Browse Month

October 2017

Investing Thoughts

Weekend Thoughts – 2

 

  • Credit Card companies really love it when you buy and don’t pay in full. Interest payment gets compounded & their money earns on your money.
  • Just like you stay calm with your investments in FDs, do it with equity as well. The only caveat is you need to stay calm for 10-15 years.
  • Your Financial Independence in the future depends on how you treat your money today.
  • You can earn huge amount of money only if you tend to wait for decades and let money multiply on its own.
  • Never underestimate the power of compounding. It may look small in initial years but gets really huge when given a long time period.
  • If you want your money to support you in your retirement, start investing now.
  • Investing in the right assets earn you extra money which gets compounded year on year. Keep on following the process. It’ll make you filthy rich.
  • Inflation is your money’s enemy. It erodes its value. Invest in assets which give returns better than inflation & FD isn’t that asset.
  • Don’t become a servant to your home or car EMIs. Rather, choose to invest in a financial asset and earn more returns in long-term.
  • Invest as much as you can if you are staying in your home. Because that’s when your expenses are really low.

 

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Why people lose money in best performing funds

Why Do So Many People Lose Money in Top-Performing Mutual Funds?

 

I have observed that a lot of people tend to lose money on their investments in top performing funds. The reason is not the performance of the fund but the temperament of the investor himself. You would think why would an investor lose his/her money in the best performing fund.

 

The reasons can be plenty but I would highlight some of the reasons below:

 

  1. It’s because of investor’s inability to hold onto his/her investments for a long period of time. By saying a long period of time, I generally mean a minimum time span of 10-15 years. You need to give at least this much time to your investments in order to build a huge wealth.
  2. Secondly, I believe that people tend to buy when the markets are rising. They prefer to buy in the bull markets when the prices are too high and sell them in panic whenever a crash happens.
  3. Apart from that, people generally get impatient and sell their investments in a year or two if they don’t get to see much appreciation in their wealth. They need to understand that building wealth is a long-term process. Even a baby can’t be produced in one day.

 

The thumb rule is: Unless you don’t learn to sit tight on your investments and sell them in panic, you’ll keep on losing your money.

 

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Investing Thoughts

Weekend Thoughts – 1

 

  • Apart from investing your money, you must invest in yourself as well. The more you learn, the more you earn. And the more you invest.
  • No matter how much you earn. If you don’t gain the required financial intelligence, you won’t be able to preserve it.
  • Avoid investing in penny stocks. Just because the price is low doesn’t mean you’ll get the growth and quality.
  • If you want to earn average returns, invest in Index Funds. If you want to achieve extraordinary returns, you’ll have to do extraordinary.
  • As long as you are avoiding the market hiccups, you are on the road heading towards getting rich.
  • Invest the money which you don’t need for 10-15 years. Make it grow by compounding it year-by-year. Works best in long-term.
  • If you develop the conviction of achieving 1000% from your pick, you won’t settle with early 10-20% gains. Your behavior matters the most.
  • If you invest in appreciating assets(equities), you’ll reap the benefits some day or another. Avoid investing in depreciating assets(cars).
  • Cigarettes & Tobacco – 2K Monthly. Do you know how much money you lose? At 12% CAGR, you can turn it into 1.1Cr over 20 years.
  • Always focus on long-term strategy. By reaping benefits of long-term compounding, you can convert a paltry amount into a huge corpus.

 

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story of indians of manhattan

Those $24 Are Worth $281-Trillion Today!!!

 

I am sure that all of you must have heard about the famous Manhattan Island in New York City. It’s one of the financial and commercial centers of America which also includes the iconic Empire State Building as well as Times Square.

 

But do you really know how much did Indians of Manhattan get from immigrants by selling it in 1626? Just$24.

 

Yes, Indians of Manhattan sold the whole island for $24. Today, the book value of the whole land is worth $30-Billion (as per reports). And if you believe the market reports, the value of the land should be double the book-value i.e. $60-Billion. The value appreciated by whopping 216666666567% in these many years. Big deal, right?

 

Hold on. Let me show you the other side of the story.

 

What if the Indians of Manhattan had invested those $24 in 1626 at the rate of 8%? Well, the amount of $24, compounded annually at the rate of 8% in a time period of 1626-2017, would have been worth $281-Trillion. Money would have compounded for whopping 391 years. 

 

Had they invested it at 7%, the final amount would have been $7.4-Trillion. And that’s the difference a minute change in percentage makes. A difference of 1% CAGR would have reduced the final amount by a huge margin of $273.6-Trillion.

 

Lessons to be learned from this story:

 

  1. Always take a long-term perspective while investing your money.
  2. Let your money compound for a long period of time. It’s when it works best.

 

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