I have shouted myself hoarse, and that too many times – investing is simple. A simple savings account, a simple credit card, a simple term insurance, a simple diet, a simple exercise regimen – dammit life is simple.
All the people in the world know it, maybe we Indians do not know it.
People who read my blog and buying ULIP – get my goat! No clue why people pay lip service to all the ‘Knowledge’ they claim to get from my blog – WFT are u doing with all the ‘knowledge’ that you gain dammit?
Some simple steps like spending less than what you earn, saving and then converting that saving to investing, etc. are all simple right?
Many advisers you meet may have compared financial advise to medical advise. Not so fast. Not all advisers have taken 5 years to get their degree. No viva. No 95% rejection rate at admission level. No rigors of internship. No Continuing Professional Examination. So I would be a little worried if you thought that people with all those confusing qualifications are doctors, be warned. It is not so.
So here are another 5 simple steps:
1. Do not borrow: Most people who cannot create wealth for their families are those who spend MORE than what they earn. Simple – whether it be for a function, celebration, illness, vacation, or just living beyond your means it will kill you. Debt is NEGATIVE COMPOUNDING and kills.
2. Save, Invest and for heavens sake leave it untouched for long periods of time: Compounding worked for Warren Buffet, Rakesh Jhunjhunwala, Azim Premji, Tatas, Birlas, Rockfellers, Kennedys – the list is endless. You know what? It works for you and me also. My PPF account was opened in 1979 – imagine how powerful is the compounding effect! Even Warren Buffet was not ‘so’ rich when he was 40. He knew compounding would work for him. It did. So now he is 80+ and compounding has worked wonders for him!!
3. To make money you need not predict markets behaviour on a day to day basis. Unnecessary and completely useless. SIP in a well managed fund is a far more sensible option. Also if you are young try building a nice Blue Chip portfolio. Buy one or two shares a YEAR. You will have to create a funnel (screens as the pros call them) do research for 364 days and buy on one day. That is the ratio of Research: Action ratio that builds a good portfolio. Unless you have a team of pros doing research for you – like Prashant Jain, Siva, Naren and Bala have. You do not. Do not kid yourself thinking you can do all your research just sitting in one place. I get reports, I read them, then buzz a few people ask, then stop thinking about it for a week. Then revisit and find details which I had missed. Seriously, it is difficult if not impossible to teach experience.
4. More than 100 years ago when asked how will the markets be, Mr. J P Morgan said ‘Volatile’. I have used this quote many times. Only thing guaranteed in the market is volatility. This also leads me to a Tamil saying which is ‘trying to take a dip in the ocean AFTER the waves have stopped’. Read it together – you will never ever be able to enter the markets if you wait for the the volatility to be over. That is IMPOSSIBLE. So enter the market TODAY. Shut out the MEDIA. They are here to entertain, not educate.
5. Keep an Investment diary, write down your goals, and keep track of your investing.
That is all. See no complications at all as promised.
Now just go and Do It.
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