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Shantideva on investing !

Yesterday, by any parameter was a remarkable day, every year we get few remarkable days like this, sometimes the news is good but often not. Britain voted in favor of exiting the European Union and this brought down the markets the world over.  This is like a country divorcing from a common union and will take years to resolve. Obviously, the markets were surprised  and went down (some 600 points on Sensex in India). The whole day there were conference calls, research reports, endless discussion on TV etc. I stayed away from almost all except for one report which focussed on what exactly is meant by exiting the EU, as per the report it is still not official as once it is announced, Britain has to negotiate trade agreements separately with all the countries since now EU negotiates as a block. This will take years to resolve and in the meanwhile as an investor there are only two things that we can do

A. If markets fall a lot, see if we can invest more or

B. Do nothing since markets are where it was about few weeks back, they were much lower in February as China was slowing down.

These things will keep happening, it was Raghuram Rajan last week, China few months back and we are hardly 6 months into the year. Investing in equities is never smooth and that is why it gives great returns, If it were smooth the returns wont be this good.

Shantideva  – a Buddhist scholar who lived in Nalanda during the 8th century said ” If you can solve your problem what is the need for worrying and if you can not solve it what is the use of worrying ” As investor we have very little control over what happens in the world but have control over our own emotions. Use it and invest wisely. Spend the time with doing what you love to do,  save time and money !!




Healthy, Wealthy and wise !

Today the media will have a field day as equities crashed by over ‘1000’ points or 3% to put it correctly !. These are normal and Prashanth Krishnan in twitter mentioned that this has happened 55 odd times in last 15 years, I’m sure you don’t remember the last 3% fall, forget the first one !! Media works on the principle of bad news being good news for their business, more people watch TV and they can get more TRPs and advertisements which is more money for them.

As an investor, we make money by staying invested, ignoring the headlines and if at all there is a serious fall ( say 20% from top)  investing more if possible. We don’t make money by following headlines, in fact serious research has shown regularly following media ( be it on markets or politics is injurious to both your health and wealth, not to mention wasting precious time !) .

Be healthy, wealthy and wise !


Healthy – instead of seeing TV debates on politics, go for a walk !

Wealthy – instead of listening to “experts” on business channels, keep investing via SIP

Wise – Doing the above two will make you wise than most people you know !!

If you don’t believe me listen to what M/s Peter Lynch & Warren Buffett have to say on the subj. 🙂


What stock market?

What stock market?


3 Simple steps to stress free investing


1. Check and collate all of your investments : Be it Insurance, Mutual Fund, shares, bonds, FD, anything. Put it all one folder, use a good spreadsheet or software ( we use Mprofit)  to track all of it in one place. This will not only help you know where you stand but also help you at the right time in filing tax returns. This will take time but will save you lots of pain later. Automation can help you here, if you give same email id across investments it is possible to get one statement for all your MF and equity.

2. Keep investing simple : Investing is about making your money work for you, that is all. 4-5 Mutual Fund schemes via SIP, 1 bank account, 1 term plan and a medical plan that is all one more or less needs. Ensure that there is nominee for all your investments and that you have a will in place. Never buy  investments under “pressure”, be it from relatives or bankers.

3. Never sweat the small stuff : Things change everyday, don’t fret. Talking heads on TV are paid to talk, but no one pays you to listen, so don’t. Always think will this decision matter one year or two from now on? If not, it is small stuff, this will be the key question to ask before you take any decision financial or otherwise.

Finally, in life small improvements like small investments make large gains in future. Start today and declutter your investments and you will thank yourselves 2 years down the line.

Happy weekend,



Play now and pay later !

Better be a ploughman (worker) on your legs than a gentleman on your knees (seemingly rich but in debt) – Benjamin Franklin

Muthu recently wrote a blog on what is short and long term

thought i will expand on it a bit.

Short Term : Play now and pay later

Long Term : Think & decide

a hoarding screams

The above hoarding is an example of play now and pay later, in this case EMIs for 24 months.

Now this is clear, if you want to play now, you can as from cars to phones everything is available at zero or low down payment, but do remember, you definitely will have to pay later along with interest.

So, what is long term thinking here: first think. Every financial expense means you are borrowing from yourself in future as you alone have to pay the bills later.  An investor thinks the opposite, invest now to get more later.

After thinking if your decision is to still spend money on buying stuff, please go ahead but only with money you have.If you don’t have the money, you can not afford it so find an alternative till you can afford it.

A reminder here, i’m not all suggesting that investing is denying life’s little pleasures, definitely yes. I’m all for the weekend movie or dinner, the key word here is ‘little pleasure’, spending one months income on a gadget is definitely not little, though the EMIs make it look as if it is little, they add up to a lot!.

I’m not against borrowing for purposes of long term benefit, such as a house or education of children. They are basically investments for a good future, the 50 inch TV does not fall under investments even though it may be smart TV, but you would not be smart to buy it on installments. It is downright dumb to have a smart TV but not much saved up for a rainy day.

Pay for it if you can afford, else, look for alternatives. Your life will not improve much by owning too many gadgets, which seem to go out of style every weekend but your bank balance and investments will certainly improve and that to me and i hope also to you is the ‘deal of a lifetime’



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From 1 to 100, How 1% change can bring success.

What did Dave Brailsford , a British cycling coach, do to make his team win the famed Tour de france cycling tournament?
And, how can it make you a better investor?

We all know “Save more, Invest better, Spend less” is the solution to our financial problems. Don’t we? We need money for various reasons including for down payment for a  house, children’s education and our retirement. But, we think this would require big changes in our lifestyle and hence we postpone investing.

This is because we are all creatures of habit and find it difficult to  change. What if I tell you that it is no longer the case? What if I tell you that you would not be required to make a great deal of adjustment? But, would you change something as simple as 1% of your routine to get great results?

First, the story which inspired me to write this blog:

Dave Brailsford , a British cycling coach, wanted his team to win the famed Tour de France bicycle race that lasts for 21 days and covers 3500 kms. He made changes as simple as carrying comfortable pillows to hotels so that the players can rest well, making the riders wash hands regularly so that they don’t get infections. By doing this and other tiny changes he believed that his team would win the title at least in the next 5 years. He was wrong,  his team won within 3 years !!. (You can read more about it here :

After reading this remarkable story, you would have now understood that even small marginal changes can have big impact in the long run. The best thing about it is that they can be implemented easily.

Here are some small changes you can make to win in the journey of financial freedom:

1. Start investing – Don’t wait for the perfect day, the perfect income at which you will start. But start right now, with what you have. Take the first step.

2. Keep looking for improvements – Small changes, like having auto sweep in savings account so that your balance earns a little more. Put aside 50 / 100 Rs from your purse every day separately, and invest the money every month. Keep your credit card at home and take only the necessary cash if you think you may overspend while going out. Open an investment account for your child. Your kid will be thrilled and you would be showing them practically what it is to invest and what is profit etc.,

3. Give yourself a treat : For every small improvement that you do, treat yourself with an ice-cream or snack. What is life after all with out enjoying our victories, however small!. This victory reinforces that we are on track and we will look out for more areas of improvement.

On the flip side, small mistakes compound  over a period. Avoid mistakes like investing money in the “get rich quick” schemes ( MLM , Plots that will ‘assuredly’ double in value in 1 year, ‘insurance scheme’ with 20% return etc).

So, now tell me what improvements are you doing or planning to do and what mistakes you will avoid ? Would love to hear your experience.

Unravel the Sir Drave Bailsford in you. And, win your Tour De life cup!

Happy financial year 2015!



Simple yet powerful formula to get rich

“My wealth has come from a combination of living in America, some lucky genes, and compound interest.” – Warren Buffett


Though we learnt it in the 6th standard or so, understanding this is not easy, small shop keepers have understood it to make millions while many with degrees in finance struggle to understand it.



And how long would it take to get to 1 crore ??






One kick, 10000 times

I fear not the man who has practiced 10,000 kicks once but one kick 10,000 times – Bruce Lee.

Best selling author Malcolm Gladwell wrote that it takes around 10,000 hours of practice for anyone to be an expert. Bruce Lee seems to have found that out much before with the above quote!

As investors most of us are try different things to increase our wealth, which is not wrong but we also need to practice that one kick ( consistent investments over the years ) to make a meaningful difference. the one kick that i can think of in investing world is SIP, ( systematic investment plan which is fancy way of saying monthly investment!) that one kick once a month patiently done over last 20 years has made people ‘ Crorepatis’ without winning KBC !!

Let us see how one can do this. Franklin Prima Plus, an equity fund was started in 1994, completed 20 years last year. A monthly investment of 5000 Rs since Jan 1995, is worth 2.2 Crs today. All one needed was the patience to keep investing that 5000 Rs and not stop it for any reason. Even 2000 Rs, for 20 years ( 2000* 12 months * 20) precisely what i could have afforded from my salary of 5000 RS then, would be 88 Lacs today as against invested value of 4.8 lac’s. All this by investing amounts that one can afford and leaving it be for long term.

I’m telling this because young investors should not repeat the same mistake, salaries are much higher today, and people spend 2000 Rs on their phone bill every month, not to mention 1000 Rs for going to the movie in a multiplex.

So if you would like to practice one kick 10000 times and become rich slowly but easily, start investing today and keep investing for next 20 years or more, If you can increase your investment as your salary increases may be you can make 10 Crs or more with the same 18-20% returns, though i would be extremely happy with any return over 12-15%. As the return is not in our hands but investing monthly is ( one kick, repeated every month !)

Remember even Bruce Lee feared the man who learnt one kick 10000 times !!

PS :The 20% return mentioned above has come with years of low or negative returns (of even 50% once! ) and years of high positive returns (ranging from 30%+ to even 233% in one year! ) but those who stayed the course reaped the benefits. Future will also hold such negative surprises as well as +ve surprises, and the investor will be tested and tempted to quit, and as in past rewards are likely to be for people who hold on.

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The forgetful investor

Wish you a happy and forgetful new year 2015 !!

Let me explain 🙂

Fidelity Investments did a study of their investors to find out who made the best returns, one would like to think that those who made the best returns were either most educated, or people who carefully analysed their investments and went to investments conferences to get new ideas etc or even people who were emotionally strong investors who did not sell during a panic or buy at the top. The answer to who makes the best investor is surprisingly simple that people who had forgotten that they had investments made the best investors.

Why is this so? Investments compound wealth over long periods, so when some one says 15% annual growth our minds immediately calculate 100 Rs becomes 115 at end of year 1 and stops there (not exciting,right), but does not move on to think it will be 132 Rs at end of 3rd year, things get very interesting from there on. At the end of 9th year the total return is 50 Rs approx which is half of the initial investment of 100 Rs, at the end of 15 years the annual return exceeds the initial value of 100 Rs and by 20th year it is almost twice the initial investment every year. So if you spend Rs 50k today instead of investing it, you are potentially losing around 8 Lacs in twenty years, and around 1 lac per year after 20 years. 1.5 lacs per year in returns after 22 years etc.

So the really large returns ( not % returns but amount wise returns) happen after longer period of times, While someone who invested Rs 50000 and took out Rs 1 lac + change at end of year 5 did make 15%, he never made 50k per annum that the investor who stayed till 15 years made or 1.2 Lacs per annum that investor who stayed till 22 years made.

I can hear some of you say where do i get 15% fixed return, I agree we can’t get 15% but the volatile markets where one could lose money in some years and make more in some others have delivered an astronomical 18%+ over 20 years, so anyone who stayed the course for 2 decades has made 20 lacs out of 50000 Rs. In fact mutual funds like franklin bluechip have delivered 20% over last 20 years.

The reason why the fidelity investor made large returns was because they had forgotten that they had invested and the money was compounding for them quietly all the time, if they had known that there was such an investment, chances are they would have taken the money out and donated the money to poor companies like Apple or Google for buying gadgets that will be outdated in about 2 weeks 🙂

So, in 2015 please ensure that you invest in a good diversified mutual fund via monthly installments or SIP and forget that you invest till you retire, the results are likely to be an happy surprise for you !!

Disclaimer : Mutual Fund investments like just about everything else in life carry risks, please understand them before investing.


Saving Investors from themselves.

Saving investors from themselves
“Dear investor, the fault, is not in our stars – and not in our stocks – but in ourselves,” said Benjamin Graham, the father of value investing, and better known as Warren Buffett’s Guru.

In early 2000, a business newspaper carried a front-page picture of a big crowd in front of a bank. The picture carried the headline, “ Investors queuing up to apply for shares of an unknown software company.”  A year later, many software companies went defunct.

In 2003, I told an acquaintance to invest a small amount in mutual funds. I met him in 2007. He hadn’t yet done. Instead that year, 2007, he found courage to buy into two IPOs.

Ofcourse he didn’t seek my advice. Needless to say, now in 2013, those two stocks are bleeding. It is estimated that a third of Indian investors have bought only those two stocks and are now staring at a large loss!


How did this come to pass?

How come people who refuse to invest, suddenly find the courage to buy any garbage that their brothers-in-law ask them to buy? The fault, as usual lies, with us. We don’t follow basic rules. The comparisons we do, the questions we ask when we buy mobiles and tablets are never done while investing in stocks. Sad, but true.


Here are five thumb rules that we can use:

1.    Putting all of your eggs in different baskets

Whenever I travel my father always tells me to keep some cash and a debit card separately from the wallet. The idea is that in case the wallet is lost, I would not be stranded for cash. The idea is the same as not keeping all your eggs in one basket. Invest in house property, equity stocks, mutual funds, gold,…

At the height of the real estate boom of USA in 2008, a NRI told me that her servant maid owned 4 houses (all bought on zero down payment loans, of course) and finally had to sell all of them and still owes the bank money. Diversification is about sleeping well. Remember the best laid plans of mice and men can go awry.
2.    Falling for high returns  and low risk trap

Whenever you hear someone saying 24 per cent returns with no risk,” run as if a lion is chasing you down. Promise of high returns whatever may the business model, be, reeks of a Ponzi scheme. Any business that promises high returns especially within a short span is taboo.
3.    Not investing regularly

We  all understand in Fixed Deposits and invest heavily invest in these or in real estate. But most of us never look at investing regularly in equity markets via monthly investments called Systematic Investment Plan( SIP). Indian investors invest little in their own equity markets but today foreign investors hold a large stake in many of our banks and our manufacturing companies… The foreigners seem to have more faith in our country’s future than us!
4.    Check valuations not the price

While investing, valuation matters a lot.  For equity shares the most widely used valuation metric is reflected in the PE ratio. The higher the ratio, the costlier is the valuation. This does not necessarily mean cheaper stocks are good. I have seen many people go only by price and not valuation. So if ABC stock is trading at Rs 1000 they assume it is costly and XYZ is cheap because it is only Rs 10. What matters is price compared to profits. Thus if ABC price has a profit per share (EPS) of Rs 100, its PE is 1000/100 or 10. This is generally considered worth investigating further. On the other hand, if XYZ’s earning per share is Rs 0.5 its P/E will be 10/0.5 or 20. It is twice as expensive as ABC. So thinking Rs 1000 is costlier or Rs 10 is cheap is simply not right.
5.    Falling for the new-new thing

Dot com in 2000, infrastructure stocks or funds in 2007, gold in 2012 or may be real estate in 2013. Buying into anything that is extremely fancied by most is a recipe for at best very low returns or at worst disaster.

Happy investing!


Of Uncle’s and Aunt’s.


What uncles and aunts can teach you that the business newspapers will not.

If you are going to invest in stocks over the next five years, would you hope for a higher or lower stock prices during that period? Many investors get this one wrong, they are elated by higher prices and depressed when they fall. This reaction makes no sense – Warren Buffett.

There are 60,000 economists in the U.S., many of them employed full-time trying to forecast recessions and interest rates, and if they could do it successfully twice in a row, they’d all be millionaires by now…as far as I know, most of them are still gainfully employed, which ought to tell us something. – Peter Lynch
We can say the same thing about our business news people too. Thing is investing is all about ten,twenty years from now while writing headlines is all about today, not exactly co-related.

“Blood bath on Dalal street”, claims the newspapers headlines following the 700 point drop in Sensex on August 16th. Do google blood bath on dalal street and you shall see that every year ‘blood-bath’ occurs. Leading one to think that probably it is a scary place for people to set foot in!

Today, the investors interest in equity stocks and funds is so low that not many investors are around but if you see people who have made serious wealth over the long term, they are likely to have started small, kept investing, learn a thing or two about what fund or stocks to buy etc but more importantly never let the headline be their guide for investments.

And if you thought that is a tough thing to do meet Mrs Ashalatha Maheshwari from Mumbai, this 77 year old grandmother has seen a thing or two since she started investing in 70’s. Her investments are about 4 Crs, apart from this the house she lives in was bought from the profits she made by investing too. She reads annual reports diligently and is a fixture in most Annual General Meetings so much so that even Ratan Tata remembers her!

Not convinced ?

In my sleepy little home town we had an investor association that met every month, I came across a middle aged person who was the quintessential middle class guy, living in a small house, driving a moped, you would expect him to be working for some bank and you would be seriously wrong. he would  talk to us about how it is best to invest for long term in companies with great brands, captive business etc. Nothing esoteric just basic steps of long term investing. Many years later I learned that this ‘uncle’ who moved around in a TVS50 was worth a cool couple of crores and that was a decade back ! All made by diligently investing in great brands and good businesses with excellent managements like Colgate, HLL, ITC, CRISIL etc. He was in a way our own Warren Buffett.  HE was financially independent, yet unassuming and ready to teach anyone who cared to listen.

Both the ‘uncle’ and grandmother featured above would have gone through recessions, inflation, balance of payment crisis, etc. and kept investing.

OF course not all investors can be expected to study balance sheets and find which stocks to pick, it is much easier to invest in a Mutual Fund via monthly investments, but no, we don’t do that. We start investing keep at it for couple of years only to see the low rate of return and stop investing. Of course we will start investing again after market goes up !! Rinse & Repeat till glory comes. That will never work, what works is keep investing when there is blood bath all around, in fact invest more when you hear words like Blood-bath, Mayhem, crisis, etc.

If you go to you tube and search for the short film One Idiot, made by IDFC Foundation on habits that make an investor successful though, the message is clear. There is a path to financial independence and leading life in your own terms.


Notes :