Let me first tell you who is a successful Investor! Who is a successful Investor? To be a successful investor do you:

1. Have to beat the index?

2. Perform better than Warren Buffet, Rakesh Jhunjhunwala, Prashant Jain? Uh….

3. Get better returns than your classmate, brother in law, friend…(Relative’s return?)

NO. To me there is only one Goal of Investing. It has to be to meet your Goals. Bringing us to the most important thing in Investing – GOAL BASED INVESTING.

Now that we know who is a successful investor let us look at a successful investor!

1. They do concentrate on costs: Whether they are dealing with an IFA or  a website for investing, they have a good view of their costs. I am still not sure whether to pay 2.25 for a good fund house delivering 19%p.a. or 1.5% for a fund house getting 12%. This is not easy to understand, but a regular monitoring helps. Almost all of them use an IFA – and on portfolios of say Rs. 5 crores it is worth using an IFA – and negotiate the fee. It works.

2. They keep the bigger picture in mind: They know their strategic asset allocation and do not worry about one quarter or the next quarter. They know fund manager styles, know which fund manager is not corrupt, and know which fund manager accepts criticism. They do not bother who is the Prime Minister or Finance Minister – because honestly over a 100+ year wealth management cycle this will not matter. They realize that wealth creation is very different from lifestyle management.

3. They defer taxes: Avoiding taxes is a crime, but deferring it is a brilliant tax ploy. I know people who do not understand it, and I know many, many people whom I have helped implement this simple technique. So suddenly a person with a Rs.3 crore portfolio goes to a zero tax bracket. It is simple and can be done.

4. They keep it simple: If you run a channel you need a lot of talking heads. They need to talk, and the more you talk the more you complicate. I have seen portfolios with Franklin India Bluechip, Hdfc Prudence, Prima, Prima Plus, Top 200, held for more than 15 years. Simple does not mean small. Many of these people have 8 digits and 9 digit portfolios and are not averse to putting more money into the funds that perform. I know one friend who buys Asian Paints, Hdfc bank, Colgate, Hul on a regular basis – and not only on dips. Remember “Less is More”.

5. They have discipline:  Some of them have written down statements, many of them do not. They know which is their trading portfolio and which is their investing portfolios. I actually encourage them to have 2 brokers – for trading and for investing. One investor I know has 4 fund managers looking after about Rs. 65 crores of total portfolio. Each fund manager is rewarded differently. His fund manager cannot choose the broker, that the client himself does.

6. They follow the money: If you do not know how your advisers are compensated and where there is a conflict of interest chances are you will get ripped off. If you do not know it, follow the money and you can understand what is happening. These guys are damn good at it and treat everybody well, while protecting their backsides. They make sure that their bank RM is a little happy so that when time comes they ask their RM to stand outside the branch to collect Rs. 100,000 cash because they are too lazy to go into the bank and withdraw money and they do not want their servants to know that they are withdrawing cash. So follow the money!

7. In many cases their families have no clue about their net-worth: Or they have a clue, but not the full picture. One person I know gets all the work done by his wife – says that is the best way to teach. His wife and daughter know every transaction – and recently he was telling his wife “I have done this deal and owe Mr. S about Rs…….in cash”. In case I pop it pay it to Mr. S and keep Subra with you he knows the seller. Sometimes it is nice to involve strangers like Subra sometimes it is risky. Either your family knows or you do brilliant record keeping….

many more…but 7 habits is the name of a big book, right?


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  1. Keeping the bigger picture in mind is i guess the most important, a client once remarked that beyond a point everyone should understand they are investing for their children who are growing up fast or have already grown up, would they appreciate what you have done? Keeping this in mind lets one investment decisions be simple to understand.

  2. Who is a successful Investor?

    one who works only 4hrs a day, has the best business model in the world, talks to god directly during evening walks, is a leader of tribal people and can distill the entire world’s wisdom in an almanack @ 10k p.a 😛

  3. How do you implement Point 3? (The one about deferring taxes?)

    How to choose ‘the right instrument’ to help defer taxes?
    Eg. NPS helps us defer taxes, so should we invest in NPS? No, according to Prof. Pattu.

    When you have a minute, could you please shed some light on the matter?

  4. Also, for the salaried class, we have instruments like NPS, Superannuation, increasing employee PF contribution to reduce the taxable income. What else should one do?

    I really don’t know how someone with 3 crores goes to a zero tax bracket. Hang on. I re-read what you wrote. You said a 3 crore portfolio. I wrongly interpreted it as 3 crores of annual income. My bad.

    Nevertheless, would definitely be interested to know more about this aspect.

  5. Hi Subra,

    Wanted to know your views on our Investment strategy which we have solely created by regularly reading your blog for past 2.5 years
    We are a newly married working couple(aged 29) with a combined take-home salary of 1,50,000. Our Monthly expense is as follows
    Income- 150000
    Home Loan EMI- 32850
    Equity MF(Quantum Long-Term Equity,IDFC Nifty,ICICI Bluechip) – 80000
    Debt (MF,RD)- 10000
    Monthly Expense- 27000
    Please let us know your views & whether we require a PF Planner.

    Thanks in Advance

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