Taken from the Big chill of 1983:
Michael: I don’t know anyone who could get through the day without two or three juicy rationalizations. They’re more important than sex.
Sam: Ah, come on. Nothing’s more important than sex.
Michael: Oh yeah? Ever gone a week without a rationalization?
Self-deception is especially costly when it comes to investing. So let’s consider some of the lies that a lot of you may be telling yourselves and the impact they may have on your portfolios.
Starting with Nassim Taleb’s sardonic story about forecasting. As the tale goes, a trader listened to the firm’s chief economist provide a forecast about the markets and then lost bundle acting on it, getting him fired. The trader angrily asked his boss why he was fired rather than the economist, as the economist’s poor forecast led to the poor trade. The boss replied, “You idiot, I’m not firing you for losing money. I’m firing you for listening to the economist.”
Here is a different sort of “top ten” list of interrelated investment insights and recommendations – mistakes that are both common and deadly – for us to try to correct for 2015 and beyond :-
- We don’t prioritize properly in financial planning: Your savings rate is far more important than your rate of return in determining how bright your future is likely to be. However, we are far more likely to obsess over squeaking out a bit more performance out of our investments rather than thinking about ways to save more. Continue reading “Mistakes that an Investor keep on repeating”
Mutual Funds are the best tools for long-term wealth creation. But, the challenge is to identify good and top performing mutual funds that can help you in achieving your Financial Goals. There are hundreds of mutual fund schemes which are available in the market. Besides this, there are plethora of NFOs (New Fund Offers, new schemes) which keep hitting the market. Identifying good mutual fund for long-term investment is not an easy task.
Remember Wealth creation’ is a boring activity like Test cricket where a quick fifty or hundred may not always win you a game. You need the solidity and consistency of a Rahul Dravid or a Laxman more often than the flamboyance of a Kohali/Sehwag to be able to emerge victorious over the five days.
Here are some rules to be followed for the SIP Continue reading “Stop Thinking Start Investing – Systematic Investment Plan”
How concerned should we be about the cyclical performance of fund managers or of our own portfolio?
Performance differences, relative to a market benchmark, don’t really matter over the long-term. Short-term (months or years) under-performance is a fact of life if you are trying to beat the market.
Investors are better off investing in an index fund if they can’t deal with this fact. Otherwise, with human behavior being what it is, investors who can’t accept this fact will buy high and sell low –destroying their wealth in the process.
Volatility and the cyclical performance of active management (i.e. investors trying to beat the market) are really blessings in disguise for long-term investors. Continue reading “Do Professionals really beat the market? Or it’s a Paradox”
This is the post that I will try to put up in lay man language as most of my friends, relatives really wanted to understand why to invest or not to invest money under ELSS for section 80C.
So where all you can invest to save tax if you are salaried employee, Insurance, PPF, NSC, ULIP,
Well I will concentrate on the ELSS – Equity linked Savings Scheme
ELSS is a type of mutual fund, where majority of the corpus is invested equity and equity related products. Investment in ELSS has lock in period of 3 years and it has tax benefits. ELSS are not at all risk free , there is no fixed return , ELSS are open-ended and investor can subscribe to fund on any given day. Continue reading “A Post on Explaining ELSS”