Over the course of your investment life, you will receive a lot of help from well meaning people (completely incompetent in investing but some with empirical evidence of luck in investing). Some of it will sound as follows:
1. Invest in Life Insurance policies like ULIP: this advice will come in the second month of your job, from your dad’s friend. He will want to sell some ULIPs to you.
2. LIC is a good investment: the endowment plans of LiC or any other life insurance player is at best a good SAVING instrument, not an investment instrument.
3. Real estate is the only form of investing where you will always make money. Each person will say about equities, gold, land,…..depending on their own experience. Bull. No one asset class creates wealth. It is your own BRAIN that creates wealth.
4. “You are too dumb to make money on equities”. There is a tendency for most journos, authors, bloggers, advisers, to say this. If you meet the managers managing your funds, you will not worry about this advice! Equity investing can be learnt, and HAS TO BE LEARNT, but it is not impossible to make money on direct equity.
5. ‘Friendly uncles and aunty advisers’ will lock you in on terrible back loaded funds, ulips, endowment plans – most times it will be worth taking the loss and getting out.
6. ‘I made a lot of money in INFOSYS, so buy INFOSYS’: amazingly stupid, but advice that is repeated on a daily basis. Be careful.
7. “Buy penny stocks like ‘Moschip’ – how much lower can it go from Rs. 4” . It gets worse ESPECIALLY if you make money in a couple of deals. Life long you will keep looking at such shit. Remember even if you made money ONCE, it was luck, not skill.
8. ‘Repay all your DEBT and then START investing: Surest way to hell. Yes if you have a home loan at 11.5%, DO NOT INVEST in Nsc, kvp, ppf – they all pay LESS than your loan rate. However do continue your SIP – you never know whether it can get you 12% or 24%.
9. Why are you buying this share for trading, you should use this money as a margin and buy in FUTURES or even better buy a call OPTION – you will make a much higher QUANTUM of profit.
10. Buy my news letter, i will tell you things like ‘stop loss’ in investing and ‘averaging’ in trading. lol.
all these pieces of advice are TOXIC. guaranteed to cause violent death…
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