basics investing stock markets

Basics to Keep in Mind while Investing in Stock Markets

basics investing stock markets

I am a fan of stock markets. But that is not the case with many people I discuss it with. The reason – they might have either lost or fear losing their hard-earned money. However, if you ask me, you will never lose sleep if you follow some basic rules of investing in stock market. Let me lay them down:

Invest With Your Surplus Money:

Never invest your core money in the markets. By that I mean the cash that buys monthly ration, pays your rent or bills, fees for kids, savings for exigencies and future necessities. After you’ve taken care of your expenses and set aside a safety margin, invest the remaining in stock market.

In my initial years of investing (right after I got out of engineering), I went for fixed income instruments – primarily PPFs and FDs. As I started earning more and expenses stayed more or less the same, I ventured into the markets. I bought some shares of prominent companies and also invested in a couple of mutual funds that were doing well. Over the years, I learned from my experiences and changed my tactics. Recently, I had record profits month-after-month.

Do Your Own Research Not Go by Recommendations:

You might be tempted to go by the recommendations that analysts come out with on a daily basis. However, nothing beats your own research. Moreover, you don’t need to be a top-notch finance graduate having vast experience to understand the markets.

An example: Just think about what runs the economy? Banks, right? Guess what, they have been doing exceedingly well since Mr Modi came to power. The whole Reforms and Demonetization process will strengthen the banking system and add to our GDP in the long run. If you look at front-line Banks and how their stock prices have moved, you would get the picture.

Go for Quality Stocks:

There are many ways to identify opportunities that can give you handsome returns in the short-to-medium-to-long term. However, without going into the technicalities, just go for companies that have strong fundamentals, quality management and have done well in the past.

One of my techniques is to look for sectors that will perform well in the future. For example, the Budget this year gave a lot of thrust on affordable housing, which meant the Housing Finance and Infrastructure Development companies were expected to do well. And they did! In fact, one could have easily made phenomenal returns by just investing in the sector-focused mutual funds post-budget.

There can be Dips too, Maintain Calm:

One of the basic mistakes that many of us do is to buy when markets have been performing well and sell when they dip. Though this is the basic human nature – of greed and panic – but maintaining calm is the very basic principle of investing. Even if you bought shares at a high price and they go down after your transaction, just keep calm. If it is a company that has proven its worth, it would definitely pay you one day.

I have a few shares of Reliance Industries since last 8 years. During the recession years of 2008-09, they went down terribly, but I never got rid of them. In the last year or so they have shown some traction and the counter has moved from about Rs 900 to around 1,400 recently. I added a few more to my holdings in the past and I am now looking to profit from my investment.

Don't Get Greedy if a Stock Performs Well:

While some investors go for a buy-and-hold strategy, I am not a fan of holding a stock for long. Ths is because you never know when the markets would take a turn for the worse. Having said that, there is nothing wrong with the earlier strategy; just that I prefer to book my profits when I am comfortable with the return.

I have a good number of shares of Manappuram Finance since late last year. I practiced holding onto it for a few years, but since my buy, it has moved up and gone down to my buy price a couple of times already. I could have done much better by selling when it went up, especially because I have a huge amount locked-up in that non-performing stock. So take a call based on individual experiences.

Never Put All Your Eggs in One Basket:

The most important advice: Just don’t buy one share or invest in one mutual fund. Spread your holdings across multiple stocks and mutual funds (and that too across multiple sectors). If you don’t have that much corpus to invest, start with top-performing mutual funds (after doing basic research) and invest using the SIP route. This would ensure any ups-and-downs in the markets are averaged out by your recurring buys.

I have stocks across more than 10 sectors and investments in more than 15 mutual funds (again, across sectors). This ensures if a couple are not performing to my expectations, the others more than make up for the loss. I always keep an eye on what is working and what is ready to be offloaded.

To conclude, there is no guarantee that you would make quick bucks in the stock market; but if you've covered the basics, you will surely make good money over time.

Alok is an Engineer (Gold Medalist), MBA in Finance from IIFT, and FRM certified. He has worked with many renowned Investment Banks in the US. He also writes at

money habits helps develop till 25

Money Habits You Must Develop Till 25

money habits must develop till 25

Fresh out of college, new job and with a fat paycheck - the experience can be overwhelming. With this newly acquired financial freedom comes great responsibility. To start with - break old money habits and adopt new. This rise in disposable income can bear fruit if we start managing our finances at an early age. And what better time to start it than our 20s?

Incorporate these habits in your life and say hello to financial stability very early on in life:

Say No to Borrowing

Let’s start by erasing the bad habits first. Act mature and stop relying on your parents and friends. In college, our allowance is tight. Hence we borrow from friends. There is no commitment on paying back, late fee, or interest. It’s a casual arrangement between friends. But don’t let this habit grow out of control. Manage your expenses in your own paycheck. Borrowing is a bad habit and in some cases, it can turn into an addiction. It’s easy money. It’s especially important to control borrowing when you are a compulsive shopper. This applies to piling up expenses on your credit card as well.

Cut your coat according to your cloth, as they say.

Make a Budget and Use Technology to Stick to it

It’s really easy to manage money these days. With online payments, apps, and mobile banking, we can streamline our finances. Set auto payments on rent, telephone, internet, and electricity bills. The forgetful ones can set reminders too. There are many tools available to set budget. Get an overall view on savings, spending on rent, food, travel from it. Adjust it to suit your lifestyle. Use apps to track your spendings. Cut the unnecessary expenses after evaluating your quarterly spending behavior. I recommend MoneyView app for managing expenses. Most important tip - save before you spend. Transfer funds into your saving account the day your paycheck arrives. Save at least 5%-10% every month.

Investment is your New Friend

Don’t merely save. Invest. At this young age, premiums are low. And returns can be high if we play smart. Compounding offers big benefits especially when you invest in your 20s. Make mutual funds, SIPs, and stock market your new friend. Learn more about them. If anyone in your family invests in the stock market, seek their guidance. Plan for buying your own house. Take a good insurance and retirement policy. These small steps would go a long way in fulfilling your long term dreams. Start soon and reap better returns.

Don’t Succumb to Social Pressure and Spend Beyond Means

It’s tough to break the habits we adopted while growing up. Most of the singles live away from their families making it tough to control the carefree spending habits. As singles, we hang out at malls, pubs, and movie theaters. High-cost places where most overspend. It’s is difficult to resist the temptation when we hang out with our friends. But it’s not impossible. Set a limit to the number of outings. Don’t spend because of peer pressure. Everyone has a different lifestyle and different goals. Learn to say ‘no’ when need be. Remember it’s easy to spend money but difficult to pay the bills.

Don’t Lend and Forget

In addition to borrowing and overspending, lending can also ruin your financial health. Lend money responsibly. Ask for the pay-back plan. It’s difficult to say no to friends who helped you earlier. But don’t let the gratitude derail your finances. Lend but don’t forget to ask for your money back.

Have at least One Financial Goal Every Year

Goals are important. They help us to look closely at our finances. Set at least one goal for a year. Big, small or break up a bigger goal into yearly targets. A few examples -

  • Small goal - gift diamond ring to mom
  • Big goal - save for the down payment of car
  • Break-up goal - buy a home by 30 and save 1.5 lakhs every year

Setting goals and achieving them bring a sense of achievement. It doubles the joy of earning money.

The early 20s is the time we set the foundation of our lives - family, house, and kids. Make a firm foundation by imbibing the above habits into your life.

A Company Secretary by profession, Saru found her true calling in writing. She blogs at which she religiously updates every Monday for the last five years.

invest gold

How to Invest in Gold?


invest gold

Festivals, auspicious occasions or as an investment, gold is a favourite buy in Indian households. Whether you buy it as jewellery, gold coins or gold bonds, it is an investment that never loses its sheen.

In this article, we explore the traditional and the new ways of buying gold.

Gold in India – Brief Overview

We all know, Indians love buying and hoarding gold. Passed on from generations, the coveted yellow metal has become a symbol of wealth, stability and status in our country. This characteristic to accumulate gold is actually a good one for the financial stability of each individual and also the country as a whole. Stock markets can crash; banks can go bust; oil price can tank in a matter of few months, but gold is the last commodity that will get hit in times of great financial crisis. In fact, one of the indicators for economic stability is the amount of gold reserves in a country. India has about 550 tonnes of reserve gold compared to the US which has a whopping 8133 tonnes of the precious metal.

On the contrary India is one of the largest consumers of gold importing almost 1000 tonnes per year! What’s happening here?

We accumulate gold and don’t circulate what we already have. This creates a need for imports that impacts our current account deficit. Imagine the situation where every Indian earns a salary but does not spend the money? The economy will actually collapse as there will be no circulation of currency and hence no growth. Capitalism works on liquidity and gold is not insulated to this phenomena. Indians hoard the gold for years, decades and in some cases centuries (like Temple Gold!)

As an amazing fact the Padmanabhaswamy Temple in Kerala is the wealthiest shrine in the world with estimated wealth of 1.2 trillion USD. This is still conservative and proves ancient India was extremely rich! What’s the use now? Most of the gold we have personally accumulated is not circulated which impacts our import bill and ultimately the country’s economy.

Gold Monetization Scheme

To counter this lack of circulation, the government has introduced the scheme for monetising your existing gold. At the moment most of it sits in lockers, accumulating dust. Through this scheme government wants to pay you interest on the gold you have if you deposit it with a bank much like a bank fixed deposit. Wow? No, there is a significant flip side to this.

The government will actually take your physical metal and issue gold bonds of equal value. So you will mostly lose your physical jewellery but not the actual value because of the issuance of the gold bond. The bond can be redeemed at the prevailing gold price at any time. You will also earn some interest, could be a neat 2% but nothing is confirmed as of now. Again there could be a psychological resistance for most Indian to give away physical gold for bonds (which is a piece of paper, like a share), but the government hopes that this mindset will gradually change.

Doing this, the country can gradually reduce this yellow metal's imports and still satisfy the demand of gold in the country. The advice is not to convert all your gold to this scheme, but you can consider doing a part of it for that extra income through interest.

Sovereign Gold Bond Scheme

To actually decrease the import of physical gold, the government is now giving an option to buy a bond which is nothing but a piece of paper. So for the ones who would like to buy gold as an investment, they could actually consider buying the bond rather than physical biscuits, coins etc. This will have three benefits:

  1. Safer as you don’t need to worry of keeping physical gold at home or in your locker.
  2. Easy to redeem
  3. You can potentially earn interest on the bond (yet to be confirmed by the government)
  4. Good for the country as it will reduce the need to import physical gold.

As a note, the Gold Bond scheme is different from Gold ETF which is much like a mutual fund. While you can earn an interest on a gold bond, the Gold ETF does not earn you any interest. Gold ETF is like a share of a company, you can buy and sell units of the ETF. On a flip side, the bond scheme has a lock-in period. This is yet to be confirmed.

So, the next time you go out to purchase gold for Navratri, Dhanteras, Akshaya Tritiya, Diwali or any other special occasion you can consider buying the bond instead of the actual gold!

As they say all that glitters is not gold, therefore you needn’t be worried about ISO marks anymore!

Final Word: Balance Practicality and Emotion

We Indians are an emotional lot. Sometimes we need to break some emotional barriers and make our lives better. Monetizing a small portion of your gold will help you earn some extra money and also help the country reduce the deficit due to gold imports. Is it time to open up those ancestral lockers?

Arjun Balakrishnan is an investment fanatic who loves writing about investment topics. He regularly writes at Investment Gyaan.

financial resolutions new financial year

5 Financial Resolutions for the New Financial Year

financial resolutions new financial year

April marks the start of a new Financial Year. Every new beginning gives us a chance to change for the better. This would be the perfect time to make financial resolutions for this financial year and for the life ahead for a secure and healthy financial future ahead. Here are 5 financial resolutions you must take this year:

I will Create an Emergency Fund

This resolution helps you remain prepared for the rainy day. Having a healthy corpus of at least 6 months’ expenses towards emergency fund is desirable since it helps you with a sufficient financial cushion towards any unforeseen event. So, if you have not yet created an emergency fund, making one should be your first priority in this financial year. Also, being a smart investor, invest this emergency corpus in relatively high-yielding, low-risk instruments like liquid funds etc.

I will Plan my Tax-Saving Investments over the Year

A disciplined and consistent approach is key to investing to achieve a desired set of goals. Being a finance professional, I do receive many phone calls in the month of March to guide people for tax saving instruments and this story continues every year. However, when you rush to invest in Feb-March,  you have fewer options available and end up investing in the instruments yielding lower returns. Also, investing at one go at the year-end stresses the finances during the respective period.

Hence, make sure you plan your tax saving investment at the beginning of the financial year itself. This will allow you to take more prudent saving  and investment decisions and keep you stress free.

I will Start Saving in a Systematic Manner

For a majority of the population, investing is only for the purposes of tax saving. Little do they realize that there is a larger investment scenario beyond tax savers. One must start saving and investing at an early age to reap the benefits of compounding. However, even if you could not start earlier, it’s always better to start now. You must enroll for systematic investments like Recurring Deposits, Systematic Investment Plans (SIPs) in Mutual Funds, etc. which help you inculcate a financial discipline with periodical investing. These small investments don’t make much difference on monthly basis but indeed go a long way in building a healthy investment corpus. 

I will Stay Informed about My Investments

When it comes to managing our money, lack of knowledge about various investing opportunities often restrains us from earning at least reasonable returns. Also, many of us are not aware of the investments already made, since they are generally made at the advice of a friend/ tax planner/ CA. Once the investment is made, we believe that the job is done.

But, if we monitor our investments, we can better plan our finances by including the redemptions and returns from such investments into our financial planning. Being an informed investor is the most important way to protect your money and, in fact, grow it steadily.  So, make sure, you prepare a complete list of your investments with details of redemption/maturity/returns etc. to help yourself make better investment decisions.

I will Keep Track of my Finances

As I become more savvy with managing my finances and investments, it is important that I track my finances regularly. There are some wonderful free apps like Money View which make this work simpler.

I resolve that I will keep my financial resolutions for this year and for the rest of my life. Do you?

Simardeep Singh is a Chartered Accountant based in Delhi. He loves sharing his knowledge about personal finance and investment. He blogs regularly at


When is the Right Time to Redeem Your Mutual Funds?

Investing is all about ‘getting in’ and ‘moving out’ at the right time. Going by the law of probability, one has an equal chance of getting both right or wrong. Common sense dictates that one must make investment during lows of the market and exit at the highs of the market to earn a decent return. But the general tendency is to buy at high prices, when the stock is experiencing euphoric buying and sell at low prices when the stock is going through the phase of panic selling. Let us help you take the right decision to redeem your mutual funds at the right time.

A disciplined and consistent approach is key to investing with the aim to achieve the desired goals. Hence, we must minimize discretion in the decision-making process. Discussed below are certain guidelines to redeem mutual funds: 

When the Fund is Continuously Underperforming

While daily monitoring of the investment portfolio for long-term goals is never suggested, one must monitor the portfolio once in a while (every fortnight or monthly) for its performance in order to reach the desired investment objective. When one fund continues to underperform as compared to the benchmark index or other funds in the portfolio, it is a good time to consider redeeming the fund. But, in order to continue staying invested in the markets, one must always consider switching the fund instead of redeeming and getting the amount in the bank account.

However, one must be careful to track the performance over a longer tenure and not get swayed by a month’s underperformance or outperformance of the fund. 

When the Investment Objective of the Fund Changes

Such changes are not a regular feature in the industry. Investment decisions are mostly taken by us in tandem with the investment objective and investment profiles of the mutual funds. For example, an aggressive investor chooses to invest in a small and midcap fund while a conservative investor may choose to invest in the gilt fund investing only in Govt. debt securities.

Hence, when a large cap fund widens its investment horizon to small cap shares as well, you may consider redeeming the fund, if the daily volatility in the portfolio value affects you.

When the Fund Manager Changes

A fund manager is a professional money manager who manages the fund portfolio. He is the one who makes the investment decisions based on the market conditions which are best suited for the scheme and its investment objective. More often than not, the performance of the schemes is driven by the acumen of the fund managers.

 Even when the fund may be performing well in comparison to the benchmark indices and also against other funds, the outperformance may or may not be sustained if the existing fund manager moves to some other fund house. 

When Your Investment Objective is Met

One must plan for both short-term and long-term goals and make systematic investments to fund those goals. These goals may include planning for an exotic vacation, child’s education, child’s marriage, buying a house etc. One must invest in a diversified portfolio consistently over a period to build an investment portfolio matching the amount and tenure to fund these goals. Thus, once that investment objective is met, one must consider redeeming the fund to fulfill the desires and plans linked to that goal.

 Mutual fund investments can be redeemed by submitting a physical request at the investor service center of the fund house, the office of the Registrar and transfer agent like CAMS, Karvy etc. or by making an online request through fund house’s website or mobile application.

My decisions for my investment portfolio are logical and not emotional. What about yours?

Simardeep Singh is a Chartered Accountant based in Delhi. He loves sharing his knowledge about personal finance and investment. He blogs regularly at

5 reasons invest stock markets 2017

5 Reasons Why You Should Invest in Stock Markets in 2017

5 reasons invest stock markets 2017

Indian equity markets saw a lot of turbulence end of the last year owing primarily due to the demonetization drive on the home front and the unexpected Donald Trump win in the US. After being directionless for some time, the markets have now taken on positive global and domestic cues and Nifty recently hit its all-time high. I was bullish all through 2016 and feel there is still time to take the plunge, as the future looks even more promising.

Let us look at 5 factors that would drive the markets, and can take the indices to new highs:

Political stability in the US

Now that Mr Trump has been sworn-in as the President of the United States, the uproar over his candidature and then the demonstrations against his win have abated. People are now looking forward to the policies he is going to implement and the foreign relations he would build (or destroy).

If one were to look at the performance of the US Equity Markets (Dow Jones Industrial Average, S&P 500, and the Nasdaq), the DJIA has risen over 2,000 points since the announcement of the election outcome. Recently, Nasdaq set-up new highs almost every day. In response, the markets globally have also breathed a sigh of relief and believe Trump may not be as bad as he was thought to be. In fact, the Indian Markets are looking strong on the charts that many traders and investors follow.

The Indian Markets have received a major share of the Foreign Investments for long, and that is only expected to get better, thus pushing up the stocks even further.

Demonetization Behind Us

The markets took a beating when PM Modi suddenly announced demonetization of all Rs 500 and Rs 1,000 notes in circulation. The result was chaos all around since India has primarily been a cash-driven economy. However, within just a couple of months, the new notes made their way to most of the people who were suffering from the cash-crunch and the whole situation seems to have been forgotten now.

Going by the results of the quarter ending December 2016 for NSE or BSE listed Companies, many still beat the consensus estimates and have given a strong outlook. This means one can safely take long positions and make a good return in the medium-to-long term, though there might be hiccups on the way since the markets have had only one way run in the recent months.

GST Roll-out

The passage of the Goods and Services Tax (GST) bill is expected to contribute about a percentage point to India’s GDP in the next 3-5 years. It is going to hugely benefit the economy since tax rationalizing on multiple fronts will reduce compliance costs for the firms. Specifically, the GST will lead to a common market, as against the (current) fragmented one with separate center and state levies and will give a huge boost to the Make in India campaign by addressing the cascading of taxes, inter-state tax and high logistics costs. In addition, the tax credits will encourage suppliers to pay taxes rather than avoiding them.

Touted as the biggest tax reform ever in India, the GST is supposed to be rolled out from July 1, 2017.

Supportive Budget

In the Union Budget for 2017-18, the Government took a slew of measures that would provide a thrust to many sectors of the economy. These came in the form of higher capital expenditures on the rural and agricultural sectors, which form the backbone of our country. Positive steps were also taken to ensure affordable housing, creation of infrastructure and digital economy.

Overall, the budget was market and growth-oriented. And the results are already showing up if one were to look at the returns some stocks have given since then.

Positive Investment Climate

The Finance Ministry (in the budget) gave a big push to the ease of doing business by promising to simplify labour laws, abolishing the Foreign Investment and Promotion Board (FIPB) as part of the fiscal reform, and extending the tax reduction to MSMEs (by 5 percent). The impetus would more than negate the downside of the demonetization effects that were witnessed by various sectors.

Adding further to the optimism are the GDP numbers for the Quarter ending Dec ’16, that came in much higher than expected at 7.0%, showing that the economy is surprisingly resilient. This ensures that India is still the fastest growing major economy in the world.

Moreover, there are a few other factors too that would provide impetus to the markets. These include the recent Interest rate hike in the US which passed off as a non-event on the domestic front and the thumping win of BJP in the largest state of India. In addition, RBI could bring down the rates adding fuel to the uptrend.

All in all, I view the markets to perform well in 2017 and there is money to be made in select sectors and stocks with strong fundamentals.

The views are personal, and any recommendations inferred should be followed-up with a proper research before investing.

Alok is an Engineer (Gold Medalist), MBA in Finance from IIFT, and FRM certified. He has worked with many renowned Investment Banks in the US. He also writes at

Kohli financial tips

5 Investment Lessons You Can Learn From Virat Kohli

His name makes people sit up. His batting makes people gasp in awe. And his ability makes us believe in the term ‘God-gifted talent.’

Today, he is the captain of the Indian cricket team, and a run machine. MS Dhoni joked that a stand in a stadium in Australia would be named after him.

But do you remember Virat Kohli when he debuted for India? Do you remember how, until 2010, he struggled to find form? Kohli said that Dhoni saved him from being dropped from the squad many times. How did that player become one of the most prolific batsmen of this era?

There are many lessons to be learned from Virat Kohli. Those lessons are worth implementing in all aspects of life, including investment and making money. Five of them are:

Stick to Basics

According to Experts, the best thing about Kohli is that he does a few things, but does them really well. It’s a reminder of Bruce Lee’s quote - “I fear not the man who has practiced 10,000 kicks once, but who has practiced one kick 10,000 times.”

Every successful person has stuck to the basics long enough to master in it. Imbibe this trait in yourself. Study the basics of investment and making money, and stick to them. The temptation to do more will be high, because the basics are boring. But the longer you stick to them, the more returns you will receive in the long run.

Work Hard

Virat Kohli trusts his instincts. But those instincts were not formed on a whim. They were formed by working hard consistently for years. Many Indian cricketers (past and present) have remarked that Kohli is always found either at the gym or the nets. The results are for us all to see.

Investment and making money are not easy. Otherwise everyone would make money. They take time, hard work and patience. Don’t shy away from effort. Work hard on understanding the basics. Read about what worked for successful people, and follow those steps. Smart work doesn’t mean not working hard. It means working hard on the right things, while people around you are busy scattering themselves thin.

Understand the Atmosphere

Virat Kohli is astounding in run chases. So much that when opponents win the toss, they mostly put India in to bat. Kohli has a sound understanding of the situation, because he breaks it down into smaller, simpler steps, regardless of how daunting the task is.

Understanding the atmosphere is crucial everywhere, including while investing. If you invest during a bubble, you risk losing your money. If you invest in a scrip with over-inflated valuations, your returns will be dismal. But if you invest and exercise patience when the market is gloomy, your chances of getting good returns increase.

Keep an eye on the atmosphere. Let this trait guide your decisions while investing, and everything other avenue in life.

Timing is Crucial

He touches the ball. It’s nothing more than a gentle push. Yet fielders don’t even try chasing it when it beats the infield. That’s the class and timing of Virat Kohli.

Timing is important in every decision. Now that Kohli is captain, his timing of changing the field and bowlers is even more crucial. It is the same for you.

How do you decide the timing while making an investment? Nobody can time the market’s highs and lows perfectly. The next best thing to do is understand the sentiment. Use analytics to make a guesstimate of which way the graph might go and make your move accordingly.

Keep timing in mind while exiting an investment too. If your investment goal has been achieved, exit. Don’t give into emotions. You might make more money twice if you stick beyond a logical goal. But the one instance when things go bad will make you lose everything you earned, and more.

Create Opportunities

Until Kohli found his form in 2010, batsmen defended balls outside the off stump. Hence, to keep the scoring down, bowlers would maintain a solid line there. Then Kohli invented the jab down to third man with the angled bat while defending. Soon, every good batsman around the world had added the shot to his arsenal. Rotating the strike became easier, and the scoreboard kept ticking. Kohli had created an opportunity where others found none.

If you follow the herd, you will get access only to opportunities which others know of. Instead, invest in self learning. You will create your own opportunities. These opportunities, underutilized by others, will bring you closer to your financial goals.

There are many more lessons to be learned from Virat Kohli, not just in investment and money management but every aspect of life. Which are your favorite lessons? Do leave a comment. I would love to hear from you.

Vishal is the founder of Aryatra, a venture to help individuals improve their productivity and live more fulfilled lives. He also is a digital marketing consultant helping businesses generate revenue from their online presence.

5 Habits to Follow to Become An Awesome Investor

habits awesome investor

You want to make money. It is not an end, but a means to an end - a better life for you and your family. And you want to make money without stress.

It’s a justified desire, not a pipe dream, meant only for certain people. You can achieve this dream too. All you must do is imbibe the right habits.

You see, successful people don’t do extraordinary things. They do ordinary things extraordinarily well.

Here are five habits that will make you better at investment and help you achieve your dreams.


The best and keenest investors are voracious readers. Warren Buffett read between 600 to 1000 pages every day when he started his investment career. You don’t need to read as much. Nonetheless, do read.

But not just anything. Buy relevant books, subscribe to high quality newsletters, and stick to them like a toddler to its mother. The results will not be visible immediately. But over time, you will discover clarity in your thoughts and action.

Stick with What You Understand

Buffett rarely goes outside his circle of understanding, if ever. He sticks to what he understands, and it has paid him handsomely. You should follow his advice.

Don’t get lured into something you don’t know because somebody gave you ‘a tip’ that a certain scrip would grow fast. And don’t try understanding too many sectors either. If you put your feet in many boats, you will drown.

Stick with what you understand, and make sure you orient it better anyone you know.

Manage Emotions

Emotion is the biggest cause of heartache for investors. Greed, anticipation, excitement, attachment and more stop us from using logic while making decisions.

Denial when an asset is not performing hurts in the long run. Instead of waiting till your decision is vindicated (which might never happen), abandon the ship while you can. Also beware of greed. Your money works better as a marathon runner than a 100-meter sprinter.

Be as disciplined in your investment as your boss demands you be at work.


Investment is a long term game. If you want instant gratification, leave this game right now. Before you get hurt.

People who make money in the long run are ones who have learned the art of patience. They stuck to investments for long because they understood them. They did not read news every day or act on impulse because of market sentiment. They understood the difference between signal and noise.

If you want your returns to pay off in the long run, be patient. If you want to make quick money, be prepared for intermittent shocks.

tax saving else

Calculated Risk

If you keep doing what you have always done, you will get what you have always got.

To get more than what you currently have, you must open yourself to calculated risks. Investopedia suggests the following steps for taking calculated risk:

  1. Pick an investment after exhaustive research: Many online portals will guide you about the option which suits you best.
  2. Set an upside and downside price: Predefine how much money you want to make, or how much of the downside you can take.
  3. Calculate the risk/reward: Measure your ability to take risk, and the associated reward. If the risk/reward becomes unfavourable, don't be afraid to exit the trade. Never find yourself in a situation where the risk/reward isn't in your favour.

Investment is not rocket science. It’s just taking a few key actions, and repeating them over and over again, till they become habits. These good habits don’t just impact your money management positively. They also subconsciously impact other aspects of your life.

Which habits do you strictly follow to invest and grow your money?

Vishal is the founder of Aryatra, a venture to help individuals improve their productivity and live more fulfilled lives. He also is a digital marketing consultant helping businesses generate revenue from their online presence.

5 Tips for Investing in Equity Mutual Funds

5 tips investing equity mutual funds

In almost every other financial blog post, the emphasis on equity mutual funds has been immense. It is without doubt the most sought after investment these days, with real estate and deposits/debt taking a back seat. It is therefore important to understand certain realities about these funds which can guide us to make better investment decisions.

What Goes Up, Comes Down

Newton discovered this law centuries ago but investors have not paid enough attention. An equity mutual fund that performs extraordinarily well in the past year or so need not continue to do well. In fact, there is a high possibility of the fund correcting or consolidating, in which case you may end up making a loss.

One of the reasons that this happens is that the fund may have invested in a sector that could have done really well. Some sectors are cyclical in which case a good period is followed by a bad or an ordinary period. At the moment mid and small cap companies have been doing really well for the past 3 years, and hence could see some near term consolidation. Therefore small and mid-cap funds may not replicate past performance in the coming years.

Fund Manager's Track Record

We cannot stress this enough. The fees you pay for the mutual fund is not half as important as the track record of the fund manager. A good fund manager can generate above average returns for an extended period of time (>10 years). The fees that you pay for a good fund manager with a credible track record may well be worth it compared to a cheaper fund.

Weigh your options considering qualitative aspects as well. But how does one assess the manager’s track record? You can ask yourself the following:

  1. How did the fund manager perform during the 2008 financial crisis or for that matter any bear market. Did their fund correct lesser than the average market. If it corrected much more, that would mean the fund manager was simply chasing trendy stocks which eventually collapsed.
  2. How long have they been a fund manager and how many bull-bear cycles have been witnessed? This is very important. The stock market is a great leveler. A fund manager learns a new lesson during every bull and bear market. More experience, the better the manager handles the investment.
  3. Go-Go stocks: Go-Go stocks are stocks that the market fancies a lot at a given time. Good fund managers do not go after these stocks as they are generally over priced and when there is a crash these are the ones to get punished the most. This happened to Infra stocks in the last Indian bull market.

Spend time knowing your fund manager as it may be a partnership for life.

The Truth about NAV

NAV or Net Asset Value is the sum of the underlying assets of the mutual fund. It is NOT the measure of the value of the fund. You cannot measure if the fund is cheap or expensive with the NAV. Often we are misled to think a fund with a lower NAV is cheaper which is far away from the truth.

Probably the rate of change of NAV is a better indicator of fund performance. So next time an agent talks about NAV, ask him/her about the fund portfolio to assess.

How Many Funds?

“The definition of genius is taking the complex and making it simple”, a famous quote by Albert Einstein.

We need to take this seriously. Often agents and advisers suggest buying a number of mutual funds in the name of diversification. We need to understand that diversification is already present in any individual fund and there should be no need to buy funds from different companies. What could be considered, is diversification in terms of small, mid and large cap funds or just go for a diversified fund. But buying funds from different banks and institutions is not diversification.

Constant Review

Investment process is a journey, rather than just sitting idle after investing. Constant review of the performance of your fund, the market sentiment and knowing your fund manager are some key elements of the journey.

Keep reading and learning. It's your money after all.

Let us know about your experience with equity mutual funds in the comments section.

Arjun Balakrishnan is an investment fanatic who loves writing about investment topics. He regularly writes at Investment Gyaan.

FMP NCD better than FD

Are FMPs and NCDs Better than FDs?


FMP NCD better FD

The morning just after the Diwali, while we had assembled for our daily jogging routine, the smog in the atmosphere made us change our mind and instead we ended up discussing pollution. Manohar Ji wished to leave early since it was his superannuation day and he had his farewell in his office. It was his special day and I offered to drop him to his office instead of his daily commute through bus.

En route, we talked.

Beta, you help everyone with their finances, guide me a little with my retirement funds. I will be receiving a fat cheque today towards my provident fund and gratuity.” Manohar ji said.

I will go to ABC Bank tomorrow itself and get fixed deposit done for the funds. They offer 0.50% extra for senior citizens like us.” He continued to share his thoughts.

Uncle, there are many better ways to invest these days, giving you much better returns. Why do you only plan to invest in Fixed Deposits?” I asked Manohar Ji.

Ever since I have been working, Fixed Deposits (FDs) are the only things I have invested in and I have not even heard of any other investment avenues as well.” Manohar Ji seemed surprised.

Uncle, a few options like NCDs and FMPs have evolved in recent times with the development of money market. Let me explain the same for you to take a better decision.

The financial advisor in me was now all ready. Moving forward, I explained the fixed income avenues available:

  1. Fixed Deposits (FDs) – This is the most common investment instrument used for household savings and entails depositing money with a bank for a fixed period of time with a fixed rate of interest.
  2. Non-Convertible Debentures (NCDs)/Bonds - NCDs may be considered as twin brother of FD, in the sense that they do have almost similar features in terms of fixed tenor and fixed rate of interest. The major difference lies in the fact that while the FDs are generally issued by the commercial banks, NCDs are issued by corporates. Further, most of the times, NCDs are listed on the stock exchanges and thus impart better liquidity to our funds.
  3. Fixed Maturity Plans (FMPs) – As the name suggests, FMPs come up with a fixed tenor. They do differ a little from FDs for the fact that they do not guarantee any fixed returns. However, since FMPs pool in funds from investors, and invest in fixed income securities, they give almost similar returns as prevalent in the market

This is so informative. However, FDs are so convenient. They provide me with a monthly interest payout option. I can get my funds back anytime. Do I get similar benefits with NCDs/ FMPs?” Manohar Ji seemed interested but was still convinced with the idea of investing in FDs.

I continued to explain the benefits of NCDs and FMPs over FDs and break his myths point-by-point:

  1. Convenience to invest – Funds in FDs can be deposited easily and NCDs/FMPs offer similar convenience. These days, one can invest in public issues of bonds, which happen occasionally, or buy NCDs on stock market or invest in FMPs online. Further, the investments are in dematerialised/ digital form and hence, easy to store for records and reference.
  2. Periodical Interest Payouts – NCDs usually come with annual interest payout options. Similarly, FMPs can also feature dividend option wherein periodical dividends are declared and credited to the bank account of the investor directly. Hence, even on this parameter, NCDs/ FMPs don’t score less than the traditional FDs.
  3. Liquidity – FDs come with a premature withdrawal option. However, in most of the banks, premature withdrawal penalty @1% is levied. Instead, NCDs/ FMPs are usually listed on stock exchanges and hence, the investments can be encashed at the fair value less small transaction costs.
  4. Returns – As discussed above, NCDs are often known to offer better returns than FDs in order to attract investors since NCDs are a much recent investment instrument. Further, the returns also vary based upon the credit rating of the companies issuing the NCDs. Similarly, FMPs also provide comparable returns since they pool the funds to invest in fixed income opportunities available.
  5. Tax Efficiency – Interest from FDs is always taxable on the tax rates applicable to the investor. On the other hand, while the interest from NCDs is taxable at the same rate, capital gains if any on sale of bonds may be taxed at concessional rates if the bonds have been held for more than 12 months. Similarly, the tenor of FMPs is generally made tax efficient and hence, eligible for concessional rates of tax. Further, no tax is deducted on the returns for listed NCDs/FMPs and thus eliminating the need to file Form 15G/15H.
  6. Safety of Funds – Banks have always been considered as a safe investment avenue. However, in the event of bank’s default, the funds invested in FDs are insured to the extent of Rs. 1,00,000 maximum due to Deposit Insurance facility. On the other hand, NCDs can be both secured as well as unsecured. In case of secured NCDs, the same carry the security of the fixed assets/ receivables of the issuer company. Similary, FMPs invest the funds through professional fund manager who can be expected to take prudent and rational investment decisions which are safe and secure.

That’s a good dose of knowledge, beta. I feel like I have spent whole my life being so ignorant.” Manohar ji seemed convinced with my arguments.

It’s always better to be late than never.” I quipped as I dropped him off leaving him mulling over these new investment instruments.

Simardeep Singh is a Chartered Accountant based in Delhi. He loves sharing his knowledge about personal finance and investment. He blogs regularly at