17/06/2017
INVESTMENT TIP FOR THE WEEK - SIMPLE INVESTING LESSONS
1. Continuous out performance is impossible: It is not possible for a fund manager to outperform all other funds over all time periods. If ICICI Prudential Discovery has performed better than say HDFC Top 200 over the past 5 years, it does not mean it would have beaten the same fund over 3 months, 6 months, 1 year, 3 years, and so on. It may happen, but it is not necessary that it will happen.As long as a fund is meeting your objectives, do not bother too much about its relative performance, or relative out performance.
2. Saving is difficult, investing is easy: Many people do not invest because they cannot save (or spare) that small amount every month – Rs. 500 or Rs. 50,000 – whatever. So, if you started early and saved instead of investing (means you did a RD instead of doing a SIP) you are still smarter than your friends who did neither. Once you set up a habit of saving 1,000 a month or more, starting a SIP instead of a RD is easy.
3. Better early and wrong, than right and late: Between starting early and starting late, starting early even in the wrong fund, is a better option.
4. Any way that you invest (or worse, not invest at all) there is risk: Risk of inflation, concentration risk, holding in single name without a nominee - risks are there in every corner if you invest. However, there are risks even if you do not invest.
5. Risk management is not easy: Why even investing is not easy, but many people think they can handle it themselves. I have seen both successful DIY investors and unsuccessful DIY investors.
6. Investing is all in the head: 90 per cent of investing is in the head, and the other 10 per cent is mental.
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