Tag Archives: Growth

10 Commandments of Successful Investing

Guest Column: Expert-Speak

Let me unveil the 10 commandments of successful investing today. These commandments strictly followed can make you a successful investor; make you richer. The successful legendary investors like Benjamin Graham, Warren Buffet have followed these principles. So why not you?

1. Decide your investment strategy and stick to it: 

An investor may invest in SIP and when the market continues to fall he will discontinue his SIP. But market crash is the right time to continue your SIP. Because, during the market crash you will get more number of units and the averaging works out in your favour.

Another investor may decide 50:50 as his debt:equity asset allocation ratio. When the market goes up he may want to invest more in equity and hence he may change his asset allocation to 30:70. Actually when the market goes up one needs to reduce his equity exposure to bring the portfolio back to his predetermined asset allocation ratio.

Don’t change your strategies midway. You know what is best for you and this applies to deciding with foresight the ideal investment strategy for you. Once the strategy is set, do not fluctuate in your decision each time you decide to invest. This would only mean losses instead of profits.

2. Conduct your own research on stocks: 

It is not advisable to just depend on hear say and decisions of your neighbor, friend, relative or tips from the media or your stock broker and invest in stocks. It may seem easy but could amount to gamble. Being an informed investor, investing your hard-earned money needs you to ensure if the investment would meet your financial goal. This could be done through research from various sources.

3. Learn to overlook short-term fluctuations:

If you want to be a successful investor, you need to understand that it is futile to be affected by short-term fluctuations of the stock market. Investing in good and reputed portfolio ensures good quality of your investment and capital appreciation in the long run. The short-term volatility of the share market has nothing to do with the long-term performance of your investments and achieving your financial goals.

4. Resist investing in penny stock:

Some investors have a common misconception that it is better to invest in penny stock than in high value stocks. This is wrong as whether you buy stock at Rs.5 or 5000, you need to check the background of the company before looking at the price of the share.

5. Discard the losers and pamper the winners:

There is a tendency among investors to sell off appreciated stock and to hold on to depreciated stock in the hope that it would rise. It is wrong, as it is possible that the shares which are not doing well may continue to underperform and the shares that are doing well may continue to perform well in the future.

It is better to acknowledge you went wrong, swallow your pride and discard the loser stocks and lessen your losses. Your decision lies in deciding to suffer a one-time loss for future long-term gains.

6. Look before you leap:

Even good company shares bought at the wrong price can be a poor investment choice. So devise some strategies like SIP, asset allocation to avoid this mistake.

7. Adopt an open-minded investment strategy:

It may be advisable to consider investing in good companies, however it is wrong to overlook the point that small start-up companies can make profits as well. Even such companies with good strategies and growth plans could contribute to long-term capital appreciation. Always have an open mind in taking your investment decisions.

8. Base your investment strategy on the future: 

Investment decisions based on past happenings may not always be right. It is better to consider the happenings, but give more importance to the present and future prospects of the investment. An informed decision based on the fundamentals and mission of the company helps in long-term wealth creation.

9. Consider tax friendly investments:

Making investment decisions based on tax considerations may prove counter-productive. However minimizing taxes and maximizing returns after taxation would help. The long-term capital gain tax is nil. So if you invest for a time horizon of more than one year you will have better post tax return.

10. Adopt a long-term perspective:

Adopting a long-term prospective is advisable if you want to be a successful investor. If you want to get short-term results, then you will be able to cultivate only coriander leaves. If you want to grow a large banyan tree then you need to wait for years. So if you really want to be richer and create wealth, you need to be a long-term investor.

You could have seen a lot of success stories of people, who bought a good stock 10 or 15 years back and accumulated a good amount of wealth now because of the appreciation of those scripts. But have you ever heard of a person accumulating wealth by trading in the stock market or moving in and moving out of the market?

By trading in market you may make profits in a few transactions, but you will not be able to make profits forever. There is a lot of difference between making profit in a single transaction and being a successful investor forever.

Knowing Vs Doing

There is a huge difference between knowing what we should do and actually doing it. The knowledge piece appears quite sexy; being interested, learning something new, coming up with that cool idea. The doing part sounds comparatively like routine work, no matter how easy this work may be to do or how obvious that it should be done. Don’t fall into that “Knowing Vs Doing gap”.

Now you know the 10 commandments to successful investing; put it into practice to become richer.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.
Views expressed on this website are of individual writers and NOT of the website/blog-owner. Individuals are advised to exercise personal judgement before responding, using or contacting to any post/writer/organization.

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Filed under Economy

India, China and Australia on economic recovery fast-track: IMF

 

International Monetary Fund

The Washington based International Monetary Fund (IMF) on Thursday said that the three economies of India, China and Australia were recovering at a especially rapid pace, which suggests that there would be growing pressures for regulatory authorities in these markets to tighten monetary policy well ahead of others in the region.

 

In a few special cases…the recovery is advancing so rapidly that output gaps are already starting to close and pressures are already emerging,” the International Monetary Fund said in a regional economic outlook report, released in Seoul.

The IMF while calling the three economies special cases, added that a tightening of the monetary policy for other countries in the region seemed unnecessary in the near future.

IMF also advised the central banks in the region against raising interest rates for now.

It also advised Asian central banks not to raise interest rates  as it could potentially attract “carry trade-type” capital inflows and aggravate asset price pressures while staying away from pointing out economies facing such pressure.

 

For all these reasons, it would seem preferable, at least initially, to address incipient asset price pressures through targeted prudential measures rather than the blunt instrument of monetary policy,” it said.

The Australian central bank has already raised the interest rates, becoming the first major economy to do so after the crisis started while the Reserve Bank of India (RBI) is also contemplating measures like tightening credit to commercial property sector.

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Filed under Development, World

Citizen Participation in Development Planning

Charminar, Hyderabad

At a time when morphology of Indian cities is changing at a fast pace and rapid urbanisation is witnessing increasing migration from rural to urban areas, metropolis such as Hyderabad are coming under greater pressure in providing basic services to its burgeoning population. It is leading to what urban planners call urban decay.

Though the city was initially designed to cater to five lakh population, it later rose to 40 lakh and currently hovers around 80 lakh. Likewise, the area has increased from 174 square kilometre to 744 square kilometre to 7,000 square kilometre currently.

These have brought enormous pressure on the government to deliver – provide basic services like good roads, drainages, smooth traffic flow, regular water supply etc. to its citizens, observed Karuna Gopal, president of Foundation for Futuristic Cities (FFC). Despite the various initiatives of the government like the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) citizens continue to suffer from bad roads, garbage dumping etc., she said.

To enable citizens to participate and come up with innovative strategies for developing the city and improve the quality of life, FFC has announced ‘Citizens for City’ contest. Anyone can draft a well-researched strategy from a list of 30 topics given on the foundation’s website, www.citizensforcity.org. It was formally launched by Deputy Speaker of the State Assembly Nadendla Manohar here on Tuesday. Commenting on the initiative, he said it would be in the society’s better interests if one utilises existing institutions rather than blame them for everything.

“Such initiatives will eventually lead to meaningful partnerships between government, private sector and citizens to make our city vibrant and performing,” Ms. Gopal said. It comes in the context of city development strategy for Greater Hyderabad – a requirement under JNNURM currently being developed by the GHMC.

The competition whose aim is to influence policy makers and town planners to incorporate citizen ideas into city development policy initiatives will lead to ‘City Strategy Awards’ being awarded to the top three winners.

October 15 is the last day for entering the contest while the deadline for submission is October 31.

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Filed under Development