First of all let us be happy about one thing – we have enough money that we are reading about creating wealth. I can start a class by saying “by the end of this class you will all be wealthier” – all I have to do is distribute Rs. 100 at the end of the session. I would have made you richer, right?

So let us see what is getting wealthier. The amount has to be significant and has to be over a period of time. ALL OF US WHO EARN, and spend less than what we earn will get rich. Give the investment time, love and patience, you will get rich. Buffett and Munger too have got enormously wealthy over a long period of time (do not ignore the ‘n’ part of their portfolio).

When I visit investor forums I see so many arguments of direct equity vs Mutual fund, do you need an adviser, how many funds, should I switch, ..etc..etc. Believe me, all this will have NO (repeat no) impact on your portfolio unless you got the following correct:

  1. Start early (ok not elaborating on this)
  2. Look at the TOTAL impact on your portfolio and your life: If you have a Rs. 20 crore portfolio making a single investment of Rs. 10 Lakhs will not matter at all. If the fund did well or did not do well it will have no impact on your portfolio. Similarly if you have a Rs. 400,000 portfolio do not make a single investment of Rs. 5000. A sip of Rs.5000 is good but not a single investment. Also if one fund or equity share goes up or down consider the impact on your OVERALL portfolio. So on a Rs. 400,000 portfolio Rs. 5000 will not really matter – it is about 1% and the impact of Rs. 10 L on a Rs. 20 crore portfolio is similar. All changes in your portfolio should be compared to the total portfolio – it controls your greed and fear. Or Regret.
  3. Asset allocation: Most Indian portfolios are under weighted on equities. So if 10% of your Rs. 25,00,000 portfolio is in equities, there is no point in getting into discussions about Value, Growth, direct, Index, switching…stop wasting time. Get your financial goals/objectives in synch with your Asset allocation. Most of us will need to have at least about 70% of our assets in a nice core multi cap fund. Get this right.
  4. Track Investment performance: at least at the broad level. There are free websites like Valueresearchonline, Moneycontrol, etc. which will tell you how your personal portfolio is doing. You do not need anything more sophisticated, but please make a start. Create your balance sheet, calculate your net worth, and see whether it is going up year on year..
  5. Maintain an Investment diary: which writes down why you bought, with which goal is the asset aligned, what returns you expect, how will you judge the performance, and what will be the reasons that you will get rid of it. If you do not do this, the chances are the asset will over stay its time in your portfolio. You will not be smarter, but just more irritable and irrational when somebody questions your portfolio. Remove the bias.
  6. Earn more in your core business/job: a greater income after a particular threshold will OBVIOUSLY get invested. If it is not so obvious in your life, make it obvious. Start investing more, and improve the asset allocation.
  7. Teach personal finance to your family: I have made a career out of teaching personal finance, and I can assure you I have enjoyed every minute of my existence. Make sure that you keep learning and teaching it to your family and friends. It feels awesome to have people come up to you and say “remember when we started out in 2000 …my xyz sip is still continuing and I feel great when I see people doing 2 year SIPs!”.
  8. Teach delayed gratification and the benefit of compounding to your 3 year old at home. Believe me that kid will bless you.

Sure there are many more things…but if you can get these right FIRST we can then get into a smart alpha v dumb alpha v lucky alpha debate.


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  1. Are you pointing at me. My son turned thee yesterday, wants toffee chocolate all the time, it’s very hard to say no… Just one trick works “beta hum sham ko khaye ge, papa ke pass paise nahi hai”

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