Tips for ‘new’ investors – is what I thought should be the title of this post..changed it to..observations..so that new investors can read and learn…so let me enumerate:
- Do too much of trading and tell their wives that they are investing: Giving investing a bad name by not understanding the difference between Trading and Investing is a sine qua non of being a new investor. If your spouse is an investor (or he tells you that) – ask for the dividend income statement on a year to year basis. If your dividends are not growing at 12% per annum at the least, your Spouse is a TRADER.
- They think they are experts on world events. The way some of them talk about world events is amazing. If China hard lands and Japan has negative interest rates, and Na Mo does this and does that….Hello investor the world has seen world wars, skirmishes, fights, cold war, famines, floods, tsunami,….all YOU need to do is invest.
- They keep waiting for the world events to ‘settle’ down. There is a Tamil saying ‘you cannot have a bath in the ocean after the waves stop’. The world is always in a turmoil and keeps doing funny things…so relax. Start doing a SIP today. Do not wait till the index – Sensex reaches say 20k or whatever number. If you are going to invest a small sum regularly for a very long time – it frankly does not matter whether you start your journey in Feb 2016 or March 2016!!
- They fail to see what is working: If they have bought a particular share which is doing well and paying decent dividend and you have been holding it for say 5 years, it may be worthwhile to add more of it instead of looking for a new share to buy!!
- They make no attempt to understand risk, let alone manage it.
- They do not understand that an Investment Strategy is not about Market Timing at all. So they keep trying Market Timing and become happy constantly entitled to be called ‘the voluntary contributors to the broker welfare fund’. Relax, keep it simple.
- Resolving Market Fear is a process. There is no magic moment. Resolving market worries is a process, not an event.
- They go all In or go all Out! You can be partially invested in equities at all points in time…..why do an ‘all’ or ‘none’.
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