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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  1. thank you for the article. for me , in brief:
    1.Equity and Real estate were considered investing. — be ready for Risk and Return. Volatility too
    2.gold: 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. Unquote- better than cash or cash equivalent.
    3. I normally use only equities or cash – am too lazy to move in and out of liquid funds and FMPs. unquote- for direct equity,the time(when the price comes to your target buy price) is as important,at least for psychological satisfaction, as the selection of the share , you must have ready cash. you can’t wait redeeming liquid fund)
    4.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

  2. Hello Subra Sir,

    What should be done in Bond funds as yields have increased almost 90bps since 15th july alone should one stay invested or take out the money?

  3. As an NRI investor am getting tax free returns of nearly 12% per year on NRE FDs. I do have couple of SIPs in good MFs but the returns are underpar in last 3 years. I am looking at 3 factors. Safety of principal, Inflation and FD returns.

    With my SIP returns in last 3 years, I could not generate returns to the extent of inflation leave alone FD rates. Worse, after 3 years, my capital is at loss. This gets magnified if I count inflation. Looks to me that even if the market catches 30% upside in future which is very unlikely until the elections are over in India in next year, I may break even.

    I started to believe the recent statements of ‘long term equity investment in India is dead’. The decline in SIP portfolios, MF redemption, lack of retail investor participation only confirms the above assumption.

  4. @Krish
    3 years is not enough to judge on any asset. Economy goes through cycles & presently its a trough.

    Right question to ask is..
    Do you BELIEVE in equity markets?
    As you have seen in Western markets, Real Estate is in doldrums last 5-6 years. Would you STOP paying your EMI if your Home investment does not year returns for 3 years? Very likely, you may NOT. Because you BELIEVE, it WILL give good returns over long term.
    One needs to take a similar stance with equity markets. You need to START believing in equity markets. The past returns definitely show that it has given good returns. If you think Indian ECONOMY will GROW, you have to be in equity Markets. It will give better long-term (10 years) returns most other asset class.
    If YOU don’t have the BELIEF, you will grumble & chicken out.

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