December 02, 2006

Make hay while the sun shines

NIFTY has reached the 4000 mark, SENSEX has zoomed past 13000 and there are debates whether it would cross 15000, India`s GDP growth has been an incredible over 9% this year....are these are all positive news for the retail investors?, is it time to get more equity exposure to your portfolio?. Maybe yes...

Many of us wish to increase our wealth by working hard, negotiating for a higher pay package and in the process end up changing jobs, dream to become a VP in the next 2 years? the list is endless.....all these aspirations are not bad, its a human tendency...but do we plan our investments? do you know how much amount and in which instrument (bank CD,bonds,stocks,Mutual Funds) and for how long you wish to stay invested? Just ponder over these following points.....

Some investing gyaan from what my investment experiences have been till now....

1. Dont work for money. Make the money work for you. Ofcourse returns on investment are not guaranteed but saving a part and investing it wisely and in a disciplined manner would yield good returns. These days a 5% return on a bank CD may look peanuts in front of a Mutual Fund giving 40% annual returns, but just dont ignore these safe investment avenues (bank deposits, government bonds), they should make up certain percentage of your folio (how much % is up to you to decide).

2. Dont be obesssive about stock index and the stocks in your folio! Dont panic when the index falls (most people do this mistake and end up liquidating their portfolio at a loss). Have an investment horizon of atleast 2-3 years. Frequent trading will make only your broker rich!

3. If an investment decision has resulted sour, just accept it. Maybe sell it at some loss but you can reinvest the amount in some other way."A sensible investor
is one who takes losses".

4. "People sell their winners too early and keep their loosers for too long". The message is clear and is a feature of investment pshycology!

I shall be posting more of my experiences in the near future....your comments are most welcome.

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