investing Archives – Page 13 of 19

Are you a disciplined investor?

February 10, 2016 by Vipin Khandelwal

Do you know more than 95% investors fail to create wealth for themselves or find it difficult to reach their financial goals?

Why?

They cannot control their behaviour. It means that they fall prey to their own emotions. They do everything that an investor should not be doing. Here are some of them:

Don’t have any goals
No plan, random last minute action such as for tax savings
Copy friends and family
Take advice from popular news media
Falling for highest returns

In short, they just lack the discipline to be an investor.

What is discipline after all? Discipline is about behaviour. It is about awareness, alertness and action, in that order.

Discipline is paramount in every walk of life and you too, as an investor, cannot remain immune to it.

What makes a disciplined investor?

Investments for Beginners: Understand 3 essential elements

February 5, 2016 by Vipin Khandelwal

Essential Elements of investments - Safety, Liquidity, Returns

Before you make an investment decision, you would knowingly or unknowingly run the following questions in your mind:

Will my money be safe?
Will I get my money back when I need it?
What return will I earn from it?

These questions are about the 3 essential elements of investments – Safety, Liquidity and Returns.

Let’s see what are you most likely to do if you were to focus on just one of the elements.

What is the safest investment? You would typically invest in a PPF, NSC, Government Securities/Bonds, Bank Fixed Deposits, etc.

What is the most liquid? Well, cash in the locker, money under the mattress or your savings/ current account are the likely places.

What will give the highest or best return? Now, that’s where the conflict begins. Will this be the one with highest safety and liquidity?

Do you have a written investment strategy?

January 26, 2016 by Vipin Khandelwal

It is not news that most ‘investors’ do not have a thought through investment strategy. Asking for a written one is a far cry.

In good time, you would agree that your investments continue to be random acts driven by popularity, hearsay and need to just get the best returns.

The same randomness is equally visible in the not so good times. Stop systematic investments, sell current investment due to panic or take a vow to altogether avoid any market linked investments are some examples of these random acts.

If you were to ask me the difference between having a strategy and not having one, it would be that an investment strategy helps you stay the course. You know why you are doing what you are doing.

An investment strategy holds your investments together and hopefully, you too. It keeps you sane. It is difficult to waver a mind that understands the ‘purpose’.

Call it a set of road rules in your journey of financial independence.

What is an investment strategy like?

The investment strategy is a set of guidelines that direct your savings towards investments in a way that help you meet your financial goals.

I am sharing with you the investment strategy for one of my client’s – let’s call him Bruce Lee.

Understanding Risk and Volatility – a primer

January 20, 2016 by Vipin Khandelwal

“The markets are so volatile. Isn’t it risky to invest now?”

If you are an investor in stocks or mutual funds, this is a likely thought that must have crossed your mind recently.

Let me ask you, “What’s actually worrying you – the volatility or the risk?”

If this has got you to wonder as to which of the two, risk and volatility, is your real concern, then this post is for you. Let’s understand them better.

Reintroducing Risk and Volatility

With respect to investments, risk is the chance that you may lose some or all of your investment amount permanently.

Small Savings Schemes – Rates get further smaller

January 15, 2016 by Vipin Khandelwal

Why does bad news get more attention than good news? Not just that, it also triggers us into action.

I realised it yet again when my friend Vijay told me anxiously about a news he just heard.

“Did you read that the government is planning to reduce interest rates on small saving schemes?”

Small savings schemes include National Savings Certificates, Senior Citizen Savings Scheme, Post Office Monthly Income Scheme, PPF, etc.

“Yes, I heard that. But why are you bothered?” I said with my tongue-in-cheek.

“You know everything, yet you ask me that. Almost all my money is in these schemes, in fact most of it in Bank Fixed Deposits. Aren’t my returns going to suffer because of the reduction in interest rates?”

What is the Common Account Number of Mutual Funds?

March 14, 2016December 31, 2015 by Vipin Khandelwal

[This post originally appeared on the Unovest Blog. Click here to read it there.]

Life without a Common Account Number (CAN)

Rohit wrote to me recently asking for advice on his mutual fund portfolio. He shared with me an excel sheet that he used to track his investments. It had the names of the funds, the folio numbers, in whose name the holding was, the broker who had facilitated the transaction, amount invested and units.

I suggested to Rohit that we verify all the investment holdings from the AMC or Registrar statements. I shared with him the link to download a consolidated statement across all mutual funds.

However, the pre-condition for this to work is that you have a common email id registered for all your investments. The consolidated statement will reflect only those investment of yours which have the same email id.

If you have multiple email ids then you have to generate multiple statements using one email id at a time.

Rohit did some work only to realise that he was NOT able to get statements of all his holdings. First he realised that he had used 2 email ids. So he generated two statements. But that still didn’t sum up for all his investments.

He then realised that probably some of his investments don’t even have a email id registered.