Thanks to my style of writing many people ask me
‘What should be the strategy of investing for a small investor’ – the answer is simple. However we are Indians and we do not like simple things.
If you have a brilliant mind, and think you can make money in your profession, and managing money is not your profession, leave it to the experts.
Take the following steps:
1. Set Goals, write them down, make sure you understand it.
2. Buy simple products that you understand. If you do not, buy it. The products are an index fund (the cheapest one I think is Franklin Templeton Index fund when I last saw it), buy a term insurance (the cheapest company – which you trust – I have taken it from Hdfc, and it is not the cheapest, when I bought it, it was the cheapest, now there are others).
3. Have one savings bank account, one credit card, the bank will anyway give you a credit card, one health insurance (I have it from New India).
4. Write down the details of all your investments. Completely – why you bought it, for whom, what purpose, when should one sell it, where is it kept, passwords if it is electronically held, …AND MAKE YOUR WILL. NOW, TODAY…
5. When anybody calls for anything say please read www.subramoney.com – he told me to do JUST this. Touch base with me after 10 years (I hope to die in 15 yrs) ….
6. Go to sleep. Sleep tight and chill.
Caveat: – I invest in direct equities. I listen to my broker/adviser 90% of the times. When I have defied him, I have lost money. In 10% of the cases that I listened to him also I have lost money. Thanks to him, I have dramatically outperformed the index.
I have invested in mutual funds – 2 fund houses and one fund manager. Most of the investments are as old as the schemes (so I could not follow the ratings!! LOL).
I have 2 credit cards. One with a limit < 50,000 and the other one with >500,000. Never use the second one – just in case!
I will soon be able to surrender my term policy – my wife feels rich enough to say so I guess. Frankly I was willing to surrender it a couple of years back….
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