Equity and Real estate were considered investing. And they had the ultimate investment asset’s characteristics – returns greater than inflation and volatility. No 2 blocks of 5 years could be compared sensibly – too many dynamics.
Now in the past few weeks gold and debt are also playing the volatility game. It does not mean anything for you. Sure in case of liquid schemes you have got NEGATIVE returns over a day or 2 or 3…but THAT MEANS NOTHING FOR YOU.
Gold is down about 35% – but the rising dollar has still made the metal far more expensive for the Indian buyer.
Again this does not mean anything for you. If you need gold for consuming, buy it. If you need for consumption 10 years later, keep buying regularly – as much as you will consume at a later date.
Stop calling it an investment, that is all.
And ha, be ready for Risk and Return. Volatility too. Enjoy the trip!
Investing is a lot about luck – any investor will tell you that. I have said this in an earlier post also. For example I sold hdfc, l&t, and tata power (in 2007) (skill, I thought they were overpriced in a slowing down market) – they are still way below my sale price. Then I used some of that money to buy Basf (luck, I had no inkling that a buy back will be announced way, way above my cost price.
However, I do few, very few transactions in a year. That is why I realised the great pleasures of inaction. I normally use only equities or cash – am too lazy to move in and out of liquid funds and FMPs. Like preparing for a war can take a long time, and the war itself a short time – remember Field Marshall Sam Manekshaw told the then Prime Minister Indira Gandhi it would take him 6 months to prepare for the war? Well Indira Gandhi wanted the war in September, Sam said December, and Dec, 1971 it was.
Similarly preparing a portfolio, construction, asset allocation, goal oriented investment planning, creating an investment strategy, drafting the investment policy statement / strategy statement etc. are the things which take time. Trading / doing the transaction takes very little time. So spend time on all these and little time in trading. It will help.
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