Stocks may go up or down – It always works out – so best stay put – Fincare Services

Stocks may go up or down – It always works out – so best stay put

Stocks may go up or down – It always works out – so best stay put

Stocks may go up or down – It always works out  – so best stay put

 

Many of you may not know but Benjamin Graham is considered as father of value investing.

We name the famous wall street value stock investors – be it Warren Buffett or Seth Klarman and Bill Ackman, all have been influenced by Benjamin’s thought. On India side, all the mutual fund managers, analyst must have read his book “Security Analysis” and “The Intelligent Investor”.

For a common man like you and me, I stress upon following few of his quotes regarding stocks, while taking the investment decisions:

“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

“People who invest make money for themselves; people who speculate make money for their brokers.”

While stock market is firing on all engines right now, we should not get digressed from our main objective i.e. earning reasonable return from more than the bank rate for 20, 30, 40 years from now. If we run to chase 40-50% a year from stocks, we may run a risk of losing 30-40% a year too. Ideal expectation from Indian stock market should be anchored to 15%, anything more is a BONUS.

HOW SHOULD YOU PLAN YOUR INVESTMENTS NOW?

While deciding on your investments, you should better focus on following important basics:

1.  Purpose: Investment or Speculation?

If we are “Investor” – we need to create a growing portfolio which provides us reasonable return and protect against the unsystematic risk.
If we are “Speculator” – we need to look at the market dynamics at that point in time, time frame for which we invested into a stock, target we decided, and most importantly stop loss for a particular trade.

2.  Time Frame: Less than 3 years or more?

If you are having time frame of less than 3 years, you need to look at the funds which balances your risk such as balanced fund or dynamic asset allocation fund (not purely equity stocks). This protects you from unwarranted market movement and wild swings and thereby cushining your portfolio.

3.  Payout: Growth or Dividend?

If you are in the retirement age, you should look at the investments which are easily redeemable, provides regular income (Monthly/Quarterly) and cushions against volatility.

If you are in young age say around 35-40 or even less, always opt for Growth option so that today’s sowing and give you opportunity to reap the benefits letters.

Always remember: Market may give you good returns in short term, it gives handsome returns in long term. 15% compounded growth on Rs. 10 lakhs gives you Rs. 80 lakhs in 15 years and Rs. 1.60 crores in 20 years. Whereas, 15% compounded growth on SIP of Rs. 1 lakh can fetch you Rs. 6 crore in 15 years and Rs. 13 crore in 20 years.

NEED ANY ASSISTANCE?

If you need any assistance in dealing with your existing investments or planning for your next, me or my team can help you. As a firm, we have a collective experience of more than 50 years. With Fincare Services, you shall receive one-stop solution for all your financial needs. You can also view your portfolio value online and can transact hassle-free. In past one year of educational campaign, I have had many interactions with you all, and I look forward to keeping it up positively.

Tejas Lakhani, Chartered Accountant, Co-founder, Fincare Services – 9773687483 or email at tejas@fincareservices.com

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