similar fear. (I don’t know if there really was, but I think we can draw a parallel.)

You suddenly didn’t have to painstakingly write optimised assembly code and manually link different assembly modules. Compilers and linkers were “good enough.” Tasks that needed three human programmers now only needed one. Experts in different machine architectures were not needed anymore; any high-level-language code can be compiled to run on any architecture.

If you were an assembly programmer, you were right to be terrified of losing your job to compilers. But then, if you just learnt how to code in a high level language, you became a lot more productive. You just had to look beyond machine architectures and see where you could add real value.

I don’t pretend to know how many software engineers will lose their jobs to the new AI systems. But I am fairly confident that today’s programmers will have an easier time adapting to the new world than a non-programmer learning to vibe-code today.

It’s entirely in your control whether you stick to the “old ways” or adapt to the new paradigm. Are you doing something to stay relevant? Ask yourself that, and keep adapting and improving until you have a satisfactory answer.

Random thought: Learning is thinking

Learning is thinking.

Many consider reading, writing, listening to lectures, participating in discussions, etc. as learning. However, they remain only as tools that enable the actual learning, which is thinking.

Surrender: responding to life without a bias

My life coach recommended The Surrender Experiment to me. I have been reading the book ever so slowly.

My primary takeaway from the book so far is to accept life as it happens without the influence of my own personal preferences. The following quote captures the core of the advice:

From now on if life was unfolding in a certain way, and the only reason I was resisting it was because of personal preference, I would let go of my preference and let life be in charge.

For a couple of days, it seemed obvious what I had to do. But slowly it started to be confusing. If on a Sunday I feel like eating at a fancy restaurant, is that my own personal preference, or is that life offering me a fancy meal (in the form of a spontaneous thought)? I didn’t have an answer.

Then it occurred to me. Accepting life means living spontaneously; pausing to question every single choice is anything but.

If always acting by one’s personal preferences is the south pole of the earth, purposely acting against one’s preferences is the north pole. The direction may be different, but they are qualitatively the same; you are still on the same plane; you are still anchored to the earth. What we really need is to rise above the earth. Rather than basing your actions on your preferences, you should ignore the preferences.

Respond to the situation that life presents. If the response aligns with your preferences, so be it. If the response is against your preferences, so be it.

Dream big to realise your potential

I am a credit card enthusiast. I often browse through credit card offerings to see if there are better cards than what I currently have.

Earlier in 2024, I got the Infinia credit card from HDFC Bank. This is sort of like “winning” the credit card game. There is no clearly better card an Infinia holder can upgrade to. (While there may be more beneficial cards for some people based on their spend patterns, it’s hard to do better than Infinia for most people.)

My “credit card optimisation” game pretty much ended when I got the Infinia, with me winning the game. However, I still habitually explore other credit cards every now and then. As expected, such explorations end with a reaffirmation of what I already know: there aren’t many cards I can upgrade to. The time spent looking at credit cards is wasted time, more or less.

But why do I still look at credit card options even when I know it’s not a productive use of my time? I think it’s because I don’t have anything more productive to do.

This is where the advice to “dream big” shines through. Dreaming big and working towards achieving those dreams is an effective way to realise your potential. Had I dreamt of doing something more meaningful than simply collecting credit card rewards, I wouldn’t be wasting time now browsing credit card brochures.

Where GenAI tools struggle

A tricky, niche, tax question. Basic clauses that apply to the majority of taxpayers in the country are described and discussed everywhere on the web. But this specific question is not.

Since GenAI tools are the new panacea, I asked Gemini about this. It said something that was clearly wrong. I thought its “deep research” mode may do a better job. I asked the same question again but in the deep research mode. It did a lot of work and eventually spit out a report, which was also unsatisfactory.

There are nuances in tax rules that need to be considered for answering this question. Most web sites don’t care about this nuance; Gemini, which uses information from the web as its source, also couldn’t understand the nuance. It produced an answer without solid justification.

I then did a regular Google search and found a site that said the opposite of what Gemini said. I asked Gemini a follow-up request to include information from this new page.

My expectation: Gemini will reconcile the differences between the sources and improve on its previous answer.
What Gemini did: Gemini simply overwrote whatever it had said before with what was in the new site.

Gemini did exactly what I do when a code reviewer is forcing me to do what I don’t want to do, but I am tired of arguing. I just do whatever the reviewer says and move on. Gemini doing that to me did not exactly instill confidence in the report it had generated.

While GenAI tools are great at many things, they are not exactly good at answering niche questions based on conflicting information from different sources.

A different kind of social media diet

As I was going to write a rageful comment on a random post by a random person on Facebook, I realised something.

If someone told me in real life the exact same thing as that post, what would I do? I would say the least amount of words possible to stay polite and flee the scene. I know not to engage with idiots in the real world.

But when it comes to social media, I was constantly engaging with idiots. That’s why I wasn’t feeling good after spending time on social media. I am choosy about whom I engage with in real life; I should emulate the same on social media too.

(In my defence, this was not an issue in the initial days of social media. I only have sensible people as my connections; they don’t post garbage. With every social network promoting everything from outside the user’s own network, chancing upon random garbage has become more frequent.)

Starting to appreciate consistent performance

The following graph shows 3 year rolling returns of 3 different mutual fund schemes. (I have removed the fund names from the graph since the names of specific funds are not needed for this post.)

Rolling return graph taken from primeinvestor.in

The green and purple funds had sharp declines in March 2020 when the market had just reacted to the Covid-19 shock. The blue fund also fell, but not by as much. The reverse of this fall can be seen in March 2023. Any investor that invested in these funds in March 2020 got a significantly higher return than anyone invested right before or right after.

When I was new to evaluating investment assets, the peaks that the green and purple lines reach used to attract me. I liked such funds. “There is a chance of making an incredible return from these funds,” I’d tell myself.  Investing in funds like the blue line felt like leaving some returns on the table. I wanted to invest in assets that have the potential to maximise returns.

But high volatility can be hard to live with. When investing in a fund that provides fairly consistent returns, entry and exit times do not matter as much. A volatile fund can leave us less than satisfied depending on our entry/exit time.

Let’s say a fund’s NAV goes up from ₹100 to ₹130 within 4 months, and then falls to ₹121 in the next month. I’d find it hard to sell my holdings when the price is ₹121 despite knowing that anchoring to ₹130 is irrational. I’d delay exiting the fund as much as possible in the hope that the NAV may rise back up. Of course, the NAV can keep dropping below ₹121 as I wait. But that knowledge hasn’t been enough to gather the conviction necessary to sell at ₹121.

Over time, I have started appreciating consistent performance over potentially high—but uncertain—performance. I think the following reasons triggered a change of mind in me.

• Reading various articles on portfoliocharts.com and looking at the various charts that they plot to compare different portfolios.
• My experience selling the RSU shares that I receive from my employer. Working with volatile assets can be emotionally taxing.

There’s another angle to this, too. I used to think that investors avoided risk only when they were afraid of it. But now I know better. I avoid certain risky assets or risky portfolio mixes not because I fear the potential loss. Rather, I don’t particularly want the added return, so I am happy to keep both the extra risk and return outside my portfolio.

Uncertainty = discomfort of the mind

I went to see a doctor today. I was only expecting a simple treatment. After all, the symptoms didn’t seem severe. It seemed like something that could be cured in a few days.

Then came the diagnosis as a shock. It was a condition I’ll have to live with forever. Something that can change my life as I have known it. Something that can potentially disrupt what I consider as my identity. Something that can make me humble.

It hasn’t been easy since then.

A part of me keeps reminding me of what Oscar Wilde once said: “If I may not write beautiful books, I may at least read beautiful books; and what joy can be greater?” Though this will be a life-altering change, I have great confidence that my happiness will remain intact.

Nevertheless, it’s all a haze right now. Things will become clearer and more certain in the coming weeks and months. For now, however, this uncertainty hasn’t been easy to endure.

How diversification increases risk

Trump’s remittance tax is spooking many around the world. Some Indian residents investing in US assets are also worried if their withdrawals may also fall in this tax net.

A while back, I wrote that diversification doesn’t strictly reduce portfolio risk. This remittance tax is an acute example of how holding assets in the US exposes us to more risk.

Just to be clear, this post is not about global diversification or US assets. The only point I am trying to convey in this post is that diversification does not strictly reduce risk; it alters the portfolio’s risk-reward behaviour.

The impact of the recent enthusiasm in gold ETFs

I have invested in 2 gold ETFs: Quantum Gold and SBI Gold. Every month, I download the fact sheets of all the funds I invest in to monitor how my money is being invested. As I was checking May 2025 fact sheets, I noticed something interesting.

Gold ETFs have appreciated more than physical gold in recent months. This is bizarre since gold ETFs are expected to always underperform physical gold because ETF returns are physical gold return minus expenses.

I looked up the trailing returns of these ETFs on Value Research Online. To make sure this isn’t special to these 2 ETFs, I also looked up India’s most popular gold ETF, Gold BEES.

Trailing period	Physical gold	Gold BEES ETF	Quantum Gold ETF	SBI Gold ETF
1 month	4.50%	4.85%	4.92%	4.86%
3 months	12.86%	13.80%	13.81%	13.83%
6 months	24.20%	27.67%	26.96%	27.71%
1 year	35.72%	36.54%	36.72%	36.68%
3 years	23.92%	22.90%	22.94%	22.92%
5 years	15.37%	14.50%	14.53%	14.63%

This table reveals something new to me: gold ETFs have run ahead of physical gold in the past year. Gold ETFs have been in so much demand that they are running ahead of physical gold’s price appreciation! But this has only been happening in the recent year+. The numbers for 3 and 5 years (and beyond) are as one would expect.

What does this mean for investors?

• If you need to trim your gold allocation, now is a good time; you’ll be able to sell at a price higher than the fair price.
• Now is probably a wrong time to buy gold ETFs. Eventually the market will sober up and ETF returns will fall in line with gold price return minus ETF expenses. That means we can expect gold ETFs to underperform physical gold in the coming months/years. (Of course, no one can tell when the shift will start to happen.)

Caution: Please don’t take this—or anything I write—as financial advice. I myself don’t act on most of my observations. For me, this is merely a fun intellectual exercise.

Life isn’t the final draft

Came across a beautiful video and this observation from the video struck a chord:

Life isn’t the final draft. It’s just breakfast over and over. You burn some. You get better.

Does your AMC act to protect your money?

I noticed a strange bump in the NAV history of Bank of India Short Term Income Fund. The fund’s NAV on 3rd November 2024 was ₹27.05. The NAV went up by 1.9% on 4th Nov to 27.57.

Screenshot from Value Research Online

I was curious what went on and started digging. To my surprise, there was no news coverage about this at all. Comparing the fund’s October and November fact sheets did not give any clue. After a bit of searching around, I found a letter BOI MF had written to their investors about this. The letter says that the fund’s NAV was reduced in 2022 following a default.

After recovery from selling of shares, the outstanding amounts for Bank of India Credit Risk Fund was Rs. 24.11 lacs and for Bank of India Short Term Income Fund was Rs. 6.75 crs.

In November 2024, the fund has received a settlement. The letter says:

After trying to recover the balance outstanding amounts since the default, Bank of India MF (“the Fund”) finally entered into OTS agreement with promoter group and the final OTS amount of Rs. 9.08 lacs for Bank of India Credit Risk fund and Rs. 2.54 crs for Bank of India Short Term Income Fund was received by the Fund respectively on 4th November 2024. The received amount was dully accounted in the NAV of the respective Schemes on 4th November 2024.

Anyone that invested in this fund before 2022 lost some of their money. I have no problem with that; investors sign up for such potential losses when they invest in debt mutual funds.

What makes me sad is that the AMC chose to not create a segregated portfolio with the Coffee Day NCD (despite the fund’s SID allowing portfolio segregation). Any investor that bought into this fund after the NAV fell in 2022 but before it increased in 2024 would have received this 1.9% rise in NAV “for free.” The AMC is essentially taking the previous investors’ money and gifting it to newer investors. Creating a segregated portfolio would have prevented this unfairness altogether. But, for whatever reason, the BOI AMC chose to not create a segregated portfolio.

I wrote an email to the AMC asking about this more than 10 days ago, but they have not responded (other than an automated reply with a ticket reference number).

This is the kind of behaviour—I don’t know what to call it… laziness, lack of integrity, or incompetence—that an investor should be weary of when choosing an AMC. Bank of India AMC has shown that they will not do what’s right for the investors. It is up to us how we act on that information.

Can we invest in high-yield bonds?

There are bond investment platforms that let retail investors buy bonds directly. Many of these platforms sell high yield bonds issued by private organisations. For debt/bond allocation in a long-term portfolio, can investors buy these bonds?

As an example, let’s look at this high yield bond that pays 10.75% fixed coupon, but available in the market at the yield of 11.415%. (This is just a random example; not a recommendation for/against investing in this bond.)

Screenshot from goldenpi.com

When I calculated the XIRR for this bond, it came out to an impressive 11.72%. But that’s before accounting for tax. Advance tax is due every quarter on the interest received, so let’s assume that we set aside the cash necessary to pay the tax as soon as we receive the interest. That causes the XIRR to drop.

Effective XIRR of the bond for 30% tax + various surcharge rates (source)

Some of you may point out that the after-tax XIRR of 7+% is actually great from a fixed income instrument. You are right, but we need to look beyond (the admittedly attractive) XIRR the following reasons:

• Investments with high XIRR are useful only if you can reinvest the incoming cash quickly. If the interest piles up in a savings bank account, you are not benefitting from the high XIRR. (See Don’t let attractive XIRR figures fool you.)
• These bonds usually have so little demand in the market that these bonds are held till maturity in practice. When the interest rate falls, you don’t benefit from the increase in the bond price. There is no inverse correlation with equity in practice.
• This means that you cannot rebalance your portfolio by selling bonds to buy equity. The bonds need to stand on their own, and cannot be part of a portfolio diversified across asset classes.
• A bond mutual fund that holds higher quality bonds, however, can be a great addition to a diversified portfolio. Such a fund may have a lower yield, but it’ll be liquid enough to be useful at all times.
• When you invest in a bond mutual fund, you can defer taxation until redemption. This could be years or even decades for a long-term investor. This will increase the effective after-tax return for those investors.
• Gains made from bond mutual funds are considered capital gain. Capital gain arising from bond mutual funds can be offset by short-term capital losses. No such benefit for the interest earned through holding bonds directly.
• If the bond issuer goes bankrupt and the bond value becomes zero, that may count as capital loss, but I don’t know the tax rules around it.
• A sovereign bond, which has virtually no credit risk, will likely give around 7% pre-tax yield. Consider holding a gilt mutual fund for 15 years. Your returns will be pretty good at a much lower risk. If we consider the risk-adjusted return, isn’t a gilt fund a much better choice for most retail investors?

I’ll likely buy a low-quality high-yield bond to hold in my fun portfolio. But that’s mostly for the cheap thrill of investing in this asset. Such bonds have no place in my more serious portfolios.

Do savvy investors need a financial advisor?

If you are capable of learning investment processes and evaluating investment assets and portfolios, do you still need to hire a financial advisor?

Maybe you do; maybe you don’t. That’s a decision only you can make. But I’ll show you a reason why I have been retaining my advisor for over 3 years now.

Back in 2022, my advisor had recommended me a portfolio with 20% allocation to bonds and 10% allocation to gold. I insisted that I’d not invest in gold. He agreed to change the recommendation to have 30% allocation to bonds instead (and 0% to gold).

2 years later, in 2024, I started researching different portfolio combinations. This is when I discovered that gold was a great ingredient to have in long-term portfolios. In September 2024, I wrote the following email to my advisor, asking him if I should allocate 20% of my portfolio to gold.

Email I wrote to my financial advisor; click to enlarge

I was vehemently against gold when my advisor had recommended gold. But now I was taking a U turn and asking if I should add gold to my portfolio.

This was his response:

Email reply from my advisor; click to enlarge

Eventually, I agreed to keep the gold allocation to 10%. Basically, I accepted the portfolio that he had originally recommended to me.

• • •

So, why do I need an advisor? To keep me grounded and stable when I am being blown away by something new I have learnt. Some investors can find such a balance naturally; for them, an advisor may not be needed (or they may need an advisor for a different purpose). I, however, need an advisor to keep me safe from myself. 🙂

My stance on gold: learning from the pros

I used to have no opinion about gold as an investment asset. Then I came across this Warren Buffett quote:

[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

Thinking more, I came to the decision that investing in gold was a bad idea. I wrote 2 different blog posts declaring that gold was a bad investment (post 1 and post 2). Many months later, I hired a financial advisor, who recommended that I allocate 10% of my portfolio to gold. I told him that I wouldn’t hold gold, and I stood my ground.

A couple of years pass, and I discover the idea that the portfolio as a whole is more important than the individual components in the portfolio. I warmed up to the idea of having an allocation to gold, and I compared gold to spices such as bay leaf or star anise that are added to biryani. No one eats bay leaves on their own, but we all want bay leaves in our biryanis.

Image source: pickpik.com

I still didn’t like gold, but I was willing to add it to my portfolio because of what it brings to the table. I was still hesitant because gold is a speculative, non-productive asset. Then I came across the most complete write-up on gold I have ever seen: this is the memo that fund manager Howard Marks wrote to his clients in 2010, named All That Glitters.

I already knew that Howard Marks was not a fan of investing in gold, so I was expecting to see arguments against gold. I was also a bit nervous because if I am convinced by Howard Marks’ arguments, I may have to change my stance on gold once again. But that memo blew my mind. It was as rigorously seeking truth as an unbiased academic research paper would. Strangely, I am more at peace holding gold after reading the memo. (Confirmation bias, maybe?)

Here are the key points that I took from the memo:

• To profit from an investment, the question of intrinsic value may not be fully important. As long as we have other investors willing to buy the asset from us, we can make a profit.
• We call bonds and shares productive assets because they produce cash flow. But what is that cash? Cash is the fiat currency of some country. Do fiat currencies have intrinsic value? They don’t. They have value only because everyone agrees that they are valuable. Then how is gold different?
• Howard Marks’ investment framework requires knowing the intrinsic value of an asset and then buying it at a bargain price. For gold, no one knows what the intrinsic value is. Hence, Howard Marks cannot buy gold using his prudent methodology.

Gold is not compatible with Howard Marks’ strategy, but my investment strategy is a lot more passive, and I don’t usually care about valuations. That means I can buy gold according to my portfolio allocation without worrying about overpaying for it. (If I overpay, I’ll correct that mistake when I rebalance the portfolio next time.)

I still worry about a technological advancement making gold abundantly available and hence crashing its price. But I have grown a lot more comfortable giving allocation to gold in my portfolio.

Great work is a great energizer

We often see people who act with an incredible amount of energy while we struggle to even wake up in the morning.

Many of us would also have noticed that we are filled with energy at times, but we can’t muster any energy at other times.

I have wondered why, and I think I have an answer now. Maybe not the answer, but an answer.

When we do great work, it’s easy to find the energy needed to do it. If the work that awaits us—and the things that we can accomplish—are of great importance and interest to us, it’s easy to wake up early and start the day with a smile. When we expect the day to be dull, it becomes mysteriously hard to get up and move.

Great work is a great energizer.