There are a few Golden Rules of investing…apart from the most important one..’The Man who has the Gold, makes the rules’ …apart from that the other rules are:

1. Do not abdicate financial understanding: “I trust my adviser” is not always a statement of faith. In many cases I know, it is a matter of laziness or convenience. Do not do it. It is necessary for you to know why somethings are being done, how, and what are the implications.

2. Ask sensible questions: Ask your adviser why certain things are being done. If you do not understand and you do not ask, you might be in trouble later on. Do not assume, ask.

3. Trust your adviser: trusting your adviser should be an exercise that is done diligently. Do not think “he looks fine”, “he dresses well” “goes to the same club”. Also to remind you of what Ronald Reagen (late President of USA) said “trust, but verify”.

4. Do not issue cheques in the name of the adviser: Asking the adviser to pay the premium on your behalf is not a good idea – but people routinely do it, and then repent.

5. Choose your adviser carefully – read Deepa Venkatraghavan’s book ..(What your financial agent will tell you, and you should not listen) regarding about your agent’s lingo (or relationship manager of a bank) and then chose your agent.

6. Ask the agent about conflict of interest: Check who is paying him, how much, etc. – and check out whether that is more than what you have been told.

So these if you ask me are the Golden rules – the real ones!

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  1. when I invest I intend to trust my advisor as he is photogenic (oops),and trustworthy. Its also because I am lazy and I will find it convenient!
    Too bad his advise is impeccable.

  2. photogenic means looks good in the foto. If a person looks good in real life and in fotos, then there is nothing to comment..However for a bad looking guy, looking good in the pics makes him photogenic..:)

  3. As usual you are correct in your observations.Thank you.How can I get your blog on my e-mail address.Can you devise solution to this problem

  4. http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2011/01/31&PageLabel=20&EntityId=Ar02000&ViewMode=HTML&GZ=T

    Did you guys read todays TOI article about SIP in equities (link above)? I just glanced through it, they have shown returns for a number of companies. SIP of 5 shares every month (isnt that a stupid SIP?) also in showning the returns, they havent considered the share splits and bonuses. How ridiculous to do this exercise and show -ve annualised returns of some companies. How irresponsible! TOI!!!!!

  5. KalpK,

    I had the same reaction, but then I read the full article. It’s not that bad.

    The point they tried to make is that unlike mutual funds, it’s difficult to offer SIPs in individual shares for a fixed amount (rupee cost averaging), because you buy shares in whole numbers. That’s why brokerage platforms are offering 5 shares per month or so.

    Secondly, they are only saying that while you bought 5 shares of each company per month, the eventual number might be different because of splits, bonuses, etc. This actually implies that they have considered corporate actions.

    Happy investing 🙂

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