Timeless Wisdom For Investors
Timeless Wisdom For Investors
If experience is anything to go by, we have seen investors make decisions that undermine their ability to make huge returns on their investments. However, there are surely exceptions to this, and we have many respected investors who have built fortunes in their lives by practising some simple principles of wealth creation. The experience of these investors are widely shared, yet rarely practised. In this article, we hope to share some of these timeless pieces of wisdom for investors aspiring to be successful at investing.
"Go to bed smarter than when you woke up." - Carlie Munger.
No amount of reading and learning is enough for any true investor. The search for a better understanding of businesses is a constant endeavour, even for those who have made it. Constant learning is however expected only of those making direct ‘stock’ investment decisions themselves. Retail investors often do not have the same time and acumen to commit to understanding economic cycles, industries and companies. They can simply outsource this to fund managers and focus on investment behaviour instead. However, knowledge and understanding of markets, asset classes, products, investment strategies and the principles of wealth creation is still expected from all investors.
"Never invest in any idea you can’t illustrate with a crayon" - Peter Lynch
We do not often read much about risk, nor is it taught well in schools or colleges. Yet, risks exist in our every endeavour and aspect of life. Risk exists in not doing anything, and it exists even when you do decide to do one or the other thing. There is also a misconception that the higher the risks, the higher the return. When we talk about long-term investing, diversification and disciplined investments, aren’t we talking about lower risks and higher returns? The greatest risks emanate not from market or investment or product risks, but from our investment behaviour and our decisions. The more we learn, understand and gain experience, the better will be our understanding of risks and our decisions.
"I'm only rich because I know when I'm wrong." - George Soros
Successful investors focus on eliminating costly mistakes more than focusing on finding big ideas. The fewer the mistakes, the greater the probability that your gains and growth, even if nominal, will not erode and will sustain for a longer duration. Wealth cut short by costly mistakes hugely impacts long term wealth creation prospects and is like cutting a growing plant repeatedly and praying it grows fast. One good thing about investing is that you do not need many great ideas, a few are enough, as long as you avoid big mistakes.
"The single greatest edge an investor can have is a long-term orientation." - Seth Klarman
Often, retail investors are attracted by growth prospects in the short term. The recent bull run, the IPO fad, is a pointer to this behavioural reality. However, markets move through different cycles over the long run. Expecting and sustaining high short-term growth rates over long periods of time is next to impossible. Trading, taking short-term positions, hunting for ideas, etc are nothing but short term distractions. A 10% gain or a loss in a day will not bother a long term investor. An experienced and successful investor will stay away from the distractions of short-term thinking and only focus on long-term growth prospects.
"It never was my thinking that made big money for me. It was always my sitting." - Jesse Livermore
True success lies in simplicity and investors who keep things simple, eventually cherish the beauty of the same. History has taught us that people who try not to be stupid have a tremendous long-term advantage over people who try to be intelligent. It is but natural that the more you know, the lesser investment decisions will you make, and they will most likely be the right ones. Being disciplined in your investment approach and having a strategy to follow also helps you make fewer decisions. The more action you venture into, the greater is your probability of making losses. Smart investors make fewer investment decisions, after thorough research and stick to it with conviction, something which most investors fail to do.
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffet
The ability to have patience with your conviction has simply no substitute. Your patience will greatly reward you in the long term, where the power of compounding will make all the difference. Letting your winners run and not selling them off early is not easy, and yet is the most successful strategy to build wealth. It is a road often not taken and is a lot less crowded.
"Individuals who cannot master their emotions are ill-suited to profit from the investment process." Benjamin Graham.
If an investor cannot control emotions, he/she cannot control money. One is likely to be reactive and suffer consequences if emotions are attached to any decision-making process, let alone financial decisions. True power lies in sitting back and observing/understanding everything with logic. True power lies in restraint and self-discipline. Fear, greed, hope, non-acceptance, ego, etc. are some of the many emotions that cloud our investment decisions. Stay away from emotions. Practice, practice and practice to be good at it.
Bridging the Divide: Financial Empowerment for Women
Bridging the Divide: Financial Empowerment for Women
Picture this. Six of India’s last eight medallists at the Olympics are women! In this year’s edition, all the three medals won and assured are by women till the time of writing this article. Clearly, they have been the saving face for India and for all of us. What is more inspiring is the number of difficulties and challenges that these women have faced in order to become who they are today.
Read More...
Why not? Perhaps that may be the right question. Everyone must have an equitable share of opportunities and should be equally trusted. That’s the basic underpinning of any progressive society, developing society. At a broader level, unleashing the potential of women, as labour force, savers and investors will also boost India’s economy. One study indicated that if women had the same financial incentives and opportunities in the labour force, the GDP would rise over 26%. Yet, about 51% of the work done by women is unpaid. Unfortunately, the work-life of women is also less than men because of various reasons like marriage, raising a child, social commitments, homemaker duties, health issues, and so on. Generally, women also receive less pay than men. This makes things already a lot more challenging for them.
Now lets’ look at the micro picture. A study indicated that earning women spent over 90% of their income on families, directly improving the health and education outcomes. A man may or may not be a bread-earner, but a woman is always the homemaker, irrespective of whether she is earning or not earning. With urban, nuclear families, the spouse/homemaker is the one you turn to for support, either social, emotional or even financial.
In case anything happens to the sole-bread earner of the family, the lady often has to carry the burden of the family. Imagine what will happen in situations where there is divorce with or death or disability of the husband? Women generally don't have any clue about their family finances and are left totally lost in case of an emergency. Women also find it hard to get a fair distribution of inheritance and business legacies. For so many reasons and more, women continue to be vulnerable and financially dependent, something we don’t want them to be. And hence, financial empowerment is the need of the hour.
There is no doubt that financially literate, independent and empowered women can be transformational for families, communities and society. However, the onus of change is upon the women themselves, rather than again depending on the men to do so. They have to step up and stake their claims for a fair share of financial independence. And as responsible, mature men, we should encourage our women to do so.
Here is the path one can pursue...
  1. Realise the necessity for you as a girl/woman to be financially literate. If you are earning, start aspiring to be financially independent and empowered.
  2. Have a conversation with your father and/or your spouse and share your desires /aspirations.
  3. Start on your own by increasing your knowledge and understanding of financial matters. There is no dearth of resources easily available to do so.
  4. Start questioning, understanding and participating in important financial decisions that affect you and your family.
  5. Keep proper documentation and records of bank //insurance /investment /property, etc and details of important advisors to the family, as a preparation for any emergency.
  6. Open your bank savings and investment accounts. Start saving independently and learn from your financial products' distributor /advisor.
  7. Start taking ownership of your money and deal with it the way you deem fit.
  8. Start investing for an emergency fund and for your own financial goals.
Women have been known to be smart savers and money managers at home. It is time to take the next step. Being financially independent will boost one’s self-image, confidence, and will command greater say and respect in the family. Let us work together, lend support to the women of the home for not just financial empowerment, but also to realise their own dreams in life. Let us begin the change in our own homes first.
NJ E-wealth
Riders in Motor Insurance for better coverage
Riders in Motor Insurance for better coverage
Most of us are familiar with the life and health insurance policies and the riders available to us. Just like any other policy, a motor insurance policy too is a tool for financial protection to us. And just like an adequate cover is necessary for life and health insurance, and adequate cover is also necessary for our vehicles.
Read More...
This is the most basic and common type of vehicle insurance and is also referred to as liability-only insurance. The Motor Vehicles Act, 1988 has made it mandatory for all vehicle owners to purchase a third-party insurance policy. It is thus illegal to drive without a valid insurance policy in India and it can invite both, fines and/or imprisonment. A third-party motor insurance, being a basic policy, covers only the damages and losses caused to a third-party person, vehicle or property and leaves out everything else.
As the name suggests, a comprehensive insurance policy has a wide coverage and offers complete protection to both the parties involved in an accident. So, the damages to self, car, as well as the other party involved in the accident are covered by the comprehensive policy, up to the maximum coverage amount. While the maximum amount of coverage for injuries/death under this policy is unlimited, there is a cap on coverage for third-party property damage. This type of plan safeguards the insured vehicle against vandalism, theft, fire, flood, natural disasters, damages caused by birds /animals /falling objects, etc in addition to third-party liability.
Every vehicle owner may have specific requirements and expectations, and a basic policy will not be able to cover the same. Fortunately, vehicle owners can select covers as per requirements and get peace of mind. Here are some of the most common riders /add-ons...
Also known as a nil depreciation cover, can lead to sizable savings at the time of claim. How? As soon you buy a car, it depreciates in value and when you file a claim, all the depreciation-related expenses are not usually reimbursed. Say if you have damages of Rs.1 lakh, and depreciation is amounting to Rs.50,000 you will only be reimbursed with Rs.50,000 not the Rs.1 lakh that you have to pay. In such a situation, a zero-depreciation cover can come to your rescue and the insurer will cover the expenses related to the depreciation of the vehicle and its parts.
A no claim bonus is basically a reward, in form of progressive discount, given by the insurer at the time of renewing your policy to those who do not make a claim during the tenure of the policy. However, this reward, which leads to substantial savings in renewal premium and which usually ranges between 20% to 50%, is lost when a claim is made. But with a no claim bonus protect cover, you can preserve this bonus even after making a claim during the tenure of the policy.
A standalone comprehensive policy does not cover the cost of repairing engine-related damages. By purchasing an engine protection cover, you can cover the cost of protecting your car’s engine. This add-on is especially relevant to those people who reside in areas that are prone to waterlogging.
Car theft is a major problem that is prevalent in major parts of the country. In case of a car theft, a comprehensive cover will reimburse the value of the car but might not cover it from total loss expenses. It is important to note that a RTI cover does not account for depreciation and thus, covers the actual invoice value of your vehicle.
While a comprehensive policy covers the owner or the driver, it does not offer protection to the passengers. This add-on can extend the personal accident coverage to the passengers as well.
A 24x7 car roadside assistance cover can be a saviour in the hour of need when there are problems with the car and one needs roadside assistance. It can help you in situations like flat tyre service, emergency towing help, vehicle key service, on spot repair, driver disability, emergency fuel delivery, cab service, etc.
From the perspective of a vehicle, individual vehicular components, engine oil, screen washers, among others are collectively considered as consumables. Despite being a part of the vehicle, the cost of covering these components does not fall within the purview of the insurance company. With this cover, their cost will be covered under the policy.
Buying and maintaining a vehicle today is a necessity, especially post pandemic. However, owning a vehicle comes with its own costs. It should never prove to be a financial burden in case of any unforeseen event. A comprehensive insurance cover with the right add-on covers and riders will make sure that you do not stare at a huge loss, your damages are minimised and you are financially protected. However, in order to truly benefit from the policy, you need to ensure that the motor insurance policy you purchase is adequate and holistically meets all your requirements.
NJ E-wealth
Fund Manager INTERVIEW
Partner Image
Ms. Lakshmi Iyer Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company Limited
Lakshmi heads fixed income and products team at KMAMC. She has been with the organization since 1999. Lakshmi joined KMAMC as a fund manager, and was responsible for credit research as well as deal execution, managing fund performance across all debt funds and assisting sales in client interaction.
Read More
NJ E-wealth

Kotak Deepak Amrutlal (ARN-127784)
AMFI REGISTERED MUTUAL FUND DISTRIBUTOR

Deepak A Kotak
  • Retirement Assessment
  • Child Future Assessment
  • Portfolio Review
  • Mutual Fund:Debt / Equity / ELSS

"We have taken due care and caution in compilation of this E Newsletter.Certain products and services offered may not be traded on exchange. All disputes with respect to the distribution activity, would not have access to the Exchange Investor Redressal Forum or Arbitration mechanism. The information has been obtained from various reliable sources. However, it does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions of the results obtained from the use of such information.In accordance with the applicable laws, we are permitted to only render incidental advice with respect to mutual fund products only to its mutual fund distribution client. For every other purpose, including distribution of non-mutual fund products, this material is for informational purposes only. Investors should seek proper financial advice regarding the appropriateness of investing in any of the schemes stated, discussed or recommended in this newsletter and should realise that the statements regarding future prospects may or may not realise. Mutual fund investments are subject to market risks, read all scheme related documents carefully. Past performance is for indicative purposes only and is not necessarily a guide to the future performance."

This Page is Best Viewed with Chrome Browsers

"Start for your financial well being soon. The future is promised to no one."

For better investment contact
9924298976
0281 2992850