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 – 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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  1. Subra,

    You could not have it more simpler. But as you rightly pointed out… the smart alecs,( are they really smart ???) do not like the simple and easily comprehendible recommendations.

  2. ha ha Sujatha – that is a Chinese proverb and quoted in my book. I had been saying for a very very very long time. Somebody told me it is a Chinese proverb, I did not know it when I was using it :-). I got a brilliant doctor (homeopathy) and a brilliant portfolio adviser. Both relationships go back 30+ years.

  3. It really is so simple, isn’t it? Wish had been available for reading 15 years ago when I started working. It takes so long to realise all this and then a little longer to learn the discipline to do it regularly. I wish I had started all of this 15 years ago instead of 5 years ago. anyway trying to teach the kids better…..

  4. How can I thank you ? No words 🙂
    unfortunately, I met will all the wrong advisor all the way 😛
    still paying the hefty price for the mistakes.

  5. mahesh – how do you thank a professional? Simple write a nice fat cheque! Simple is it not..?

    the worst is to get fees one has to complicate stuff…nobody pays for simple stuff…like mom’s cooking, its free.

  6. Monoplay is the best thing one can do be it small or big investor. Let everything be single be it bank account, credit card, insurance, d-mat and mf account and so on.

  7. Do you really mean, one should only have one bank account? What if that bank goes on a strike for a week when u need your money? What if some other bank is providing you better home loan interest only if you have a savings account with them? What if your debit card is lost and you need to withdraw cash? What is meant by monopoly in mf account, u want to invest only in one fund?

  8. Subra, I suspect you must have a lot of enemies in the “advisor” community. 🙂 But yes, in reality life would become so simple even for them when unnecessary complications and sophistication are avoided.

  9. I want to ask if there is a missing piece in the second bullet. I thought that the bullet might read this way: “Buy simple products that you understand. If you do not understand a product, do not buy it.”

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