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- Your own Fundamental InvestorFundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.comBlogger40125tag:blogger.com,1999:blog-303837536783625365.post-90304532155297604352022-05-20T20:59:00.000+05:302022-05-20T20:59:20.251+05:30My Experience with Panchakarma & Ayurveda<p><span style="font-family: Source Serif Pro; font-size: large;">Dearest investors & friends,</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Praying that all of you are in the best of physical and mental health. We all Invest Our Money in Businesses, Invest our Time in Activities and Passions. But as a Fundamental Investor, I believe that the Best Investment we can Make is in our Health & Well Being. This is perhaps, the only Investment which will enable us to enjoy all the other Investments, in times to come.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">As I write this article today, I am 36 years old on this Wonderful Mesmerizing Planet Earth. As many of you who follow me closely are aware, I began my Investing Journey in 2007. I came out of my Actively Paying Professional Career 3 years back, in 2019. Most of my Articles and Tweets are mostly on the process of achieving Financial Independence & Early Retirement. But this article is something different.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">We all invest our time & money in mostly worldly things. Job, Family, Loans, Vacations, Pleasure, Education. This list goes on & on. We spend some time every day Ensuring that our Body is Fit. This can be Daily Exercise, Walks & Workouts.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">When I came out of the rat race in 2019, I always thought that, at least once a year, we should spend some Serious-time Servicing our Bodies. Just like a House or a Vehicle needs Regular Servicing, Oiling, Painting & Washing, Our Body Needs Yearly Service too. Our Body is the only Vehicle which will last with us, as long as we Enjoy this Planet. I had this Serious Thought and Wanted to Do Something in this Direction.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">In 2020 & 2021, Covid sprinted across the planet. 2 years, we all became closer to our Bodies. Closer to our Families. The Pandemic had brought about a lot of change on this Planet. In thought and in deed.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">This year, 2022, the Love of My Life and I decided that we would explore Ayurveda. As most of You must be Aware, Ayurveda is a Way of Life. It is a Lifestyle. Both at Mind & Body Levels. Normally, most of us think about our well being, when our health is deteriorating. But, We wanted to begin connecting with our bodies early. When our body and mind are in decent shape, we wanted to explore this opportunity. We didn't want to wait for an ailment to strike.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">My best half, myself & our son (Prakrit) have a reasonably healthy lifestyle. We sleep well, eat healthily and have a nice routine. I swim every day. My best half dances. We teach. My son plays, learns and explores. We wanted to have this tryst with our bodies as well.</span></p><p><span style="font-family: "Source Serif Pro";"><span style="font-size: large;">As we started thinking of options, we were very clear that the place & environment was very very key in this process. We had a few things in mind:</span></span></p><p><span style="font-family: Source Serif Pro; font-size: large;">1. The Ayurvedic Facility should be Clean, Green & Peaceful.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">2. The Ayurvedic Therapists should have Seva Bhava (attitude of Service).</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">3. The Accommodation Facility should be Clean & Comfortable.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">4. The Annakshetra (Bhojana/Prasad/Food Facility) should be Hygienic & Nutritious.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">5. The Ayurvedic Doctors should Focus on our Nadi Pariksha & Guide us on the Needful.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">6. The Complete Process should be a Divine Prayerful Experience.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">As we explored various options, we finally zeroed in on the Sri Sri Tattva Panchakarma (SSTP) Facility on the outskirts of Bangalore. The facility is just near the Sri Sri Art of Living Ashram campus.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvgNCzYpyp2f0v3vyC8usP0eRCbx_RTmJBR9VXUZCosuV07yxvAvj2Yu2W5rwYBXLdcv-wbJRpWmNXRDauDrtqtY40iZ_Z_LsCvjSfSyQ3P0U00bCs1S9J_gdTe18w0MIB-8I4Ry_qB01ivuoIR1WC944SipO7CAbownGFLupAYKaPS6E9OocCdRV2Ug/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.57%20AM%20(1).jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="1171" data-original-width="1600" height="468" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvgNCzYpyp2f0v3vyC8usP0eRCbx_RTmJBR9VXUZCosuV07yxvAvj2Yu2W5rwYBXLdcv-wbJRpWmNXRDauDrtqtY40iZ_Z_LsCvjSfSyQ3P0U00bCs1S9J_gdTe18w0MIB-8I4Ry_qB01ivuoIR1WC944SipO7CAbownGFLupAYKaPS6E9OocCdRV2Ug/w640-h468/WhatsApp%20Image%202022-05-20%20at%209.56.57%20AM%20(1).jpeg" width="640" /></span></a></div><p></p><p></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: Source Serif Pro; font-size: large;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiBkp6GLerU3l0Cn5uYFRHkaEgLHb2bpcYOUwbbfIGm31MM0rJUzpp9Lpqm7vhX0kWkxBEuWQnQ-OB-SyRKYadby_dFhRtaGQ6viQsneolwVqhFW5hZ8ZHNMiSK1wm96NxxhVaKlKtMVkg3MzgqAbfKQCZd1FUjWupDhCENTu5QS-g7mxGIapT00fSoA/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.58%20AM%20(2).jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1120" data-original-width="1600" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiBkp6GLerU3l0Cn5uYFRHkaEgLHb2bpcYOUwbbfIGm31MM0rJUzpp9Lpqm7vhX0kWkxBEuWQnQ-OB-SyRKYadby_dFhRtaGQ6viQsneolwVqhFW5hZ8ZHNMiSK1wm96NxxhVaKlKtMVkg3MzgqAbfKQCZd1FUjWupDhCENTu5QS-g7mxGIapT00fSoA/w640-h448/WhatsApp%20Image%202022-05-20%20at%209.56.58%20AM%20(2).jpeg" width="640" /></a></div><br /><span style="font-family: Source Serif Pro; font-size: large;"><br /></span></div><span style="font-family: Source Serif Pro; font-size: large;">So, in general, my wife & I had some basic issues. The main issues we had then were General Exhaustion (after Covid time) and Some Weakness in the Knee & Back.</span><p></p><p><span style="font-family: Source Serif Pro; font-size: large;">Just before coming to SSTP, my wife & I got our comprehensive medical tests done. My insurance covers the same. I am always a believer, that, if we are going to pay insurance premiums for the next 30 years with a provider, it is always best, if the insurance company is aware of our health (good & bad). I know, that many would disagree, but I am of the opinion, that there should never be anything to hide. If we have a problem, then the insurance company, better be aware of the same.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">In our tests, with God's grace, all the parameters were ok. But, our Vitamin D levels and B-12 levels were really low. Now, this explained, why the nutrition was not reaching our bones. The body pains now made sense. I never knew that Vitamin D was such an important part of our system.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">We came to SSTP for our Nadi Pariksha in the month of March, 2022. Nadi Pariksha is a divine process where the Doctor (after deep prayer), feels our Nadi, and then suggests the blocks in our system. To release these blocks, a particular lifestyle is suggested along with some basic medication. Based on the body, a Panchakarma Treatment is also suggested. This is a gradual process. It needs patience & time. It is not for emergencies.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1GXA2Kpqb6WDwdb8XJtJImLfTNaEShRBDgCSQU_nOri1FLg9tKw3IFwRbIrH1ydh5z1RPiI64mqgGh5rcGbsR-GYeidf10kB78vzhPf9dK_6HYcSZea1uHh_TQtVPp-0RRyHhUglP-yIAzGYpXAYkg7lJkrjL3kSbxTJkMVOBcEueHfN7iPM5qSNCZA/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.58%20AM%20(1).jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="1600" data-original-width="1305" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1GXA2Kpqb6WDwdb8XJtJImLfTNaEShRBDgCSQU_nOri1FLg9tKw3IFwRbIrH1ydh5z1RPiI64mqgGh5rcGbsR-GYeidf10kB78vzhPf9dK_6HYcSZea1uHh_TQtVPp-0RRyHhUglP-yIAzGYpXAYkg7lJkrjL3kSbxTJkMVOBcEueHfN7iPM5qSNCZA/w522-h640/WhatsApp%20Image%202022-05-20%20at%209.56.58%20AM%20(1).jpeg" width="522" /></span></a></div><span style="font-size: large;"><br /><span style="font-family: Source Serif Pro;"><br /></span></span><p></p><p><span style="font-family: Source Serif Pro; font-size: large;">In our case, our Ayurvedic doctor also suggested that we consult an Allopathy doctor to enhance our Vitamin-D and B-12 levels. This clearly showed the openness & approach. All sciences should move together to general well being. Each science has its place in our well being. No science is above all. All need to work in tandem.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">As far as Panchakarma treatment was concerned, for me, the focus was on my back, knees, digestion & basic well being. Behind one of my knees, I had some small Varicose veins issue which also needed attention. This was not a major problem since I exercise my feet every day by swimming & walking regularly. Nevertheless, it was an opportunity to tackle this problem & all our general issues.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">In March 2022, we decided to begin this lifestyle and medication for a couple of months and then, take the Panchakarma treatment in the month of May 2022. This would give our bodies a couple of months to get used to the lifestyle & the medication.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">In the two months of lifestyle & medication, we saw enormous improvement in our health and well being. We began our Vitamin-D supplementation as well & connecting to Surya for 20 minutes every morning. We were preparing slowly for the Panchakarma treatment.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Before I proceed, let me now take you through the SSTP facility:</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">1. Main Reception where we get all details</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">2. Doctor Kuteers where we can consult with the doctors</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">3. Krishna Kuteer - Panchakarma Treatment Facility</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">4. Meera Vanam - Beautiful Accommodation Facility equipped with Duty Doctors & Nurse Stations</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">5. Panchamrut - Bhojana/Food Facility where Food is prepared as per our Diet for the stay. General Food is also available, but mainly Nutritious and Sattvik.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">6. Vehicles to shuttle us across various facilities (of course, we chose to walk most of the time)</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgADK3OM07uuX3j1g3hvqLriEzow1zG2uNGCzKkWjREwg1qOCW7FCAShGqoG-9zJR8916xsZJqP-g5SwcC1f0EInaiQ_8TbUTmmKnhWuORSRSSBDsReLU7M9tVvUeSrQMyxuqfLo0aqq62rKoSs213tQDuHVUvs5MofwxKIhlL-bokGW0QEt8NpGT4E7g/s1024/WhatsApp%20Image%202022-05-20%20at%209.56.59%20AM%20(1).jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="768" data-original-width="1024" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgADK3OM07uuX3j1g3hvqLriEzow1zG2uNGCzKkWjREwg1qOCW7FCAShGqoG-9zJR8916xsZJqP-g5SwcC1f0EInaiQ_8TbUTmmKnhWuORSRSSBDsReLU7M9tVvUeSrQMyxuqfLo0aqq62rKoSs213tQDuHVUvs5MofwxKIhlL-bokGW0QEt8NpGT4E7g/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.56.59%20AM%20(1).jpeg" width="640" /></span></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJLfq8yqJQ7_pb9Wza3HTGjRdiJ4r7DjOHuOBZ8xAEFun04GgS9I1q-A5EguUfRZfy4C4GTRORbVCtovXnw9ZcucO4U1CouF1qJb6zCLduocZktHD0AAYr3tQfMC7Jra6fND2ncdWU89Pt5W7vRtBgkMxixIzRfxklU91PJwsfQCKEu0eEM2DtfpPyQw/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.54%20AM.jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="1200" data-original-width="1600" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJLfq8yqJQ7_pb9Wza3HTGjRdiJ4r7DjOHuOBZ8xAEFun04GgS9I1q-A5EguUfRZfy4C4GTRORbVCtovXnw9ZcucO4U1CouF1qJb6zCLduocZktHD0AAYr3tQfMC7Jra6fND2ncdWU89Pt5W7vRtBgkMxixIzRfxklU91PJwsfQCKEu0eEM2DtfpPyQw/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.56.54%20AM.jpeg" width="640" /></span></a></div><div class="separator" style="clear: both; text-align: center;"><span style="font-family: Source Serif Pro; font-size: large;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbQIoOcwg1GySoc5ups6rSss9pGaUmrPqifBhEibeX5xBfvxfZ_wKA2kRHdXDkNQTf4j93jY7EWPb82pRlXk_9VB3uKzjHoppsQ3UG9MiLVOU2gQtO8kuOdPuVCjFrNcaV0Cp4xBJtOgsS1coRMB4RRAi3GdZYaa7MdC_SBLNEJT1GJ2URyHoCMXJcKA/s1600/WhatsApp%20Image%202022-05-20%20at%209.57.00%20AM%20(1).jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="1200" data-original-width="1600" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbQIoOcwg1GySoc5ups6rSss9pGaUmrPqifBhEibeX5xBfvxfZ_wKA2kRHdXDkNQTf4j93jY7EWPb82pRlXk_9VB3uKzjHoppsQ3UG9MiLVOU2gQtO8kuOdPuVCjFrNcaV0Cp4xBJtOgsS1coRMB4RRAi3GdZYaa7MdC_SBLNEJT1GJ2URyHoCMXJcKA/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.57.00%20AM%20(1).jpeg" width="640" /></span></a></div><span style="font-family: Source Serif Pro; font-size: large;"><br />We booked ourselves Twin Sharing Room in the Meera Vanam facility. Such a beauty, this facility was. When we reached the Meera Vanam, we were greeted in the Reception Front office. We had a beautiful room on the 3rd floor overlooking lush greenery and the Vishalakshi Mantap of the Sri Sri Ashram. Immediately, we were added to a Whatsapp group which had my wife, myself & 22 others (Doctors, Guest Relations, Insurance and Treatment Team). This group was mainly for any communication regarding treatments, schedules & any concerns. We were impressed. Each room had its own Whatsapp group. So, we had a personalised team taking care of our needs and concerns.</span><p></p><p><span style="font-family: Source Serif Pro; font-size: large;">I visited the Krishna Kuteer facility for my first Panchakarma Treatment. My therapists escorted me to one of the rooms. I had to wear one piece of cloth to cover my private parts. They made me sit down. They first prayed to Lord Dhanavantari & chanted some prayers. They cleaned my feet and applied oil across my body with lots of prayers. I could sense that they were completely into the process, with prayers & humility.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXpz2mSJvCLSbFMsUPswKY9XfadVLzLxROc70L1GVO0lBAwtfS15v5WjRy39Gn9CUEnydB1cjzTuNfeTJRK9TO20s0h11FKF6aNgV6Q3t5-pwvA9217thsimis1ZDMuM6HxrApCOYSusIKdWhAVQ-8bZ0c9wYOlRntoScnfJ51Mrv7aaThDhnqXFI7tw/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.54%20AM%20(1).jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="1200" data-original-width="1600" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXpz2mSJvCLSbFMsUPswKY9XfadVLzLxROc70L1GVO0lBAwtfS15v5WjRy39Gn9CUEnydB1cjzTuNfeTJRK9TO20s0h11FKF6aNgV6Q3t5-pwvA9217thsimis1ZDMuM6HxrApCOYSusIKdWhAVQ-8bZ0c9wYOlRntoScnfJ51Mrv7aaThDhnqXFI7tw/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.56.54%20AM%20(1).jpeg" width="640" /></span></a></div><span style="font-family: Source Serif Pro; font-size: large;"><br /></span><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOsGpSHvr-kuQvgS6tn7eXxk3luScOfs-hRUzmXc8XUUjEpf_twUxQnTqZNULDrutdlrq-Rbcxz3v1KHMzALzxg1G9N1ky1iJQ5kipn90nbo2jUSKRAYLl7n6G8xLdaOYBHzj4_Apr_jVVCU8TLqK5AoEA2JR_Dltpuma8No8SdwwL47GddUikLHkOjg/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.56%20AM%20(1).jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="1200" data-original-width="1600" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOsGpSHvr-kuQvgS6tn7eXxk3luScOfs-hRUzmXc8XUUjEpf_twUxQnTqZNULDrutdlrq-Rbcxz3v1KHMzALzxg1G9N1ky1iJQ5kipn90nbo2jUSKRAYLl7n6G8xLdaOYBHzj4_Apr_jVVCU8TLqK5AoEA2JR_Dltpuma8No8SdwwL47GddUikLHkOjg/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.56.56%20AM%20(1).jpeg" width="640" /></span></a></div><span style="font-family: Source Serif Pro; font-size: large;"><p>This small process set the beginning of a wonderful experience. Each staff was doing their Seva with lots of prayers and Bhakti. This added a huge difference as they worked through my body. The staff were part of satsangs, prayers & hence, their attitude was simply humbling.</p></span><p></p><p><span style="font-family: Source Serif Pro; font-size: large;">Since, for me, the focus was on my back, knees and digestion, I had the following treatments.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Uzhichil & Pizhichil - Hot Oil Massage across the body</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Udwarthanam - Hot Oil Massage. Then Hot Herbal Powder is Rubbed across the body from Bottom to Top of the Body (against normal massage). 2 therapists massages. 3rd person assisted in heating the powder and maintaining the right temperature.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Lepam - Herbal Paste applied on Knees and then Bandaged tightly for 3-4 hours so that Juice Enters my Body</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Jambeera Pinda Sweda (JPS) - Jambeera means Lemon. Potlis are made (small bags) with Lemon and herbs inside, soaked in hot oil and massaged across. The Entire Strength from the Lemon Potlis enter our system. This is done by two therapists, with a third person assisting in heating the potlis and maintaining the right temperature.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Patra Pinda Sweda (PPS) - In this treatment, Potlis are made with Herbs inside, soaked in hot oil and applied across the body.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Marma & Osteopathy - Subtle treatments, where the doctors activate the points across our body as we get into deep meditation. This is not a massage. These are meditative techniques where the experience is subjective. I cannot describe my feeling in words. Just that the connection was blissfully medicative.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Basti - Enema treatment to cleanse the intestines. Felt super light.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">- Leech Therapy - To remove impure blood and general well being. Leeches are taken care of and used as another staff in this process. Leeches are also therapists here.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">For my wife & me, personally, all these procedures were opportunities to give our body the best, from the best. I had beautiful conversations with the therapists, some of who had spent 15 - 20 years of their lives, serving people. The most experienced hands were working their magic on our general health. With complete devotion.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Our breakfast, lunch & dinner were ready as per our diet recommendations. Pure Sattvik food with wholesome nutrition was provided as part of our stay in SSTP. The diet included ragi, oats, millets, brown rice, jowar/bajra/ragi rotis, steamed veggies and sabzis. We consumed lukewarm water throughout our stay. Herbal Tea and khichdi were regular in our diet.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXG8m7o4khzyUoSB14096Cdr4qkdyZQfHCgBZ_q6ZQEALjbni96k78CnjVkcUmawyLiWxWrBkhaK6HKA3JtlJD_LLIY2QdZ9gJo_s_Bbxr00VBNTCR2J3TmwFDyrRjjmqspWRHoFiu3-TXEdmlMbNEKSHcgQW5jH2QQa9D2h8UYCvhUfr4E3Dr2qOWCQ/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.56%20AM.jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Source Serif Pro; font-size: large;"><img border="0" data-original-height="1200" data-original-width="1600" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXG8m7o4khzyUoSB14096Cdr4qkdyZQfHCgBZ_q6ZQEALjbni96k78CnjVkcUmawyLiWxWrBkhaK6HKA3JtlJD_LLIY2QdZ9gJo_s_Bbxr00VBNTCR2J3TmwFDyrRjjmqspWRHoFiu3-TXEdmlMbNEKSHcgQW5jH2QQa9D2h8UYCvhUfr4E3Dr2qOWCQ/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.56.56%20AM.jpeg" width="640" /></span></a></div><span style="font-family: Source Serif Pro; font-size: large;"><br /></span><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgslSyXkMupyd9xYP5Q73SVMlQNOIS3eMJNs0WKMYF8YOkay66MRv7QMEADiRQJA3iXQ9mGYelHS_8QXnJThTR7QcwXhEr8xrtbW7kHDyQJovs1-fm8tyVwIJDoj7OzkKAsqnx_s89JU06h5zKULo5oYkFbzJCRQ3a6qxRuwlDnGTL-RKAc3hVN7qhlPw/s1600/WhatsApp%20Image%202022-05-20%20at%209.56.53%20AM.jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="1200" data-original-width="1600" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgslSyXkMupyd9xYP5Q73SVMlQNOIS3eMJNs0WKMYF8YOkay66MRv7QMEADiRQJA3iXQ9mGYelHS_8QXnJThTR7QcwXhEr8xrtbW7kHDyQJovs1-fm8tyVwIJDoj7OzkKAsqnx_s89JU06h5zKULo5oYkFbzJCRQ3a6qxRuwlDnGTL-RKAc3hVN7qhlPw/w640-h480/WhatsApp%20Image%202022-05-20%20at%209.56.53%20AM.jpeg" width="640" /></span></a></div><span style="font-size: large;"><br /></span><p></p><p><span style="font-family: Source Serif Pro; font-size: large;">Duty doctors used to visit us 3 times a day to check our general well being. Nurses used to come to our rooms with kashaya and medication regularly to strengthen our system. Water was refilled regularly. The housekeeping staff cleaned every day. Diet food used to come to our room (in case we didn't go to Panchamrut). It was pure bliss to see the whole system working together, without any issues, seamlessly like a well-oiled machine.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">It was so awe-inspiring to see how the doctors, therapists, nurses, housekeeping, cleaning, food and shuttles coordinated. It was simply amazing !!! Only in Seva, this can be achieved.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">As we leave this place, stronger, healthier and making a new relationship with our bodies, I realised that this experience comes at a price. As Warren Buffet says - Price is What We Pay. Value is What We Get.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">What we Pay, goes into making this Place more Efficient, Supporting the doctors, staff and Ayurveda & Panchakarma. The ashram feeds thousands daily. We were more than happy to pay for the same. We got enormous Value in the 7 days spent here.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Now, friends. Let me give you a perspective:</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">There are 365 days a year. For these 7 days of Treatment, Stay & Food, we have to Invest ₹250 x 365 days (₹125 per head per day). My wife & myself discussed, that, ₹250 a day for our well being is not such a big price. We can afford it today, and we should make this a yearly affair.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Most of our Insurance Partners cover AYUSH Treatments. So, you may want to explore that as well.</span></p><p><span style="font-family: "Source Serif Pro";"><span style="font-size: large;">To conclude, I wanted to say that, this was a wonderful experience. I believe that each of us has the right to take care of our bodies. Vehicles undergo yearly maintenance. Why should our bodies be any different?</span></span></p><p><span style="font-family: Source Serif Pro; font-size: large;">I hope this article sparks a thought process in each one of us. This article was aimed at you, doing the best for our bodies. Wherever it is, the time to begin is TODAY. You can explore various options at a location near you. We are in Bharatha, the land of Ayurveda.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">The best investment we can make is in our body, mind and general well being. Our bodies will stay with us until the end. Let us make every second count !!!</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Cheers to Peace, Health & Happiness.</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Lots of Prayers,</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">Fundamental Investor</span></p><p><span style="font-family: Source Serif Pro; font-size: large;"><br /></span></p><p><span style="font-family: Source Serif Pro; font-size: large;">You can write to me anytime at investorfundamental@gmail.com</span></p><p><span style="font-family: Source Serif Pro; font-size: large;">To connect - <a href="http://www.fundamental-investor.com/p/about.html" target="_blank">Click Here</a></span></p><div><br /></div>Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com4tag:blogger.com,1999:blog-303837536783625365.post-87499781529379093572020-10-18T14:13:00.002+05:302020-10-21T23:48:55.967+05:30My Learnings from Zero To 1 Lakh Followers on Twitter<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif">Dearest investors & friends,</span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif">As many of you know, my investing journey began in 2007. In 2013 I began guiding friends on <a href="mailto:investorfundamental@gmail.com" target="_blank">email</a>. In 2016, I started my <a href="http://www.fundamental-investor.com/" target="_blank">website</a> where I began writing articles and sharing my thoughts. What a wonderful journey this has been, interacting with thousands of virtual friends, making few real friends for life. Absolutely phenomenal. </span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;">It was in March 2017, that I joined Twitter as <a href="https://twitter.com/FI_InvestIndia" target="_blank">FI_InvestIndia</a>. I have been guiding virtual friends on email since last 8 years now. Long long journey in connecting with everyone. Like compounding, it started Zero. And today, I have connected with over 1 Lakh Virtual Friends.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-Hj9AQnycqME/X3C122DyxcI/AAAAAAAABYw/EjYHfbdQ50Y8F9-8-0Is1gYnBeEI61hIACLcBGAsYHQ/s600/1Lakh.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Mukta;"><img border="0" data-original-height="335" data-original-width="600" height="224" src="https://1.bp.blogspot.com/-Hj9AQnycqME/X3C122DyxcI/AAAAAAAABYw/EjYHfbdQ50Y8F9-8-0Is1gYnBeEI61hIACLcBGAsYHQ/w400-h224/1Lakh.jpg" width="400" /></span></a></div><span style="font-family: Mukta;"><br /><span style="font-size: large;"><br /><span face="Trebuchet MS, sans-serif">Today, as I touch 1 Lakh Friends on Twitter, I thought I should collate my learnings for benefit of all. My learnings, mistakes, associations, arguments, discussions & all the emotions I went through in this wonderful journey. I want to pour my heart out to all of you. </span><br />
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<span face="Trebuchet MS, sans-serif">This is not only useful for myself as a reminder, but also for readers who aspire to use Twitter effectively to reach out to thousands effectively. This post will also serve as a guide for friends who aspire to become People Influencers and Make a Difference to a lot of people.</span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">I am blessed to have such a beautiful journey.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><a href="https://twitter.com/FI_InvestIndia/status/1298166849386029061" target="_blank">Click here for My Long Journey in a NutShell</a><br />
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<span face="Trebuchet MS, sans-serif">Before we begin, I want to give you something awesome. Very powerful to begin with.</span><br />
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<u><b><span face="Trebuchet MS, sans-serif" style="background-color: #fcff01;">BASICS OF TWITTER:</span><br /></b></u>
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<span face="Trebuchet MS, sans-serif">Let's say I have 1000 followers. My 1000 followers each probably follow hundreds or thousands of people apart from me. Read this again friends. Our followers follow many many more people. So, my tweet is just one, out of thousands for my followers. It's just a random Tweet on their Timeline.</span><br />
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<span face="Trebuchet MS, sans-serif">Now, when I create a Tweet, it shows up on my Followers' Timeline. But, along with my Tweet, other Tweets will also show up on my Followers' Timeline based on how many people he/she follows. So, effectively, my tweet has to be so so awesome, for someone to give it a second read. Yes. It has to make a difference. Only then, will someone Like it, Retweet it or even Share it with someone else. If my tweet is continuously making a Difference to someone, he/she will follow me. If my tweet touches someone's heart or makes someone smile, he/she will share it around. It's Simple but we need to Understand this.</span><br />
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<span face="Trebuchet MS, sans-serif"><b><u>LIKE BUTTON:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">When I Like a Tweet, what Happens? When I press the Like Button of a Tweet, my Followers will get a notification of that on their Timeline. This is a very Powerful concept. But there is some algorithm there as well. If I like something which is really getting other Likes as well, it can actually help that person to gather more readership. A Like is the simplest way of Really Appreciating someone's content. When we Like something, it moves around.</span><br />
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<span face="Trebuchet MS, sans-serif"><b><u>RETWEET:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">This I think everyone understands. If I retweet something, all my followers will get it on their timeline. We need to Retweet wisely. The more we Retweet, the more our followers' timelines get filled up. So, we should use this very very judiciously. A lot of Retweets can be irritating at times (especially for me).</span><br />
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<span face="Trebuchet MS, sans-serif"><b><u>MUTE:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">If I Mute someone on Twitter, I cannot see his/her Tweets. But, that person can still see my Tweets and reply etc. In my opinion, this helps if we feel that we do not want to see all the tweets. For eg: I am interested in reading a person's tweets. But, 80% of her tweets are irrelevant for me. I am interested to read 20% of her tweets. In this scenario, we can Mute. Later on, we can go to his/her timeline and read what we want to read. This is a powerful feature. I have muted few Amazing People and I read their Tweets every night. I can choose what I want to read in this process and my Timeline remains clean. I do not use Mute for any Trolls/Time pass people. So, what do I use?</span><br />
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<span face="Trebuchet MS, sans-serif"><b><u>BLOCK:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">Superb feature. In Twitter, not everyone is coming for constructive discussions. Over time, we know which people actually do not wish to read our tweets. So, we can Block them. So is blocking something to be ashamed of? No way. Actually, we are helping the person who is being blocked. The person being blocked has a huge huge advantage since he/she will never see our tweets again. Isn't that great for them? I feel it is a wonderful feature. It's the greatest service we can do for people who do not find value in what we post. I love it.</span><br />
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<span face="Trebuchet MS, sans-serif"><i style="background-color: #fcff01;">So Blocking in my view - Politely ensuring that someone doesn't go through the pain of reading our tweets. We are serving them by Blocking them. Always remember this.</i></span><br />
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<span face="Trebuchet MS, sans-serif">Now, with this basic introduction of the features, let us proceed. Sit back. Read aaram se as I open up some amazing stuff.</span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 1 - Never Underestimate the Power of Organic Growth:</u></b></span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif">Just like my Wealth Creation, this journey to a Lakh friends following has been Slow. Steady. It has taken it's own time. To be frank, I never started off with any aim. I just joined Twitter to share my experiences. But, from the beginning I was very clear about one thing - Organic Growth. I came to know that there are multiple ways in which we can buy Followers or Likes, Retweets etc. But, thankfully, I never resorted to such things. Yes, it takes time. But friends, let me assure you - It is totally worth it. If we have 100 followers and if even 10% of them resonate with our sharing, this can compound real big. What's the use of having fake or paid followers if our content is really not creating an impact? So, the first and most important point is to grow organically. The better our content, the better our reach eventually. </span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span face="Trebuchet MS, sans-serif" style="font-size: large;"><span style="background-color: #fcff01; font-family: Mukta;"><i><br /></i></span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><span style="background-color: #fcff01;"><i>So, GROW ORGANICALLY. TAKE TIME. IT PAYS OFF.</i></span></span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face=""Trebuchet MS", sans-serif"><b><u style="background-color: #fcff01;">Rule 2 - Crisp Content in Few Words:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">On Twitter, Content is everything. Twitter is a great platform to share few thoughts with our virtual friends and to have constructive discussions. My first learning is that a content which connects and resonates with thousands really gets passed on. To build a good content, we need to know what we are good at. What are the areas where we have an edge or expertise. This introspection should happen over a period of time. If we can deliver great content which instantly makes a difference to others, it really helps over a period of time.</span><br />
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<span face="Trebuchet MS, sans-serif">The art of communicating a lot in 280 characters takes a lot of time. To be frank, it took me months to understand how to post on Twitter. I realized that the greatest of quotes are short but very very powerful. In the last 3 years, I have seen so many people who communicate powerful ideas in a simple sentence. I can assure you that this is possible. We all get such powerful thoughts if we can connect to ourselves and to the universe. And you know what. Powerful thoughts compacted in one sentence can really touch the hearts and minds of thousands. It is magical.</span><br />
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<span face="Trebuchet MS, sans-serif"><i style="background-color: #fcff01;">WORK ON CREATING SHORT POWERFUL SENTENCES. THEY WORK MAGIC.</i></span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 3 - Association Matters:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">Twitter is a Virtual World. I call it Virtual because thousands of people whom we don't know personally read what we write. And they comment/respond with their opinions and reactions on what we write. So, on a platform where everything is virtual, Association becomes extremely key. The better our circle of association, the better our thoughts become. We need to decide whom we would like to Follow on Twitter. Twitter as a platform is very powerful and I have made some amazing friends here. But more importantly, I have also realized whom to stay away from. Yes. I keep a long long distance from many as well. If used effectively, Twitter can become a beautiful place. But, if we are associated with people who do not resonate with us, it can become an Ugly place. So, Association Matters.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><i style="background-color: #fcff01;">SATSANG IS MOST IMPORTANT ON TWITTER. NEVER ALLOW ANYONE TO DECIDE YOUR STATE OF MIND !!!</i><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 4 - Follow only People who add Value to your Timeline:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">There is no magic number here. To make Twitter an effective platform, we should Follow the People who make our Timeline Powerful. Never follow someone just to please someone. To be frank, as you all know, I mainly focus on Personal Finance and Long Term Investing. But, a lot of Awesome Trader Friends follow me. They are simply the best. I used to feel bad that I am not able to follow them. I used to honestly DM them, telling them that I do want their Chart Tweets in my timeline and hence I do not follow them. And they actually understood it. And we are the best of friends. Every night, I read their Tweets on Life. Their psychology tweets. Their pictures etc. I love them. But, I really cannot afford to have their Chart Tweets on my timeline. I realized that we need to follow people who can keep our timeline apt for ourselves. If you are a trader, follow the best traders. If you are a spiritual person, follow people who can give you that precious timeline. If you are looking for jokes, music, stories, inspiration, quotes, follow people who can give you specifically that. That's key.</span><br />
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<span face="Trebuchet MS, sans-serif"><i style="background-color: #fcff01;">FOLLOW WISELY. KEEP TIMELINE RELEVANT AND POWERFUL.</i></span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 5 - Sincerely Respond to Almost Everyone & Support Awesome Content:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">One of the things I have been following from the beginning is to respond to each and every person. I try to build a beautiful connect with each person. Now, since I read all the replies, it also helped me to understand who the genuine people are. It helped me in handpicking my circles and associations as well. I realized that responding to every person really helps. A small like can make a big difference to the person following us. A small response like "Wonderful", "Great" or even a "Good Morning my Friend" goes a long long way. If I read any article which really is awesome, I Like it and I respond individually to the Person's Thread. In this way, since I have pressed the Like Button, my followers also can see that article and then read it. I love supporting awesome content. I realized that appreciating amazing content actually builds a great connect with the audience. Over a period of time, we get to read great stuff by following this simple technique.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">But yes, there is a problem here. Since I respond to each and every person, I get to see some irrational remarks sometimes and trolls etc. Initially I used to try and justify and argue etc. I lost my peace of mind many times, since I was trying to educate a troll. Never works that way. Later on, as I understood the real intent of trolling, I started liberating them with the BLOCK feature. It's a WIN-WIN Now. My Timeline has also got much much cleaner.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span style="background-color: #fcff01;"><i>Appreciate Publicly. We don't lose anything by Congratulating someone openly. But, if we want to Criticize, do it Privately on DM. It really really works wonders.</i></span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 6 - Tag People Rarely, but Effectively:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">Now, this is a tricky one. Tagging multiple people in your posts can actually do well or get irritating. To be frank, there is nothing right or wrong here. I have been tagged on some amazing articles which helped me build great connections. But, sometimes when people tag just for the sake of tagging, it gets irritating. So, it's for you to decide - When to tag and whom to tag. Let me give you a small idea here. Instead of tagging all the ids in the Tweet, upload a relevant picture to your tweet and tag people in the picture. This can work wonders actually. In this way, you are still tagging people, but you get the entire Tweet for the content. It can become more effective. Tag rarely. But effectively.</span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 7 - Being Positive Pays:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">I have seen a lot of people being Negative on Twitter. Yes, Negativity Sells. But, you know what? Positivity goes a long long way. Actually much much longer. There are very few people who are Optimistic about something. I actually think that being in a Small Positive Camp is always more powerful than being in a Large Negative Camp. A Positive Quote in a Time of Crisis, a Smile or a Like in a Bad Time or even a Word of Encouragement to someone can do wonders. Positivity is contagious. I have built a huge huge impact by just being positive. Yes. The World needs more and more Positive Thoughts. Why can't we be the Torchbearers of the same?</span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 8 - Never Ever Troll:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">Never Troll. Period. If you want to disagree with someone, do it politely. Sweetly. Word your Tweet carefully. That's an art which we have to work on, early on. To be frank, this is something I have developed over a period of time. It was not a part of me when I joined Twitter. I also used to sometimes disagree in a rude way or sarcastic way in initial days. But, Twitter and people have taught me how to put my thoughts effectively without hurting someone. I have noticed that Trolls never create a Big Impact. There are many ways to have a good effective conversation. So, the bottom line - Do not become a Troll.</span><br />
<span face="Trebuchet MS, sans-serif"><br /><b><u style="background-color: #fcff01;">Rule 9 - Involve Twitter Friends in Activities & Learnings</u></b><br /><br />In 2017, I conducted an activity which became extremely popular. Hundreds of friends volunteered to study Annual Reports of Businesses and prepare notes on the same. I also used to have Exercises for friends on my Google Group where there was active participation. These small activities picked up momentum and they helped me personally reach thousands of minds. It was a group effort and it was phenomenal. We all loved it.<br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><i style="background-color: #fcff01;">So, Involve More People and Create Value for them Directly or Indirectly. It helps Reach Thousands and Compounding is Awesome.</i></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 10 - Don't be Sarcastic until it is Constructive:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">I like Sarcasm. But it has to be Constructive. Be Sarcastic, constructively. To be frank, I also sometimes, even today, feel like being Sarcastic about something. But, I think twice - Should I post this? Will this lead to a wrong effect? I feel that being constructively sarcastic (if at all) is much better than being ridiculing sarcastic. This has helped me to focus on the main point, rather than ridicule something. Constructive Sarcasm doesn't hurt anyone. The message is most important.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><i style="background-color: #fcff01;">Sarcasm is like a Rocking Chair. Keeps us Busy. Takes us No-where.</i></span><br />
<span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 11 - Focus on Quality of Tweets. Not Quantity:</u></b></span><br />
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<span face="Trebuchet MS, sans-serif">Now, this is something which I try to follow. And let me admit, this was not what I was doing initially. Too many tweets can sometimes dilute the readership. I try to post a Tweet at 8 AM (IST) and one at around 8 PM (IST). I make sure that the quality is top notch, atleast it should inspire me for sure. However, sometimes, if the Market moves a little violently, I try to put some Motivating Posts on my Timeline during the Day. Also, if the Market gets a little Euphoric, I try to put some Posts to Balance this. But, I generally Avoid Many Tweets in a Row. When I post one Tweet, and allow People to Digest it, it actually Reaches a Better Audience. This has been my Observation.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">When we Tweet, make sure we give enough time for readers to digest it. Let them read it. Understand. Think about it. And share it. Giving time between tweets really help.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 12 - Tweet on your Strengths:</u></b></span><br /><span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif">Initially I only used to tweet about some stock market related stuff. But my strengths are varied. I slowly started covering Personal Finance, Behavioural Psychology of Investing, Stock Market, Inspirational Quotes, Experiences, Videos with Children, Indian Education, Songs on my Guitar, Special Moments with Family, Trips, Personal Spending Habits etc. etc. The point I am trying to make is - I slowly created a huge Family on Twitter. To create a niche takes time. But it is worth it. And slowly, we get to be known for our niche. Everyone knows that I do not talk about stocks. So, people who expect names and tips do not find value in what I tweet. People follow for something unique. Create that unique space for yourself. That's my point.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;">Tweeting on topics which are our strengths help. Also, we need to slowly build up and keep inspiring everyone to live a better life, be happy and enjoy life. It takes time. But it will surely touch people. Slowly. Steadily. But Surely.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 13 - Save Interesting Content in Drafts:</u></b></span><br /><span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif">This is one of the best tips I can give. When I find anything interesting (quotes, Whatsapp jokes, Inspiring thoughts etc.), I immediately save it in my Twitter Drafts. This really really helps me to post some cool stuff occasionally. Even sometimes, when I am, let's say, playing with my son, if I suddenly get an amazing thought, I just save it in Drafts to be fine tuned later. In this way, we always have some great content to post and touch hearts and minds of thousands.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 14 - Give Credit to Source:</u></b></span><br /><span face="Trebuchet MS, sans-serif"><br /></span>This is really important. This might look small, but people are observing every step we take. If we unknowingly take credit for something which is not ours, we will end up creating a sorry figure. This is something I learnt over time. I also have made some mistakes in initial journey. Now, I am careful.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;">If I put up a joke or quote which we received on Whatsapp, I usually put #WAFwd as a hashtag. If I tweet a quote which I have not created, I generally use "Anonymous" in it. The reason I use "Anonymous" for even some popular quotes, is because, many times, some quotes are quoted by multiple popular people. When we google the source, we find 2-3 sources sometimes. So, to be safe, I put "Anonymous". It has worked wonderfully for me. In this case, there is no debate and people can actually focus on the message. And of course, there will be 1-2 people who find fault in Anonymous also. Best to ignore, and move on.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 15 - Keep Reposting Best Tweets:</u></b></span><br /><span face="Trebuchet MS, sans-serif"><br /></span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span face="Trebuchet MS, sans-serif"><span style="font-family: Mukta;">Initially, I used to Retweet my old Tweets which got a great response. But, later I learnt that, reposting a great Tweet always helps. When we Repost an old tweet, here are the advantages.</span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span face="Trebuchet MS, sans-serif"><span style="font-family: Mukta;"><br /></span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span face="Trebuchet MS, sans-serif"><span style="font-family: Mukta;">Firstly, it looks Fresh. Old friends love re-reading great thoughts again and again. Sometimes, some friends would have missed my tweets the previous time (since they might be following other people and hence, might have missed my tweet in their timeline). Also, new friends who follow will get to see my tweets, which they might have missed.</span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span face="Trebuchet MS, sans-serif"><span style="font-family: Mukta;"><br /></span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span face="Trebuchet MS, sans-serif"><span style="font-family: Mukta;">So, all in all, reposting best tweets time to time really really helps to reiterate those thoughts, act as a constant reminder and also helps new friends to understand us better.</span></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Rule 16 - Block Frequently:</u></b></span><br /><span face="Trebuchet MS, sans-serif"><br /></span>Association Matters. However, Disassociation also really really matter. If we Block someone, maybe that person might resort to Snapshots etc. Doesn't matter. Don't think of the consequences. Block if you feel that you are wasting time of someone else. As I said earlier, Blocking is a service which we are doing for sake of people who do not value our thoughts or time. So, I repeat. Block and stay in peace. It's a great tool to disassociate completely from people who do not resonate.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;">Now, here people might argue that we should not Block Constructive Critics. I totally agree. This wisdom comes over time. I get lots of disagreements but they are respectful. I like such people who know how to put their thoughts in a proper manner. But, it is easy to figure out, who is being cheeky. I block cheeky people. I don't think much :-)</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;">And it really really helps. So, serve others by blocking them. Don't worry. </span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-size: large;"><span style="font-family: Mukta;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">
<span face="Trebuchet MS, sans-serif"><b><u style="background-color: #04ff00;">My Biggest Mistakes on Twitter Platform:</u></b></span><br />
<span face="Trebuchet MS, sans-serif"><br /><b><u style="background-color: #fcff01;">My Ego:</u></b></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif"><br /></span><span face="Trebuchet MS, sans-serif">Twitter is a great place to feed our ego. Finance is a very subjective topic and varies from person to person. Stock Prices fluctuate on second by second basis. We all have a Nice Ego. I am no exception. But initially, it was really Big on Twitter. I used to feel that My Way is the only way. This led to unnecessary debates and loss of peace of mind. I learnt that there is no point in having a big Ego here. And since, everyone has their own way of doing things, we should focus on moving on, rather than have a big ego and continue to argue. Twitter has, over a period of time, taught me this valuable lesson. If we get into the Ego Trap, this can reflect in our Family Life as well. </span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><i><span face="Trebuchet MS, sans-serif">So, my learning - Never allow Ego to Take over in the Virtual World. It's like a Time Bomb. Self Destructive.</span><br /></i>
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<span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Making fun or ridiculing:</u></b></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><span face="Trebuchet MS, sans-serif">In initial stages, I used to try to find opportunities to ridicule something. Of course, it was never in a harmful way. For eg: If someone has invested in a particular company that I wouldn't invest in, I would try to find a fault with it. Or, if someone is tweeting something which I would not agree with, I would argue or try to be cheeky. But, over period of time, I learnt that there is no point in ridiculing or finding fault with someone. It might make our ego feel better, but it doesn't serve any purpose. So. now, if I find something which I disagree with, I put a generic Tweet with my point of view. It's for Readers to decide my thought process and see if it fits into theirs. I try my best not to ridicule. But I am also human. Sometimes, if something is too too funny, I cannot stop myself. But working on it. Hopefully getting better at it, over time.</span><br />
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<span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Naming some Businesses publicly:</u></b></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;">In my initial months, I used to randomly make comments on some companies. This was not structured at all. Later on, I slowly fine-tuned it to post important articles, concalls etc of the companies I owned. Also, whenever I used to buy some shares, I used to update on Twitter. It used to famous as "Drops". I am a firm believer in Drops make a Mighty Ocean, Over Time.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;">My main intent was that everyone should understand how to buy shares of a business for years in good times and bad. But, I made a Rookie Mistake here. My Mistake was not my Businesses frankly. But, I didn't realize that most people who are reading this are not here for 15 years time frame. Also, people would read my tweet at different times. Some might blindly follow buying as well without any research. And to be frank, not many readers actually focus on owning a business. </span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;">Also, I spent a lot of time justifying why the company is good etc. This was leading to a lot of time and energy drain. I also realized that most people who used to debate on the businesses are not owners. Also, when I speak about a company, over time, I get identified with the company on social media. But, since we can exit any point in time, this can prove to be detrimental. Yes. When we get identified with a company with "Virtual" people online, it can really get you caught in a Maya Trap. It can sometimes cloud our thinking.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;">So, all in all, this was a mistake which I feel no one should do on social media. Even today, I own my businesses, but not talking about them, makes me light. I removed & deleted all irrelevant tweets once and for all. This has been a great lesson for me personally. I hope others learn from the same. Today, everyone knows my philosophy towards investing and adding businesses, which was my main focus, then and now. And of course, I like my businesses. Allocation can change with time and opportunity.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><i>I can now own my businesses in Peace. I can buy and sell. I can hold businesses in good times and bad. No justification. No debates. I am responsible for my own decisions. I love this peace of mind. It took me time to understand how awesome it is.</i><br />
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<span face="Trebuchet MS, sans-serif"><b><u style="background-color: #fcff01;">Unnecessary arguments:</u></b></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;">There was a stage where I used to attend every argument I was invited to. And I realized that, in dynamic markets, where price fluctuates every second, we can be right at one time and wrong at another. So, a big learning is never to argue with anyone. When anyone comes to my timeline just to argue, a polite "Ok" or "Sure" can do wonders. I cut arguments quickly. And since, as I mentioned before, I read every tweet response, I can easily Close any Argument just by Agreeing to it. In a dynamic market, what works for me, need not work for anyone else. And hence, there is no ONE WAY. There are many ways to Reaching the Goal of Creating Wealth. The faster we understand, the Better.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;">So these are my biggest mistakes. I always wanted to write it candidly and I am so happy to be able to open up to all of you.</span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span><span style="font-family: Mukta; font-size: large;"><br /></span></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">Friends. Twitter is a beautiful platform. It has not only helped me reach thousands instantly, but has shaped me well as a human as well. I am ever thankful to everyone for that.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">I hope this post of mine, gives you all various messages as a take-home. Read it again, if needed and please make use of my experiences.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">Let me end with my biggest learning from Twitter.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><b style="background-color: #fcff01;">In the Virtual World, Followers will come and Followers will go. Some will Laud and some will Troll. So follower count should not be criteria.</b></span></div><div dir="ltr" trbidi="on"><span style="font-family: Mukta; font-size: large;"><b style="background-color: #fcff01;"><br /></b></span></div><div dir="ltr" trbidi="on"><span style="font-family: Mukta; font-size: large;"><b style="background-color: #fcff01;">Keep sharing experiences with all & leave the rest. Those who find value will find value. The Rest. Well. They just Move On !!!</b></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">Stay Safe. Stay Healthy.</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><div style="font-size: medium; text-align: justify;"><span face=""trebuchet ms" , sans-serif" style="font-size: large;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">All my articles are in this link. Click here.</a></span></div><span face=""trebuchet ms" , sans-serif" style="font-size: large;"><div style="text-align: justify;"><br /></div></span><div class="separator" style="clear: both; font-size: medium; text-align: justify;"><span face=""trebuchet ms" , sans-serif" style="font-size: large; line-height: 30.6px;">If you happened to like this article and want to continue learning, please subscribe for free email updates by clicking on the box below</span></div><div><span face=""trebuchet ms" , sans-serif" style="font-size: large; line-height: 30.6px;"><br /></span></div></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><a href="https://feedburner.google.com/fb/a/mailverify?uri=FundamentalInvestor" style="line-height: 30.6px; margin-left: 1em; margin-right: 1em;" target="_blank"><img border="0" height="211" src="https://4.bp.blogspot.com/-72lpa7b9Nro/VqOPFOReuEI/AAAAAAAAARA/jhCg0ZLGFAY/s640/Subscribe%2Bbox.png" width="640" /></a></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">Good luck,</span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span style="font-family: Mukta; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com10tag:blogger.com,1999:blog-303837536783625365.post-57557993506610825862020-08-15T14:52:00.003+05:302020-08-15T16:19:33.392+05:30The Illusion of Returns !!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Dearest investor and friends,</span></span></div>
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<span style="font-family: "verdana";"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">How are you all doing? I hope you & family are safe & sound. </span></span></div>
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<span style="font-family: "verdana";"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In March 2020, when we had a market crash due to Covid-19, there were many people & articles talking about Market under-performing Bank Deposit Returns in the last 10 - 15 years time-frame. And this was INFACT TRUE.</span></span></div>
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<span style="font-family: "verdana";"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So if this was true, are Bank Deposits really better Instruments than Funds or Equity? Are the Returns really better? Then how come, the wealthiest people and most financially independent people invested in Markets? </span></span></div>
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<span style="font-family: "verdana";"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I call this - THE ILLUSION OF RETURNS !!!</span></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Recently, I was reading slogans like "Stock Market Sahi Nahi Hai" or "Mutual Funds Sahi Nahi Hai" etc. You would be surprised to also note that, I received hundreds of emails during that time, asking whether SIP should be stopped or whether we should exit all the stocks in loss. People started talking about Importance of Selling in a Downmarket etc. Comparisons were made to the Great Depression. Whatever we read, it was Negative. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">But a very few of us were encouraging everyone to continue investing in Markets and in Mutual Funds in-spite of returns looking crazily bad. Why were we giving this advice during those times? Why?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I was just looking back at some of my tweets in March. It was so much fun to see that every tweet was received well and we all faced the crash together and came back stronger. Love you all for that.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Also, I got some tweets from few friends saying that their investments have not yielded the returns they were looking for. Why did they not get returns? Is there something really missing? I call this - Illusions of Returns.</span></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today's article will provide you a much needed perspective.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Compounded Annual Growth Rate (CAGR) or Internal Rate of Return (IRR) is perhaps one of the most less understood terminologies and also, the most misused. In a Fixed Instrument like Bank Deposit, it doesn't fluctuate much. But, in a dynamic Market Based Instrument, the beauty of CAGR/IRR is that it can be made to look really good or really bad, based on the start & end point of the calculation. So, we can feel Really Bad or Really Good based on when we look at it.</span></div>
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Before we begin, please take 10 minutes to read through this article to get a basic understanding of CAGR. </span><span style="font-family: "trebuchet ms" , sans-serif;"><a href="http://www.fundamental-investor.com/2017/11/compounded-annual-growth-rate-cagr.html" target="_blank">Click here to read</a>. If you have not clicked this link, please do. It will be worth your time, before you continue.</span></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As we are all aware, the Stock Market is never Linear. It moves up & down daily. And that what makes Market an easy target for Fluctuating Returns. I keep saying that, in Stock Market, Returns Fluctuate Daily, Value Doesn't.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Assume that on Jan 1st 2010, Kiran started a SIP (monthly Rs 10000) in the following instruments. She knew that RD would give around 5-6% and hence decided not to invest in a Bank Deposit. This is what she did:</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">She decided to invest monthly in 4 different Mutual Funds - Large, Mid, Small & Index (Rs 2500 each). Here's a small Table for us to refer while I communicate the message.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif; font-size: large;">NOTE: I have taken average Real Funds for this Table (I don't want to Name). Focus only on the Message & the Essence. Try this for your own Funds and see how it co-relates.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">She reviewed her Investments Regularly but didn't Churn at all. She did not change her Funds. She Stuck On. In Jan 2019 (after 108 months), she noticed that her Return was around 11% - 19% (across 4 funds). She was Happy. She continued. In March 2020, the Market started Collapsing. She checked her Return. It has down gone to 8%. She didn't Stop. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In April 2020, her return was almost 0%. Oh my God. She was Devastated. She had absolutely No Returns. It was as good as just putting her money in a Locker at home with 0% interest. She lost all her hope. Her total investment was exactly the money she had put. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Everyone Laughed. Twitter was full of Jokes against Stock Market. People were Laughing at Long Term Investing. There were commentaries that people should just Sell everything and never Invest in Markets Again.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">But, Kiran had great Friends. She had an Amazing Association. She ignored the Trolls. She Didn't give up. She continued her Investment. In Aug 2020, her return is above 6%. She is confident that in the next few years, she will definitely Reach Her Goals.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, to Summarize:</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Bank Deposits are always Better in the Short Term. I always say - Never Invest Something in the Market which you need in the Next 15 years.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Taking CAGR below 10 years, according to me, is Misleading. This is because of the fluctuating Nature of Market Instruments. Please keep this in mind.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- When Market Fell drastically, the returns diminished to almost ZERO. Just by NOT STOPPING Investing in Bad Times, the Returns became better as Market Picked Up.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- As Indian Growth Story is Always Intact, the Trajectory is always UP in Long Term. Question is - Are we Ready to Look Beyond Small Time-frames? Can we look at Decades instead of Quarters?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Association Matters. Absolutely. If we are in the Right Circles, we can Take the Right Decisions. And we can Avoid the Wrong Decisions.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Have Reasonable Expectations. In an environment where Interest Rates are going towards Zero, the Goal should be to Beat Inflation and Meet all our Goals. If the Expectations are Reasonable, we will Not have the Pressure to Beat Someone's Returns.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Today, there are Rockets Flying everywhere. Do not get Carried Away. People are looking at 3 month returns & extrapolating. Be Calm. Composed. Stay Long.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- If we can manage Returns of over 10 - 12% over 15 years, that means we are doing Really Well. Focus on the Amount Invested, Time Horizon. Returns will Follow Automatically. Don't Despair.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I sincerely hope that the point is clear now. So next time, if someone says that something is Sahi Hai or Not Sahi Hai, let us use our own wisdom to evaluate.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So friends, Enjoy this wonderful Journey. Keep going. You Can !!!</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Let's enjoy what is in store for us. Downturn or Uptick, let's chill.</span></span></div>
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com4tag:blogger.com,1999:blog-303837536783625365.post-22691329710377875332020-03-28T14:56:00.000+05:302020-08-15T14:54:03.693+05:3021 Tips During the 21 Day Corona Virus Lockdown in India<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dear friends & investors,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As I write this article, the temperature is 34 degrees Celsius in my city. Nice and hot. We are all under the 21 day lock-down due to the Corona Virus spread. Kids, Parents & Family everyone. Are you all enjoying this period together?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Here are 21 Tips which we follow as a family. Just wanted to share with all of you. So, here we go !!!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 1:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Cook together. Eat together. Eat fresh home cooked hot food. Even if you do not know how to cook, help with cutting. Or washing vegetables. Or just be around. This practice of ordering from outside is something which has picked up steam in the last decade. Let us use this opportunity to explore home cooked food. Avoid frozen stuff. Make it a habit. The love of my life is an amazing cook. We enjoy awesome food every day.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 2:</u></b></span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Use a matka (earthen pot) so that the water remains cool naturally in this summer heat. </span><span style="font-family: "trebuchet ms" , sans-serif;">Drink warm water after your meals. Keep it in a flask and enjoy small sips of it. This will keep your system clean and healthy. You will feel really good. Try it.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 3:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Stand in the sunlight atleast for few minutes during the day. Thank the Sun for being there for us. Enjoy the warmth. Encourage your family to also do the same. You could do it from your Balcony or even outside your home (ensuring that you are keeping safe distance from outsiders). If you are living in a Gated Community or Apartment, then find a place to feel the warmth of the sun. If you have your own Terrace or Garden, then great. Enjoy the warm air. Enjoy the trees. Enjoy some nature time.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 4:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">We have lost the habit of Gardening and Growing Basic Plants. Gardening is the best way to relate to nature and feel her presence. She gives life to all. It would be nice if you can have mustard, coriander, pudina etc to begin with. Introduce your children to how plants grow. Let them feel our earth. Thank Mother Earth for being there for all of us. Having basic plants helps us in our daily cooking as well. Watering them and caring for them builds us internally as well. Keep some water in small vessels for birds as well.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 5:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">I generally go out to buy vegetables, fruits, groceries and other essentials in the house. I would advise each family to identify only one member to go for essential purchases. I prefer to go out between 2 PM - 4 PM when the sun is at its peak. I see that most shops around my home are empty at that time. Milk shops open twice a day in my area. I move out to buy milk and some vegetables between 3:30 to 4 PM (generally after market hours) during weekdays. Also, I avoid the big supermarkets where I see long queues. I either walk down or cycle. Also, let's avoid stocking up. Buy fresh every week. I see many smaller essential shops having most products. Avoid going when it is cooler (early morning or late evenings). This is just something I found useful. When I do this, I feel dry. I feel healthy.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 6:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">When I return back from outside shopping in the afternoon (keeping TIP 5 in mind, let only one person go out), I keep most items in the sun for few minutes, wash my hands with soap outside, move to bathroom & wash my clothes immediately, take a quick shower and then come out fresh. This I maintain everytime I go out to buy essentials in hot sunlight.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 7:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">In our culture, taking bath twice was something we used to do. Once in the morning and once in the evening. In this lock-down, we may like to try this and see if this works.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 8:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">In school, children are taught how to score and compete. They hardly learn since they are running the race early. Most parents would be doing the homework and completely frustrated to meet the schools' demands. Most children only go to school to be with friends and definitely for the games etc. This is my personal experience as well. Now, is the opportunity to equip ourselves and show children what life is all about.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 9:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">In continuation to TIP 8, use this time to Clean the home, dust, sweep, mop, wash clothes, vessels etc. and empower the child to do the same. Do it together as a family. Let this not look like a burden or something which is only done by the domestic help or the ladies of the home. I can assure you, that these skills will help the child more in life moving forward. This will ensure that children understand the effort put in these activities. Let them not take life for granted. My parents taught me these very early in life. These skills are most helpful for me in family life. We are all able to share the work at home.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 10:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Have atleast 1 hour of game time at home. Play some board games or some old childhood games. Encourage more family time. Children will also suggest some games which they play with their friends.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b><u>TIP 11:</u></b></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If there are grandparents at home, please ask them to tell some nice stories. This is a great time to have story sessions at home. Use their wisdom to the fullest. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 12:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Have at least 1 hour of prayer time. I am sure, most of us, irrespective of culture or religion, have a few prayers. Sanskrit is a very powerful language. You can listen to Bhajans or some nice Stotrams. You may choose to play the Bhagavad Gita in the background. Try to allocate 30 min to 1 hour for the same.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 13:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Believe me. The best way to stay fit is to do the home chores. The more we get involved in home activities, the more we stay fit. Having said this, some might want to do some fitness routines. Yoga and Pranaayama could be another option. Keep that going. I prefer doing home chores to keep myself fit.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 14:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Learn atleast 1 new thing from nature every day. Empower yourself during this period. Observe. Only then, learning happens.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 15:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Give charity to someone you personally know. If you look around you will see atleast 4-5 families who need money more than you do. Maybe the domestic help, garbage picking boys, local vegetable vendors etc etc. Please ensure that you keep their spirits high and help them in need. Maintain safe distance.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 16:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Ensure that you are in touch with atleast one doctor. If there are elders in the house, keep emergency numbers handy. Also, if your domestic help doesn't have own vehicle, please ensure that you are in touch with them as well. The people who do not have their own transport will be the most hit in case of a medical emergency. Plan with your family, as to how to deal with a medical emergency. Some of us might have some non COVID cases as well. We need to be prepared for anything. Keep this in mind.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 17:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Ensure that you maintain enough money to meet your expenses. Most of us have gone digital. I personally have been using PayTM for the last couple of years and hence, even today, when I go to my local shops, I am able to pay without touching anyone. Try to use digital payments as far as possible.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 18:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Revisit some of your old hobbies. Reading, painting, gardening, writing poems, singing, dancing etc etc. Encourage everyone in family to do the same.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 19:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Watch some shows together online. If the above tips are followed, you will minimize staying on the mobile screen for a long time and end up knowing everyone in the family better.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 20:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Talk to your children. Talk to your parents. Bring back the good old days of talking and chatting face to face.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>TIP 21:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Don't keep reading or thinking about the Virus. Fear kills more than the Virus itself. Mute the Family Whatsapp groups where you see countless scary videos. Stay Positive.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, friends. Even this.... Shall Pass.... We will definitely miss these times when things get normal. But, I am sure if these TIPS are followed, life will become more complete as normalcy returns.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope these 21 Tips help during the 21 day lockdown. Let me know which are the ones you already are doing, or which one you relate to, the most. Please also let me know if you have any more things you would like to share.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Stay Safe. Stay Healthy. Stay Positive. Stay Happy. Stay Peaceful.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Love,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com12tag:blogger.com,1999:blog-303837536783625365.post-24447516922512386182020-03-14T19:12:00.000+05:302020-08-15T14:54:43.471+05:30Corona Virus, 2020 Market Bloodbath & Road Ahead for Indian Investors<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">March 13th 2020. Friday the 13th. Markets Freeze for 45 minutes. Blood on the Street. Media in Full Panic Mode. Tensions. Frenzy. Mind Stops Working. Friends. Read on...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors and friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope you are doing great. Firstly, I want to congratulate all of you. If you were not part of the 2000 or 2008 panic, then I am sure you got a small sense of how panic selling happens in the stock market. If you held on to your businesses or added to some amazing businesses, then pat yourself friends. Awesome stuff. I salute you. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If you didn't even know that market crashed, then that's even more awesome. Love you for that.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hanging On !!!</span><br />
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<a href="https://1.bp.blogspot.com/-NDIaNj6SYp8/XmzT0SDgT5I/AAAAAAAABUk/2_bqx6UYc7Y3DUXE9NfeLWT2wPPbsH9mACLcBGAsYHQ/s1600/Corona.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="695" data-original-width="843" height="263" src="https://1.bp.blogspot.com/-NDIaNj6SYp8/XmzT0SDgT5I/AAAAAAAABUk/2_bqx6UYc7Y3DUXE9NfeLWT2wPPbsH9mACLcBGAsYHQ/s320/Corona.png" width="320" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let me begin by saying that Nifty 50/Sensex is just a movement based on companies in the index. These companies change from time to time. Also, the weights of companies in the index matter a lot. Sometimes, 5-6 heavyweights in index take it up or down based on their movement. The Index was hitting life highs a month back due to few companies. Today, also, correction of these few companies is taking Index down as well. Of course, others are also falling. Falling is contagious friends.</span><br />
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<a href="https://1.bp.blogspot.com/-fYrlRMWHiic/XmyuUjWJxvI/AAAAAAAABUA/dEJsYFz52IUoLnfQv1SWPzL9o09lj1VkwCLcBGAsYHQ/s1600/Nifty.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="514" data-original-width="811" height="403" src="https://1.bp.blogspot.com/-fYrlRMWHiic/XmyuUjWJxvI/AAAAAAAABUA/dEJsYFz52IUoLnfQv1SWPzL9o09lj1VkwCLcBGAsYHQ/s640/Nifty.JPG" width="640" /></span></a></div>
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Above is a weekly chart of the Nifty 50 from 2006 onwards. </span><span style="font-family: "trebuchet ms" , sans-serif;">As you can see, there are huge red candles right from 12000+ to 8600 odd levels and then a sharp pullback to current levels of 9900 odd. All in a few days time. Many would have seen the Nifty suspended for 45 min on 13th March 2020. News channels screaming. You might have felt that your Money is gone. Paisa doob gaya. Your stocks being sold left and right. Freeze in front of your eyes. Most people saying - Maine bola tha. Few people like me, boring you with same advise - Stay invested. Don't worry etc etc etc.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">I asked on Twitter - "Investors. How is the JOSH?" I was thrilled to receive the reactions. I am happy to have right friends following me !!!</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">You must be wondering - "Why is FI showing us a chart when he doesn't even care about them?"</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Many of you know that I do not look at charts. Yes. I actually do not. I am just showing this chart to show you how mad the selling looks like. Do not further get into the chart. It was just to make a point.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, if you plot the indices of various countries, you will see a similar panic selling in their charts as well. Great Businesses across borders becoming valuable.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, what really happened. In pure layman terms, weeks back, a Corona virus allegedly originated from China and spread to various countries. Production came to a quick halt. Hospitals were built quickly. China is very very key in the supply chain across the world. When China came to a halt, markets across the world panicked. Heavy selling began in anticipation of a global crisis.</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">As I write this article, even though the virus-spread in China has been contained & factories are back in action, many countries are in panic mode. I must congratulate the way China handled the situation. Kudos. Markets across the world started collapsing as top officials and even government servants in various countries starting testing positive on the virus. Sadly, virus has moved to other countries. Travel has been banned across. The social media further deepened the panic and created a fear among everyone. Interest rates getting slashed, people asked not to move out etc. Basically, lots of fear all across. On a lighter note, situation looks so bad that e</span></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">ven the President of the United States has stopped bragging about the markets.</span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"> </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In my opinion,</span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"> in addition to this, in the Indian context, many Top Blue Chip companies were at rich valuations and needed a much needed breather.</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">As an Indian, we are entering Summer now. Also, our cultural food is hot and spicy. Our food is extremely healthy and most of us eat hot, fresh, home cooked food. Namaste is our local greeting where we fold out palms in respect. We, as a country are chaotic and we love the chaos. Thanks to that, our immunity is very well built. With the heat, the virus should just fade away. </span><span style="font-family: "trebuchet ms" , sans-serif;">Let us use this opportunity to fine tune our lifestyle a little bit for our long term benefit. </span></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I personally feel that we would not be affected by the virus as much as some of the other countries did.</span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"> </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Having said that, I pray for the victims' quick recovery and hope that the containment happens sooner than later.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">I personally see a huge difference in the 2020 market fall compared to the falls which happened previously. Be it the 2000 bubble or the 2008 financial crisis. Or the small corrections which happened time to time. I frankly do not see a Fundamental reason for this kind of fall to happen. I repeat. Fundamentally, for most Indian businesses, nothing has changed between a month back and today. Valuations have come down. But not the business. Many can argue that, since the other countries are suffering, we can see a crisis looming. Let's agree to disagree on that. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">According to me, one reason for this kind of crazy selling is foreign institutions (FIIs) wanting to liquidate as much as they can so that they could invest back in their country markets which were also available in a huge discount. Now, our domestic institutions (DIIs) are smarter. They are not buying the fall aggressively. They are allowing the FIIs to sell and then slowly buying in at every dip. This is just my take. As a reader, you might feel otherwise. Let's respectfully, agree to disagree. Of course, there could be many other reasons. But, this is one of the reasons what I see.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Friday, 13th March, 2020, saw a small pullback across markets. I repeat, a pullback. Many are celebrating. But friends, hold on. In my opinion, if the FIIs would want to liquidate some more, we will see more downside. We might never see a downside also, since there is value. We never know. Most likely, if every retail investor is waiting to see that low price again, they might keep waiting also. As I said, we never know the immediate future.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">The question is, should we as Indian investors be worried? Do we want to waste time in predicting the direction? Are we seeing anything wrong fundamentally with the businesses? Are we able to see value in top companies across the listed markets?</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Today, as I write this article, I can personally find businesses which are leaders, strong balance sheets, extremely profitable, having good cash flows, growing earnings above 10 - 20% CAGR even in the last one year where liquidity was tough, mouth watering dividend yields, trading at finger licking valuations. The non leaders which have decent balance sheets are also trading at panic valuations. Of course, the companies which are having bad balance sheets are also trading violently.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">The magic question to ask is - What to make of the current situation? What do we do now? What's the road ahead?</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1. We saw the first pullback on Friday the 13th, March 2020. Do not assume that the markets will not go down further. Anything can happen. In markets, everyone is just speculating the future in short term. No one knows. So it is futile to predict how the market will go. It can also happen that many retail investors sold at the peak of pessimism. They will either never enter markets or will enter at 30-50% higher prices when everything looks better.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2. Remember that the index (Nifty 50 or Sensex), just moves based on price movement of the companies forming it. Not the other way around. So, please do not get carried away by headlines saying that "X Lakh Crore got wiped out etc". Also, let us not blame the media. I have many friends in the media who are doing a fabulous job. For few (I wish not to name), writing masala headlines is part of their job. Bread and Butter. Let them do what they do best. Let us do what we do best.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3. If more foreign money moves out, we can see more downside. But I am very confident that our domestic cash will buy the value from here. Maybe they will love another lower circuit, but they will buy on the downside and definitely on the upside as well. There is lots of value on the street even in the best companies.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4. My favorite point. There are top companies which are profitable and will continue to grow. And the best part. They are trading at extremely awesome dividend yields. I am sure investors, in a panic selling always look at dividend yield in such growth companies. Remember, when the price comes down by 15 - 20%, the yield goes up purely based on the price at which the buy is made. So, friends. Look around for such companies. Keep ammunition ready. The real value of dividend yields is only seen in bad times. Remember this friends.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">5. Foreign money will come back. We don't know when. But, surely it will. India is an awesome investment opportunity. Why won't they?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, I understand. Many of us are fully invested. Some of us have cash. How do we make use of this situation?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">a) If you are a salaried person who gets salary every month, please use this opportunity to add more shares of your business. Increase the investment amount month on month without affecting your daily lifestyle. Please do not over expose. Just continue your SIP in markets or mutual funds. As the businesses get cheaper in value, you can invest more as well. Since your horizon is for a decade or more, you won't have sleepless nights even if stocks correct from here.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">b) If you are not a salaried person but have good dividend flow monthly or quarterly like me, please consider deploying good amount in great companies at this time. For me personally, in the last one month, many businesses have paid good dividend. I am enjoying this correction and adding good dividend yielding businesses at this time.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">c) If you are not having money at all to invest and are fully invested, this is the right opportunity to shuffle portfolio and get out of businesses where the balance sheets are poor, earnings are lumpy etc. This is applicable for above salaried personals as well. You can deploy the money into businesses which are strong instead. If businesses are already strong in portfolio, then do not do anything. Just enjoy the markets from sidelines. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">d) Either way, use this opportunity to clean up the portfolio. I keep saying - Do not feel that a business which corrected 80% is worse than business which corrected only 50%. Do not take call purely based on price. If earnings are significantly impacted, but you see that they will perform much better moving forward, you can buy more of the same businesses irrespective of price correction. If you feel they will not perform well, sell out. Period. Again I repeat. Do not base decisions purely on price corrections etc. Look at business fundamentals and performance.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Note: T</span></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">his is a good time to book short term loss on businesses and re-enter the same/different businesses the next day (slightly price will be up or down). This will allow you to show short term capital loss on your IT returns and also give you a new sense of ownership of same businesses.</span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"> This is something I do when there is a major correction. I do not buy something new. Same businesses. If you do not want to do this, perfect. No compulsion.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">e) Exit Whatsapp groups if you get influenced easily. If you have an independent view and are not at all affected and have a lot of time, only then indulge. Else, best to stay away.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">f) I read a beautiful quote. If you do not read news, you are uninformed. If you read news, you are misinformed. So, Be informed. Period.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">g) People will ask you - What did you learn from last week crash etc? Ask them to go and take a hike. We do not learn anything from one week of price movement. Price movement analysis is for the media to do, especially in short term. We should only focus on business movement. Stay in market and stay the course for more than a decade. Then you will learn that eventually price follows earnings and not the other way around. That's what I have learnt.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">h) I am seeing many people saying that having cash is a learning. I don't think it is practical. Let us most respectfully agree to disagree if you have a different view. Let us assume that someone was sitting on 50% cash when the first red candle was formed. They might have deployed 20% on a fall. Now, lets say another 10% drops. They will deploy the other 20%. Lets say another 15% drops. They won't have cash. How will they know the bottom? It's humanly not possible. So, basically, cash is an asset only when market falls. Else, its a liability. You will see many telling you that cash is king. Yes they are absolutely right when market falls. And wrong when prices move up. But, frankly, I am always fully invested. The only way I have cash is, by selling some of my stocks to buy something cheaper. Or wait for my dividends to flow. I have never sat on a lot of cash :-) Those who had cash for this crash, hopefully have used it wisely.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">g) As some selective stocks look good today, please please please do not borrow and invest. Do not sell something you need and invest in the dynamic markets. This is something I have said multiple times and repeat again and again. Deploy only the money which you do not need for the next 5 - 10 years in the market. If you are a trader, then this advise is not for you, my friend. This is for investors only.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">h) Associate yourself with people who have reached where you want to reach. If you want to make quick money, associate people who are making quick money consistently. If you want to create wealth over 10 - 15 years, associate yourself with people who have been there, done that. Association Matters.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">i) This is the best time to buy businesses which you are perfectly in sync with. Buy something you understand. Do not wait for someone else's view on this. If you trust the management, see immense business (not price) potential, and find it trading at mouth watering valuations, just go for it. When tides turn, the price will follow.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">j) Do not gamble with your hard earned money. Don't go for quick 20% returns. Focus on businesses which can give you 15 - 30% earnings growth in a long term period with good dividend yield. Margin of safety is important.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Lastly, friends. The Stock Market has created wealth for many of us over a decade. For me personally, the crash of 2008 was the best thing that could have happened. I added more and more of my salary during the worst of times which has, with god's grace and market's blessings helped over a period of time. So, market is a friend. Not our enemy. Let us trust the businesses and definitely, earnings will follow price over period of time. As I say, if businesses continue to grow their earnings with strong balance sheet, neither you nor me can stop Wealth Creation !!!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Keep the SIP going. Follow the Process.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let's enjoy what is in store for us. Downturn or uptick, let's chill.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">All my articles are in this link. Click here.</a></span><br />
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com31tag:blogger.com,1999:blog-303837536783625365.post-86488624270072754682019-05-11T16:39:00.000+05:302020-03-14T19:15:45.167+05:30Best Mutual Fund for Wealth Creation<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">What's the best Mutual Funds for Wealth Creation? How do we choose funds? Is there something called a Top Fund or an Under-performing Fund? Which is the best for me? Do we need advise? <a href="http://www.fundamental-investor.com/2019/05/best-mutual-fund-for-wealth-creation.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dear investors & friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Hope you are all doing great. It's been a long time and today I decided to share my thoughts regarding an important question which I received from multiple friends over email in the past year.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Firstly, I am overjoyed that many of you are on the path of Financial Independence. To create wealth, believing in the process is important. Beginning to invest is important.</span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Now, practically, not everyone has the time to understand businesses. Hence Mutual Funds play an important role in this journey. </span></span><br />
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<a href="https://3.bp.blogspot.com/-ZsKvevkuC9M/XNaqTJ0JNZI/AAAAAAAABRg/FKkNbUXTMdYnasI63_IvTTim-ffJql1awCLcBGAs/s1600/BestMutualFund.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="500" data-original-width="500" height="400" src="https://3.bp.blogspot.com/-ZsKvevkuC9M/XNaqTJ0JNZI/AAAAAAAABRg/FKkNbUXTMdYnasI63_IvTTim-ffJql1awCLcBGAs/s400/BestMutualFund.jpg" width="400" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interestingly, I received an email from one of my readers (let us call her Kiran) last week. Kiran mentioned that she is paying an adviser to deploy her SIP every month in a Mutual Fund. She has dedicated Rs 30000 every month for SIP. The adviser chooses a Mutual Fund every month and takes a fixed fee for this service. Of course, the adviser would have own methods of choosing best fund every month. This email got me thinking. I thought I should write on this topic.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Now, before we proceed further, I request you to spend ten minutes reading this article:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Click here -> <a href="http://www.fundamental-investor.com/2016/06/mutual-funds.html" target="_blank">Wealth Creation with Mutual Funds</a></span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">If you have decided to skip above article, then I am assuming that you understand Mutual Funds well and need no explanation.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">In the above article, I have, in detail explained a few concepts regarding Mutual Funds. </span></span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Now, if you have decided to start a Systematic Investment Plan in Mutual Funds, the million dollar question is - "Which is the Best Mutual Fund for Wealth Creation?". Everyone has this question. Everyone wants to make the best returns. No one wants to choose a wrong fund.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let us take a look at some facts here (as of May 2019)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Disclosure - The information below is taken from Moneycontrol. I have only taken Direct Plans. All returns are SIP returns (not Lumpsum returns) because I believe in Wealth Creation by adding every month. SIP Returns are Absolute Returns since small amount is added every month. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">I DO NOT RECOMMEND ANY OF THESE FUNDS. BEFORE MAKING ANY CONCLUSIONS, PLEASE DO OWN HOMEWORK.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">All of you readers know me well enough. Do not miss my message by debating on the Figures & Fund Names. Message is important. I repeat. Message is key here.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">With this disclosure, let me go ahead.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Here are the Top 10 Large Cap Mutual Funds (SIP Returns) - 1 Year, 2 Year, 3 Year & 5 Year Absolute Returns</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let us pause. Now, I have put this information in a single table. Let us observe:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Few observations:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">- 1st position fund in 1 year returns is at 4th Position in 5 year returns.</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- 3rd position fund in 1 year returns is at 1st position in 5 year returns.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- 9th position fund in 1 year returns is at 5th position in 5 year returns.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">You will observe that Performance Order of Funds keep changing based on the horizon you have taken.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If we plot the 10 year, 12 year & 15 year absolute returns, you will see similar observations. It will be really surprising.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Since I have compared Large Cap Funds to each other, you may do the same with Midcap funds. Smallcap funds. Multicap funds. etc...</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Here is a small snapshot of Small Cap Funds (1 year, 2 year, 3 year & 5 year absolute returns)</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- 2nd position fund in 1 year returns is at 8th Position in 5 year returns.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- 7th position fund in 1 year returns is at 2nd Position in 5 year returns.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, let us pause for a moment & think. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Which is the Best Mutual Fund for Wealth Creation? How can we decide? Is there a sureshot answer for this question?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hmmm.. Are you getting a new perspective? Pause. Think.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Here are my thoughts and of course, these are just my thoughts (we can agree to disagree):</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Do not compare funds across categories. There is no point in comparing a large cap fund vs diversified fund vs small cap fund. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Small cap funds might be highest risk & highest volatility in returns. Diversified funds might be conservative returns. So, choose a category which meets your comfort level & horizon.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Most of the funds in a particular category perform well over time. They are managed by professional fund managers who have good stock picking abilities.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Most of the funds hold good, liquid, quality businesses in that category with good track record. Sometimes, we will find many common companies across funds in a category. If we look at Large Cap funds, many of them will have same companies. Of course, weight of the stocks, mix, buy price and sell frequency differs.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- As we have seen in above examples, if a fund is highest performer in 1 year, it doesn't necessarily mean that it will remain at top position in 5 years, 10 years, 15 years time-frame. Also, a bad performer in 1 or 3 years, can be top performer in 15 years time.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- By looking at past data, we definitely cannot predict what returns the fund is going to give us over time. But past data definitely indicates which funds are consistent in their performance. But, this can again, can & will change over time.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- I see that over longer periods, well managed funds have achieved good returns.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">My good friend, Dhruv Girdhar has written a spectacular article on this topic. I suggest you read the same. You will get an amazing perspective with some facts.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Click here to read - <a href="http://www.richifymeclub.com/best-doesnt-always-build-wealth/" target="_blank">Best does not always Create Wealth</a></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Another friend, Prasad Shete, had mentioned to me that his sister was looking for suggestions on how to evaluate mutual funds.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I found his reply to her, pretty interesting.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Click here to read - <a href="https://drive.google.com/file/d/1HEn8QKD0JyqybZTKE8TZS9zdZjm1WpKB/view?usp=sharing_eip&ts=5cd83751" target="_blank">Letter from Prasad to sister on how to evaluate Mutual Funds - An Interesting Perspective</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, what would I suggest? Here are my suggestions:</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Do not break your head too much.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Stock Market is a wonderful place if we want to beat inflation & compound money well.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Greed has no Place in the Stock Market. The Greedy Perish over time.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Do not keep Changing the funds every month. Remember, based on Return, Positions of Funds keep changing.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- You would do better-off if you choose one fund from 2-3 categories & SIP for 10 - 15 years.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- The amount of money you allocate every month is under your control. Be aggressive in investing.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- If your fund has given lesser returns after 1-3 year of SIP, celebrate. Maybe in 10 years, it could give super returns. Keep the faith. Keep going.</span></div>
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<span style="font-size: large;">- I<span style="font-family: "trebuchet ms" , sans-serif;">f your fund has given bumper returns after 1-3 year of SIP, celebrate. Keep the faith. Keep going.</span></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Mutual funds advertisements will always choose the best returns when they project themselves. Some will market themselves as best 1 year returns (even though they have under performed in 10 years). Some will market themselves as best 15 year returns (even though they might have under performed in 3-5 years).</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Aim to beat inflation or index over period of 10 - 15 years. You will not be disappointed.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- No matter what happens, do not stop. Be consistent. Keep the faith. Keep going.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, do you really need an adviser? Maybe you still do. Maybe you don't. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">But you can do a little homework and begin today...</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Think about it. I leave you with these thoughts friends.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">All the very best...</span></div>
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Please leave your comments below on this topic.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com22tag:blogger.com,1999:blog-303837536783625365.post-28958067630943113852018-09-13T17:12:00.005+05:302023-02-19T20:57:39.534+05:30My Inflation & Balance Sheet !!!<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif">We are all worried about the Inflation Rate of our Country. Also, about the Balance sheets of Businesses. But, have we ever thought - What is my Inflation? How is my Balance Sheet? <a href="http://www.fundamental-investor.com/2018/09/my-inflation-balance-sheet.html">Read on...</a></span><br />
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<span face=""trebuchet ms" , sans-serif">Dear investors & friends,</span><br />
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<span face=""trebuchet ms" , sans-serif">Hope you are having a wonderful time - in Personal life, Work Life & of course, Equity Markets :-)</span></span><br />
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<span face=""trebuchet ms" , sans-serif">Most of us always try to understand Businesses. We talk about Investing. Focus on Returns. But, what about our Spending Habits? What about our Balance Sheet? What about our Personal Inflation?</span></span><br />
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<span face=""trebuchet ms" , sans-serif">Our Spending Habits play a Vital Role in our Financial Independence Journey. In a world of Easy Debt, Free Credit and Fancy Products, it is very easy to drown in Unnecessary Spending. Heavy discounts, Eye catching marketing & Catchy Punchlines are highly illusive and addictive. Online Window Shopping turns into Impulsive Buys. Most of us, FALL :-)</span></span><br />
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<span face=""trebuchet ms" , sans-serif">Knowing our Spending Habits is very very Important in our journey. Spending is NOT Bad. Money is, after all, a Means to Buying anything. Some of us believe in Frugal Living while some believe in Luxury. End of day, there is no Right or Wrong. </span></span><br />
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<span face=""trebuchet ms" , sans-serif">But... If we do not understand how our Money is moving out, we will never be able to chart a clear plan towards Financial Independence. Our Personal Balance Sheet is most Critical :-)</span></span><br />
<span><span face=""trebuchet ms" , sans-serif"><br /></span></span></span><div><span style="font-size: large;">As of 2018, for the last 7 years, every single day, I have been noting down my expenses. Yes friends. Every single day. I do not miss a single expense. Even if I spend 21 rupees on milk, I note it down. Or a train ticket. A Pair of slippers. Or even a bunch of Spinach or some chillies :-)</span></div>
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<span face=""trebuchet ms" , sans-serif">Every year, the Government puts out an average Inflation percentage. I always wondered. Is that percentage relevant to us? That percentage is an average of all the industries. Is that percentage applicable to me personally?</span></span><br />
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<span face=""trebuchet ms" , sans-serif">I believe that our Personal Inflation is more Relevant. It is Key to understand how our Expenditure increases every Single Year. Are we buying things we cannot afford? Are we overspending in some segments? Are we buying things which we do not need currently? Can we learn from our spending habits?</span></span><br />
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<span face=""trebuchet ms" , sans-serif">To account for our Spending, we need to start taking Responsibilities in our family. Once we start earning, let us take that responsibility slowly from our parents. Let us personally get involved in buying groceries, vegetables, pay bills & salaries for house help. With great Responsibility comes great Understanding. And with great Understanding, comes an Independence...</span></span><br />
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<a href="https://1.bp.blogspot.com/-FBx-O7ZdLZk/W5pJcD2cytI/AAAAAAAABOQ/ySslvUjDtl09QQLv0Ot1YOF9g9Y9GhrcACLcBGAs/s1600/Expense.PNG" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="399" data-original-width="682" height="374" src="https://1.bp.blogspot.com/-FBx-O7ZdLZk/W5pJcD2cytI/AAAAAAAABOQ/ySslvUjDtl09QQLv0Ot1YOF9g9Y9GhrcACLcBGAs/s640/Expense.PNG" width="640" /></span></a></div>
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<span face=""trebuchet ms" , sans-serif">Here is a link of the excel I have been using for the last 7 years.</span></span><br />
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<span face=""trebuchet ms" , sans-serif"><a href="https://drive.google.com/file/d/1SIIvSb9s6myb4gRm0T_ETTmS8S6zl8-b/view?usp=sharing" target="_blank">Click here to View the Sheet</a></span></span><br />
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<span face=""trebuchet ms" , sans-serif">Instructions:</span></span><br />
<span face=""trebuchet ms" , sans-serif">1. First Download the Excel Sheet</span><br />
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<span face=""trebuchet ms" , sans-serif">2. I have split expenses as:</span></span><br />
<span face=""trebuchet ms" , sans-serif">- Fuel</span><br />
<span face=""trebuchet ms" , sans-serif">- Movies/Dinners</span><br />
<span face=""trebuchet ms" , sans-serif">- Groceries/Vegetables</span><br />
<span face=""trebuchet ms" , sans-serif">- Mobile/Internet</span><br />
<span face=""trebuchet ms" , sans-serif">- Gas</span><br />
<span face=""trebuchet ms" , sans-serif">- Newspaper</span><br />
<span face=""trebuchet ms" , sans-serif">- Electricity/Water</span><br />
<span face=""trebuchet ms" , sans-serif">- Salaries (For household help)</span><br />
<span face=""trebuchet ms" , sans-serif">- Miscellaneous (Any expenditure which is not regular)</span><br />
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<span face=""trebuchet ms" , sans-serif">3. Feel free to add any rows, if it is needed</span></span><br />
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<span face=""trebuchet ms" , sans-serif">4. Some information about sheet:</span></span><br />
<span face=""trebuchet ms" , sans-serif">- Row 1 is SUM of each entry</span><br />
<span face=""trebuchet ms" , sans-serif">- L4 = Misc expenses</span><br />
<span face=""trebuchet ms" , sans-serif">- J1 = Regular Expenses</span><br />
<span face=""trebuchet ms" , sans-serif">- K1 = Total Expenses</span><br />
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<span face=""trebuchet ms" , sans-serif">5. I have created sheets until March 2019 (You can create sheets yourself by Copying Sheet and Renaming)</span></span><br />
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<span face=""trebuchet ms" , sans-serif">6. I have a Graphs sheet where I have backlinked to items in each sheet. The Graph shows a Plot of how our expenses are. It also gives us an average of Spending. It gives us a good direction.</span></span><br />
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<span face=""trebuchet ms" , sans-serif">7. I have a sheet for LPG to let me know how efficiently we are using the Gas.</span></span><br />
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<span face=""trebuchet ms" , sans-serif">I hope this sheet helps you to maintain your expenses and understand yourself better. The important thing is not to use MY SHEET. It is to begin accounting in any way you are comfortable with.</span></span><br />
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<span face=""trebuchet ms" , sans-serif">Knowing OneSelf is the First Step towards Financial Independence. And a very very critical one..</span></span><br />
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<span face=""trebuchet ms" , sans-serif">So in summary:</span></span><br />
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<span face=""trebuchet ms" , sans-serif">- Knowing Our Inflation</span></span><br />
<span face=""trebuchet ms" , sans-serif">- Knowing Our Balance Sheet</span><br />
<span face=""trebuchet ms" , sans-serif">- Knowing Our Spending</span><br />
<span face=""trebuchet ms" , sans-serif">- Taking Responsibilities Early</span><br />
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<span face=""trebuchet ms" , sans-serif">is key in our journey to Financial Independence.</span><br />
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<span face=""trebuchet ms" , sans-serif">Let me know if you have any queries. My best wishes...</span></span><br />
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<span face=""trebuchet ms" , sans-serif">Please leave your comments below on this topic.</span></span><br />
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<span face=""trebuchet ms" , sans-serif"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">All my articles are in this link. Click here.</a></span><br />
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<span face=""trebuchet ms" , sans-serif">Good luck,</span></span><br />
<span face=""trebuchet ms" , sans-serif">Fundamental Investor</span></span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com22Bengaluru, Karnataka, India12.9715987 77.59456269999998312.4764182 76.949115699999979 13.4667792 78.240009699999987tag:blogger.com,1999:blog-303837536783625365.post-61189148542704656762018-06-30T15:06:00.001+05:302018-09-13T17:18:35.062+05:30Magic of Dividends - The Real Return !!!<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">What are Dividends? Are Dividends Useful? Are Dividends Significant? What Impact do they have? Can they, over a period of time, cover Basic Expenses? Can Dividends Compound? <a href="http://www.fundamental-investor.com/2018/06/magic-of-dividends.html">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors & friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope you are all doing well. It's been months since I wrote my thoughts on your site. I have been pretty active on </span><a href="https://twitter.com/FI_InvestIndia" style="font-family: "trebuchet ms", sans-serif; font-size: x-large;" target="_blank">Twitter - @FI_InvestIndia</a><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"> and very happy to connect to thousands instantly there.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today, I am going to write about a concept which is very close to my heart. And of course, something I am lucky to experience.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">When I put this thought on Twitter, there were many who couldn't relate to it. Yes, it's extremely difficult to relate to this idea, unless we experience it. There were many questions asked. In this article, Ill try to throw light on as many aspects as possible.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Friends, keep a note/pencil ready to take down some important points. Don't hesitate to read this article on desktop/laptop :-)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Let's first understand some basic concepts. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">Dividend</span> - A part of the Profits or Reserves paid regularly (typically Annually/Quarterly) by a company to its Shareholders</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let's assume "Growth_Dividend Limited" is a Company which is trading at 1200 per share. It's Face Value is 2 per share. It's dividend is 40 per share annually.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If you are a newbie, to understand some basic Terminologies, before proceeding, <a href="http://www.fundamental-investor.com/2016/02/stock-market-basics-value-vs-price.html" target="_blank">please click here</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Some more definitions:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">Dividend Percentage</span> - (Dividend/FV) x 100 = (40/2) x 100 = 2000% </span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">Dividend Yield</span> - (Dividend/Share Price) x 100 = (40/1200) x 100 = 3.3%</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, let's move a little further:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Most of you will be wondering about the Naming of this Article. Let me explain. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We all know that in a Business, Earnings & Cash flow defines its Strength. No matter how good the Product/Service is, unless business grows Earnings over a period of time, we Shareholders do not make any money.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Share price of a Business keeps fluctuating based on Market Conditions, Emotions, Sentiments, News, Analyst Reports, Demand, Supply etc. Hence Returns keep fluctuating. If we observe carefully, at any point of time, our notional Profit or Loss will exist. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">But, if we are invested in a Consistent Dividend paying company, the Quarterly/Annual dividend is Real Money for us. It comes to our Account - Tax Free (below 10 Lakh annually). Over a period of time, it can be used for our Expenses or can be Reinvested.</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Many businesses have a Dividend Policy. I am personally invested in a Business where 50% of Earnings Per Share is given back to us shareholders in the form of Dividends. </span><span style="font-family: "trebuchet ms" , sans-serif;">There are many companies where as business grows, Dividend also grows. In this case, what happens is, over a period of time, Share price slowly & steadily moves up. Dividends also slowly inch up.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, observe this picture carefully. You can click on the picture to visit the sheet also, as you read further.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Friends - Below is past data. Doesn't mean it is the future :-) Just a disclaimer. Take the essence. Not the company names please...</span><br />
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<a href="https://drive.google.com/open?id=1BfJaNXnn-3ZvAEp-SYL9JviLRW7E5f5MWQ3ZYtrTZJs" target="_blank"><span style="font-size: large;"><img border="0" data-original-height="442" data-original-width="594" src="https://1.bp.blogspot.com/-dMHf_JTsgJw/Wzc_EqTtdlI/AAAAAAAABMA/G2J0as70FS0HsbcaEAn-mxJQVqXArp0dwCLcBGAs/s1600/Dividends_Yield.JPG" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let's take the example of Maruti Suzuki in this list. It has been a fantastic business over decades. </span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">In April 2010, </span><span style="font-family: "trebuchet ms" , sans-serif;">Maruti was trading at 1400 per share. Kiran bought 100 shares of Maruti (1.4 Lakh rupees) in 2010. Dividend was 6 rupees. So, the Dividend Yield in 2010-11 was a mere 0.4% (600/140000).</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 2018, Maruti is trading at 8900 per share. Dividend is 75 rupees (moved up steadily from 6 rupees to 75 rupees). Kiran is still holding her 100 shares. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, let's observe carefully:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 2018, she got 7500 as dividend. On her invested capital of 1.4 Lakh rupees, dividend is a whopping 5.4% (7500/140000). </span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Also, today since Maruti is at 8900 per share, her share value is 8.9 Lakh rupees.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, over a period of time, if Maruti continues to gain market share and progressively earns, the dividend also will keep moving up. Let's pause and re-read the above example. Please give some time to digest above thought.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, in the above list, I have tried to collate this information for some more businesses. I used to own few of them at some period of time in my investment journey.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Majority of companies owned by legendary Warren Buffet, are dividend paying. The beauty of growing dividends comes into play, as we hold the business for decades.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Consistent and growing dividends also, to a certain extent, give us confidence on the Financials of the Business. There might be exceptions to the rule, but I like investing in businesses which have a good dividend paying policy and adhere to it.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dividend Compounding:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We have all heard about Compounding in Stock Market. But, have you heard about Dividend Compounding? I get goosebumps even by thinking about it.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Look at the graphic below:</span><br />
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<a href="https://1.bp.blogspot.com/-DmwiLLfP_nw/WzdDQc1LB4I/AAAAAAAABMY/6Rj4r86nKBAsWuisACMt_Qo9jenHvNMQQCLcBGAs/s1600/CocaCola.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="565" data-original-width="997" height="361" src="https://1.bp.blogspot.com/-DmwiLLfP_nw/WzdDQc1LB4I/AAAAAAAABMY/6Rj4r86nKBAsWuisACMt_Qo9jenHvNMQQCLcBGAs/s640/CocaCola.jpg" width="640" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As you can see, the difference in returns is enormous between Dividend Reinvested & Dividend Withdrawn.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If we continue to buy more shares with the dividends which we received, the dividends also will compound along with the business share price (assuming that company continues to grow steadily over decades).</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, a few pointers while identifying Dividend Paying Companies (In screener etc.)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Business has to keep growing (earnings has to be steadily progressive). Else, dividends won't grow.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">- Check Dividend Payout history. Is it regular? Consistent? Growing? Flat? (You can find it in Corporate Actions page in Exchange website)</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">- Find out Dividend Paying Policy (in Annual Report) and see if they have adhered to it religiously</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">- Avoid cyclical companies while looking for consistent dividends (where dividends also will be cyclical)</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So ,friends... Never ever underestimate the Power of Dividends. It's so Real. So Amazing. In the Longer Run, it can work magic. Yield might be low today. Might look ridiculous. Laughable. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">But, if business compounds over a long time, yield will be awesome.</span><br />
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<span style="font-size: large;"><a href="https://twitter.com/FI_InvestIndia/status/995911489390239744" target="_blank"><img border="0" data-original-height="358" data-original-width="583" src="https://4.bp.blogspot.com/-erVd8phj3FY/WzdGeeUZWkI/AAAAAAAABMw/4Swopp7HTggPDcifkBx9M6oU3H-4zbX-ACLcBGAs/s1600/Divtweet.JPG" /></a></span></div>
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<span style="font-size: large;"><a href="https://twitter.com/FI_InvestIndia/status/995911489390239744" target="_blank"><img border="0" data-original-height="472" data-original-width="673" height="447" src="https://1.bp.blogspot.com/-aIIufwUU0MI/WzdGlc13ndI/AAAAAAAABM0/GtRXoKy2ESwNT9YtK-FjDyg9UFXBXCg9QCLcBGAs/s640/Div_2.jpg" width="640" /></a></span></div>
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Imagine - A day might actually come, when the Annual dividend would be the Initial capital deployed. Imagine a day, after 12- 15 years, when Monthly expenses can be taken care by Dividends alone. </span></span><br />
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<span style="background-color: yellow;"><span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">To Start, we need to Believe. </span></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I want everyone to experience, what I experience. It's a Long Long Long Road. But, 100% Worth...</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I wish you all the very best my dears.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">All my articles are in this link. Click here.</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com12tag:blogger.com,1999:blog-303837536783625365.post-57603815040614727742017-11-18T14:47:00.001+05:302018-09-13T17:17:55.167+05:30Compounded Annual Growth Rate - CAGR<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Ever come Across Following Phrases?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Our Company has given 33% CAGR Returns in last 30 Years.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- If you had invested in our Mutual Fund Rs One Lakh in 2000, you would have 22 Lakh in 2017 - A Mind Boggling 20% CAGR in last 17 years</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- This Company can Grow at 66% CAGR for next 10 years</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">And they follow this with Disclaimer - Read Offer Document Carefully before investing :-)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">What is CAGR Really? Are these Statements Really as Awesome as they Sound? <a href="http://www.fundamental-investor.com/2017/11/compounded-annual-growth-rate-cagr.html">Read on...</a></span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Welcome to the Roaring Bull Market Friends.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Dearest investors & friends,</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">How are you all doing? As I write this Article, The Overall Markets are doing exceptionally well. The Nifty is above 26 times Trailing Earnings. We are at a phase where Most Businesses and Mutual Funds are Boasting about their CAGR Returns :-) </span></span><br />
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<span style="font-size: large;"><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif;">CAGR is the Most Used, Abused and Misused word in the Market Today.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Today, I am going to deep dive into what CAGR really means. What is Compounded Annual Growth Rate? How does it Work? Whom does it Really Benefit?</span></span><br />
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<a href="https://4.bp.blogspot.com/-Rxw_crL5hlo/Wg_5CtRF8mI/AAAAAAAABIM/xihrGdpkeb87tatbb9_AoxDzcsLjD9a2QCLcBGAs/s1600/CAGR.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="500" data-original-width="500" height="320" src="https://4.bp.blogspot.com/-Rxw_crL5hlo/Wg_5CtRF8mI/AAAAAAAABIM/xihrGdpkeb87tatbb9_AoxDzcsLjD9a2QCLcBGAs/s320/CAGR.png" width="320" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="background-color: yellow;">When we invest in a Fixed Deposit, we get Fixed Returns every Year.</span> For eg: A Fixed Deposit would give us around 6% Compounded Annual Returns Every Year.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">What this means is, if we invest Rs 500 in the year 2000 in the 6% CAGR FD for a period of 17 years, we would have Rs 1346 at the end of the period.</span></span><br />
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<a href="https://4.bp.blogspot.com/-vJK8rxXj97Y/Wg_bQ6bSfxI/AAAAAAAABHI/GKPyo2ix0DUMDjp9EdUmdTLOgY68frkSACLcBGAs/s1600/FD6.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="441" data-original-width="798" height="352" src="https://4.bp.blogspot.com/-vJK8rxXj97Y/Wg_bQ6bSfxI/AAAAAAAABHI/GKPyo2ix0DUMDjp9EdUmdTLOgY68frkSACLcBGAs/s640/FD6.PNG" width="640" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">What if we invest in an instrument which gives us 20% returns every year. Fixed Returns. There is no such instrument but, just hypothetically.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Chart would look like this. In 17 years, we would end up with Rs 11093 in year 2017 on a Rs 500 investment in year 2000.</span></span><br />
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<a href="https://4.bp.blogspot.com/-jVcJa37eJlM/Wg_b6U6VsxI/AAAAAAAABHQ/E3LcsI8zOPocXwQ-aNEFJMZtgkwbHTLQwCLcBGAs/s1600/FD20.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="436" data-original-width="800" height="348" src="https://4.bp.blogspot.com/-jVcJa37eJlM/Wg_b6U6VsxI/AAAAAAAABHQ/E3LcsI8zOPocXwQ-aNEFJMZtgkwbHTLQwCLcBGAs/s640/FD20.PNG" width="640" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">But, friends. <span style="background-color: yellow;">In Equity Based Investments, the Returns are NOT FIXED every Year</span>. Chart is not like the above. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Let's begin by Looking at Price Chart of 3 companies over 17 years (2000 - 2017):</span></span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif;">Let's Assume that all 3 Companies have given 20% CAGR over 17 years (Since they began with Rs 500 in year 2000 and ended with Rs 11000 in year 2017)</span></span><br />
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<a href="https://1.bp.blogspot.com/-tDBHgt10eDE/Wg_ez6GOetI/AAAAAAAABHo/4A-8Q_I0f0MGYdltvWbn3wz11XDErPv9wCLcBGAs/s1600/CAGR1.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="436" data-original-width="800" height="348" src="https://1.bp.blogspot.com/-tDBHgt10eDE/Wg_ez6GOetI/AAAAAAAABHo/4A-8Q_I0f0MGYdltvWbn3wz11XDErPv9wCLcBGAs/s640/CAGR1.PNG" width="640" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Company 1 has had a pretty steady graph. So a person who entered in year 2000 would get 20% CAGR over 17 years, provided he/she stayed invested. </span><br />
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<a href="https://2.bp.blogspot.com/-y4hQQ75ICfk/Wg_e30NqpWI/AAAAAAAABHs/j554Aui6hfgdVOtd6z2WYMHWyPrm21eTwCLcBGAs/s1600/CAGR2.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="438" data-original-width="799" height="350" src="https://2.bp.blogspot.com/-y4hQQ75ICfk/Wg_e30NqpWI/AAAAAAAABHs/j554Aui6hfgdVOtd6z2WYMHWyPrm21eTwCLcBGAs/s640/CAGR2.PNG" width="640" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Company 2 has a very interesting Graph. If you notice, the person who invested Rs 500 in year 2000 was at Rs 1200 in year 2002. But until year 2013, the investment remained in the range of Rs 800 to Rs 1200. Yes, 11 years of no movement. But, from year 2013 to 2017, the movement was very very quick. It moved from Rs 1000 to Rs 11000 in a matter of 4 years. So even in this investment, the person who stayed for 17 years enjoyed CAGR of 20% (even though the maximum returns came in the last 4 years). But, if we calculate CAGR from year 2013 to 2017, it is a Mind Boggling 81%. </span><br />
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<a href="https://3.bp.blogspot.com/-ZnsvrGNiFD0/Wg_e8LHMRyI/AAAAAAAABHw/vdbCx8Izib027UtiGtwDP6xPVnSwgtR4QCLcBGAs/s1600/CAGR3.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="436" data-original-width="795" height="350" src="https://3.bp.blogspot.com/-ZnsvrGNiFD0/Wg_e8LHMRyI/AAAAAAAABHw/vdbCx8Izib027UtiGtwDP6xPVnSwgtR4QCLcBGAs/s640/CAGR3.PNG" width="640" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Company 3 has a very Cyclical Graph. Investment moved from Rs 500 to Rs 10000 and then back to Rs 1500 to Rs 12000 and then at Rs 11000 in year 2017. Even in this case, the CAGR would be 20% for a Period of 17 years. But, people who invested in between either lost their money or Made Returns. The Time Spent and the Timing of the Investment made the Difference.</span></span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif;">I hope you have got a Good Feel of what CAGR really is. So let me summarize this for all readers:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">- The Most Important Thing to Note is that Compounded Annual Growth Rate in Equity Market is Not Fixed Yearly Returns.</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- If someone claims that Company has Grown at 20% CAGR for last 17 years, this is Applicable only and only for People who stayed invested for 17 years. There might have been multiple Ups and Downs in the 17 years.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- CAGR would change based on when Entry and Exit in Equity Market Investment</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- CAGR over a Longer Period of Time is Important for Investors</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- An Excellent CAGR over Short Period of Time might lessen as Time Progresses</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, next Time any Mutual fund or Promoter talks about CAGR, you should read between the Lines. Especially in a Roaring Bull Market, Tall CAGR Claims are made. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">When we Invest in the Stock Market, we need to always Remember that in Quality Businesses which are Growing their Revenues & Profits at 20% plus every year, the Stock Price will also Compound Well over a Period of Time.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">So, let us Continue to Focus on Businesses which would Compound its Business and if that happens, we can get good CAGR Returns over a Good Number of Years.</span></span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><a href="https://goo.gl/forms/Flnk7v0CmR8wDxa53" target="_blank">Click here to Take a Quick Quiz on CAGR</a></span></span><br />
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com8tag:blogger.com,1999:blog-303837536783625365.post-70911955683597565632017-10-13T21:51:00.000+05:302017-12-02T15:57:55.421+05:30Annual Reports FY 2017 Key Highlights<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors and friends,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">How are you all doing? Hope you are all compounding wealth peacefully and steadily.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Apart from the <a href="https://groups.google.com/d/forum/fundamental_investor" target="_blank">Google Group</a> & <a href="http://mmb.moneycontrol.com/fundamentalinvestor-user-profile-66756e64616d656e74616c5f696e766573746f72.html" target="_blank">MMB</a>, recently, I have been connecting with Investors in <a href="https://twitter.com/fi_investindia" target="_blank">Twitter </a>which is a wonderful platform for quick updates. I hope, through these channels, anyone can connect with me at ease and we can have good discussions.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If you like the collective work below, please take a moment and to Like & Retweet this link so that many more of your followers can also benefit.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="https://twitter.com/FI_InvestIndia/status/908685851005034497" target="_blank">#AnnualReport #Notes 2017 for #Investor #Community</a></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Click on the below Box for Annual Reports FY 2017 Key Highlights.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Please share the link to your circles on Emails, Whatsapp Groups, Twitter, FB etc so that more and more investors can read, understand, benefit and maybe help by contributing some more Notes.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As of today, the following companies have been covered:</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Piramal Enterprises Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Indiabulls Housing Finance Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Edelweiss Capital Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Ujjivan Financial Services Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Advanced Enzyme Technologies Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Cupid Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Avenue Supermarts Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- LT Foods Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Alembic Pharmaceuticals Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Finolex Industries Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- V-Mart Retail Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Granules India</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Avanti Feeds</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Murudeshwar Ceramics</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Manappuram Finance</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Maharashtra Scooters</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Future Enterprises</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Cadila Healthcare</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Omkar Speciality Chemicals</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Future Retail</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Virinchi Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Rain Industries Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Caplin Point Laboratories Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Vakrangee Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Nitin Spinners Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Multibase India Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Maithan Alloys Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- IG Petrochemicals Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Mold Tek Packaging Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Siyaram Silk Mills Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- BSE Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- APL Apollo Tubes Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- P I Industries Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Jamna Auto Industries Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- KEI Industries Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Raymond Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Spicejet Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Tata Global Beverages Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Hikal Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Ambika Cotton Mills Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Persistent Systems Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Motilal Oswal Financial Services Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Alankit Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Aurobindo Pharma Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Navneet Education Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Byke Hospitality Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Trigyn Technologies Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Bharat Bijlee Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Nesco Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Pondy Oxides and Chemicals Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Gujarat Narmada Valley Fertilisers & Chemicals Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Anjani Portland Cement Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Majestic Research Services and Solutions Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Strides Shasun Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Karnataka Bank Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- L&T Finance Holdings</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Dilip Buildcon Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Century Plyboards India Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Vikas Ecotech Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Centrum Capital Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Oriental Carbon and Chemicals Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Time Technoplast Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Sanwaria Agro Oils Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Eimco Elecon Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Sharda Cropchem Ltd</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Fineotex Chemicals Limited</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Accelya Kale Solutions Ltd</span><br />
<br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Every week, Ill be updating you with more and more companies prepared by Friends and Investors.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Enjoy the Read. Let us know you thoughts.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com6tag:blogger.com,1999:blog-303837536783625365.post-75432971617194575302017-08-05T14:36:00.000+05:302019-05-18T17:23:23.463+05:30Retire Early with Financial Independence !!!<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Retiring early !!! Financial Freedom by 35. Sounds like a Dream, isn't it? Can this really be achieved? Can we start from Zero and still achieve it? If yes, HOW? <a href="http://www.fundamental-investor.com/2017/08/retire-early-with-financial-independence.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors and friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The markets are making new highs and I am hoping that wealth is getting created with quality stocks. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today, I am going to cover a very important aspect in our investing journey - <span style="background-color: yellow;"><b>Financial Independence</b></span>. Most of us love to achieve Financial Independence early in life. We dream of enjoying the best holidays, wearing the best clothes, owning cars, gadgets, farm houses, bungalows etc. in this lifetime. But, how many of us really work towards achieving them? How many of us save to enjoy all our dreams? How many of us have a plan in place? Think.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There are many success stories in the Share Market. Stories of rags to riches. Stories of 0 - 1000 Cr. 0 - 10000 Cr etc. These stories are not the stories of majority of investors. The people who made such returns were in the markets and that was their bread and butter.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Majority of small investors always play a zero sum game since they don't know how to play it the right way. Win few times. Lose few times. The losers outweigh the winners most of the times. Then, again playing to retrieve the loss. This is the normal story. Most investors are in the dream world and try to make quick money to achieve Financial Independence. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;"><b>When we try to play aimlessly in the Share Market, we end up wasting our time and missing out on the real Wealth the Market can create for us</b></span>.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, what are the steps for Financial Independence? Can the Markets really give us the independence we are looking for? Can we really Retire from our 7 AM - 11 PM work life (includes travel nowadays)? Let's see.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Step 1 - Beginning Early - The Habit of Saving</u></b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Most of us begin working in a paying job when we are 22 years old. This is the time when usually, our responsibilities are restricted to close family - ourselves and our parents. If our close family doesn't depend on us financially or is not having any major commitments, it's definitely a big advantage. We get good time to focus on our learning curve in the job and work really hard to stand out. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The early years are the ones where the Habit of Saving needs to be inculcated, with understanding. This is also the only time when we can save a good part of our salary and spend the rest. <b style="background-color: yellow;">Save more and Spend less</b> should be the mantra in early years of career. The more we can save in early years, the speed towards Financial Independence exponentially increases.</span><br />
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<b style="font-family: "Trebuchet MS", sans-serif;"><u><span style="background-color: yellow; font-size: large;">Step 2 - Knowing our Expenses</span></u></b><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Financial Independence is achieved when we have enough wealth to cover all our Monthly Expenses. So, knowing our Monthly Expenses is key. I have been <b style="background-color: yellow;">maintaining an excel sheet of Monthly Expenses</b> for the last 10 years and it has helped me enormously to understand where the outflow really is. This record also helps us to retrospect and understand where we can cut costs and where we can spend more. If we can document exactly to the rupee, it will help us enormously. If we know our expenses, we will know how much we can really save. Sometimes, a small cost-cutting here and there, would give more money to invest for our future.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Before proceeding, please read this article on</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/2018/09/my-inflation-balance-sheet.html" target="_blank">My Inflation & Balance Sheet</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this article, I have even provided the excel which I have been using for many years now.</span><br />
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<b style="font-family: "Trebuchet MS", sans-serif;"><u><span style="background-color: yellow; font-size: large;">Step 3 - Instant vs Delayed Gratification</span></u></b></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The biggest mistake we do in our early years is Spending on Unnecessary Wants. Please remember - Every Rupee unspent on an unnecessary desire, is a Rupee saved. In our early years, we need to ensure that we make each rupee count. Whenever we are going to spend, ask this question - Do I really need this now? Or can it wait? Let us delay our gratification sometimes. It is hard, but very much possible and very rewarding in the longer run.</span><br />
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<b style="font-family: "Trebuchet MS", sans-serif;"><u><span style="background-color: yellow; font-size: large;">Step 4 - No early commitments</span></u></b><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The biggest mistake anyone can ever make in their early years is Taking Heavy Debt. Any early major commitments is detrimental to Financial Independence. <b style="background-color: yellow;">The early years must be used to create wealth and not to get locked for 15 - 20 years in EMI Debt</b>. Settling for a Good Second Hand Car, a Decent House on Rent closer to work, Avoiding regular visits to Fancy Restaurants, Cooking at Home, Using Public transport etc. would give us peace of mind and good health as well, especially in early years of career. If we lock ourselves in a property worth 40 - 50 Lakhs early on with heavy monthly commitment, we will never be able to achieve Financial Independence in our Prime. Think about it.</span><br />
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<b style="font-family: "Trebuchet MS", sans-serif;"><u><span style="background-color: yellow; font-size: large;">Step 5 - Avoiding the Ego Trap</span></u></b><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The biggest trap is the Ego Trap. Many times we take decisions to please our ego and impress others. <b style="background-color: yellow;">We always try to buy things, which we don't really need, with the money which we do not have, to please someone who really doesn't care</b>. Buying a car to show your position in office instead of using Ola/Uber, buying an expensive House just to have a high position in family and friend's circle, regularly spending/treating in big hotels etc to impress others, visiting Race courses and Gambling dens to show off are just a few examples of cases where we are denying ourselves Financial Independence. Let us understand our needs and our bigger picture while taking any decision.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;"><u>Step 6 - Taking the right Medical & Term Insurance</u></b></span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Taking a Basic Term Insurance early on helps because the premium is very less when you are 22 years old. As we delay this, our premium would increase. Having a good Medical Insurance early on also helps. Try not to get stuck in Insurance plans which give lots of unnecessary features etc. </span><span style="font-family: "trebuchet ms" , sans-serif;"><b style="background-color: yellow;">Insurance is basically to help us in Medical need and in case a major catastrophe happens</b>. It is not an investment, rather a protection and it should not be treated as an instrument which gives us returns.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, when we have followed the above steps, we will have some amount every month, to invest for our Financial Independence. Now, where do we invest this money?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I have, in my previous articles covered a few instruments of investing. Please read the following articles:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/2016/04/power-of-compounding.html" target="_blank">Power of Compounding</a></span><br />
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<a href="http://www.fundamental-investor.com/2016/06/mutual-funds.html" style="font-family: "trebuchet ms", sans-serif;" target="_blank"><span style="font-size: large;">Introduction to Mutual Funds</span></a><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/2019/05/best-mutual-fund-for-wealth-creation.html" target="_blank">Best Mutual Fund for Wealth Creation</a></span><br />
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<a href="http://www.fundamental-investor.com/2016/07/debentures-bonds-fds.html" style="font-family: "trebuchet ms", sans-serif;" target="_blank"><span style="font-size: large;">Play Safe by Investing in Debt Instruments</span></a><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">Investing in Well Managed Mutual Funds or Compounders in Equity is the best way to create wealth over the long term. </b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Amit and Prachi are two close friends who have big dreams and have just finished their graduation at 22 years. Both of them read this article and then decide to save a part of their monthly salary for their future right from the age of 22. They are in a decent job which pays them around Rs 15000 per month initially. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Amit has some family commitments and hence his monthly allocation is lesser than Prachi, who allocates more part of salary to her savings. In their workplace, they meet Ramlal who works as the office staff. They explain to him, the importance of saving and he also starts saving from the age of 22 years. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">Here is how they move towards Financial Independence with the Magic Power of Compounding !!!</b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">As you can see, small drops added early makes a mighty ocean.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">The total investment is also shown in the table. I have also included investing in RD (5.6% post tax returns) just for comparison purpose.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">In 15 years time, Ramlal would have around 25 to 60 Lakhs. Amit would end up with 70 Lakhs to 1.42 Cr and Prachi would end up with 1 - 2 Cr of liquid cash. And I have not included Dividends in this calculation which are tax free. </span></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><b>The beauty of investing in Equity or Mutual Funds is that with a click of a mouse button, all the money would reach your account within two working days. It is not a virtual asset like a House. It is not a depreciating asset like a Car. It is REAL MONEY !!!</b></span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">With a little bit of early discipline, we can all become Financially Independent by the time we are 40. </span></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif;"><b><span style="font-size: large;">The earlier we begin, the faster we can achieve Financial Independence.</span></b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Think about it :-)</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">If you do have some more time and want to check out other articles of mine, please do click the link below:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">Fundamental Investor Best Articles</a></span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Good luck,</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Fundamental Investor</span></span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com29tag:blogger.com,1999:blog-303837536783625365.post-33442899128270287782017-05-07T16:58:00.001+05:302019-10-15T13:00:17.509+05:30Wealth Creation in Growing Large Cap Businesses<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Does Size of a Company really matter? Can Large Cap companies create wealth for shareholders? Are they boring? <a href="http://www.fundamental-investor.com/2017/05/wealth-creation-in-largecaps.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors and friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The overall market is moving </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">up higher and higher and I am very hopeful that all your stocks must be giving very good returns. I am sure that you would have experienced a beautiful run up of quality stocks which were dormant for a long period of time. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today's article is purely and purely out of experience. Before we begin let us understand Market Cap. For this, please read my article - <a href="http://www.fundamental-investor.com/2016/02/stock-market-basics-value-vs-price.html" target="_blank">Click here..</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">A large cap company is one whose Market Capitalization is more than 10000 Crore.</b><b style="background-color: white;"> M</b>ost of the investor friends of mine are experts in picking mid and small cap stocks which are cheap. Whenever, I used to talk about a Large Cap, their interest was low, since the thought process was that it cannot move up much. How can a Large Cap create wealth for shareholders? Is it worth? Can we make money in Large Caps? I have encountered these questions innumerable times in my investing journey.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For the first time, I am opening up in my blog, company names which I bought long back and still proudly own. They are not recommendations and I request readers to read my article and take the message only. This is Stock Market. Stocks fall. Stocks Rise. Stay Wise :-)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let me share with you three stories which are my experiences.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><u><b>Experience 1:</b></u></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">It was in June 2016 when I decided to study a company called Rural Electrification Corporation (REC). The company was quoting at around Rs 80 at that time (ex bonus Rs 160) and was having Market Cap of around 15000 Crores. It was trading at around 2.6 times earnings at that time and the dividend was around Rs 17.1 per share. Yes. Dividend was more than 10% of the market value of Rs 160 at that time. It was looking so cheap. These were the thoughts in my head:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- The Price to Earnings is already below 3. Can it go lower?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- The dividend is more than 10% (tax free). Wont investors put money atleast for dividend?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Even if Price to Earnings go up 50 - 100% from here, the capital will move up</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I discussed this story with a few friends, but it didn't have many takers. It was a Large Cap which was on downtrend. I gathered all the courage in the world and bought a good solid chunk of REC in June 2016 and holding on tight.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>Experience 2:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">It was September 2016 when I came across a conglomerate company Piramal Enterprises. I was fascinated by the enormous track record of the company and the integrity of the management. Having 3 fantastic solid verticals - Pharma, Financial Services and Data Analytics, the thought process was that enormous value can get unlocked in longer term. The prowess of Ajay Piramal further deepened my conviction and I knew that money invested would not be wasted. It was quoting at around 1800 at that time and the Market Cap was around 30000 Crore. Again a Large Cap!!! </span><br />
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<span style="font-family: "trebuchet ms", sans-serif; font-size: large;">The value of the business was enormous. I felt that this company should move up sooner or later. The intuition was that the capital will not be lost. I took a small position at 1800 levels. In November 2016, Demo happened. Piramal plunged to 1400 levels. It was available at 25000 Crore Market Cap. I shifted a large part of my funds from another stock to Piramal at that time. I started discussing the enormous value of this Large Conglomerate with some friends but again, not many takers. Why? Because it was a 25000 Crore company. How can it move up swiftly was their question. A few friends still took positions at slightly higher levels since I forced them to :-)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I took a huge leap of faith in PEL at 1440 and continue to hold it tight.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>Experience 3:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">It was a night of November 2016 when a close friend called me on my phone when I was just leaving my office. It was one of our usual discussions and I realized that he was an expert in Financial Services. He introduced me to the world of Housing Finance.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I was fascinated by the Housing Finance business. I had constantly tracked a company called Indiabulls Housing Finance right from 2012 onwards but never took position since I had a feeling that it was always expensive. I never knew how the business works, how NIM or leverage impacts valuations, how its books were etc. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">That phone call was a game changer. It gave me a solid foundation and a new perspective of the business. I understood that a well run Housing Finance company would grow every quarter. Even a small cut in operational cost could create enormous wealth for shareholders. I learnt about their transparency, the dividend policy and went through their annual reports and presentations. I was enchanted by their growth and their guidance.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">It was in December 2016 that I decided to own Indiabulls Housing Finance. It was available at a market cap of 27000 Crores. This time I was very very convinced and discussed with friends with most conviction. But the Market Cap was a huge barrier for many friends again. I added IBHFL at 630 levels and holding on so tight now.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">Today </b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">REC is at 42000 Crore MCAP (165% gain). </b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">PEL is at 43000 Crore MCAP (70% gain). </b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">IBHFL is at 46000 Crore MCAP (70% gain).</b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">These experiences have taught me these valuable lessons:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) Do not close your minds to companies which are Large Cap. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) Large Cap Growth companies when bought cheap, can create huge wealth with Peaceful state of mind.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) If a Large Cap company is growing but available at discount due to some macro factors, it can provide enormous downside cap risk viz. Downside will be limited.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) If dividend is more than 7-8% of the Market Value, have a second and third look and see if the investment is worthy. Sometimes, the downside will be capped due to dividend payout.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">5) Have the right friends !!! Listening with open mind to any story always helps. Choosing to own or not is anyway in our hands. We have to listen and give a chance.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I wanted to pass on the message that if a company is aggressive and growing, even a Large Cap company can make huge money for all of us. Let us be choosy and compound our money.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Enjoy the markets friends. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com14tag:blogger.com,1999:blog-303837536783625365.post-7795867227511291702017-04-08T17:11:00.001+05:302017-05-07T16:59:01.917+05:30One Night Stand in the Stock Market !!!<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">How many of us have a one night stand with a stock, then move on to date another and then another and never settle down? How many of us even end up blind dating a business due to excitement? </span><span style="font-family: "trebuchet ms" , sans-serif;">How many of us marry an evolving stock and live with it, take its support, use its strengths, remain in downs and ups and value it?</span><span style="font-family: "trebuchet ms" , sans-serif;"> </span><span style="font-family: "trebuchet ms" , sans-serif;">In our investing journey, we always have a dating phase. But many of us remain in the dating phase and never move to the next level which actually makes us wealthy. <a href="http://www.fundamental-investor.com/2017/04/one-night-stand-in-stock-market.html" target="_blank">Read on...</a></span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors and friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">As I write this article, Nifty and Sensex are hitting new highs. Most of the traders and investors are sitting on good profits. Most of the analysts are bloating on their success stories of stocks becoming multi-baggers. Many companies, irrespective of their fundamental strength, are moving up very strongly. In the recent past, Technical Analysts' minimum target is scaling up to 2x of current price. Many unknown stocks which were ot followed are breaking out from multiyear consolidation. Every IPO is giving returns and putting the listing price to shame. At this time, when the market is becoming over optimistic and enjoying the bull run, I thought of writing about a subject which is apt.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Kiran is a Fundamental Investor in this Bull Market. She researches on a company called "My Research Ltd (MRL)" which she understands well and she prepares long notes covering each and every aspect of the business. She looks at promoter integrity, balance sheets, current debt, past growth, future potential and the price multiple of the share price. She also compares the business with its peers and finds a huge valuation gap. She tries to see whether the business can scale up extensively in the near future and tries to value the company. After spending 3-4 months on research she takes a position by allocating a solid portion of portfolio on the business.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, its a raging bull market. Everyone on TV, Internet, Whatsapp groups etc. are talking about multiple stocks which are giving breakouts every day. Somehow, Kiran finds that no one is talking about "MRL" in any of the technical calls. No TV channel is recommending her stock while all other stocks are coming in limelight. She finds that her company is at same price for a few weeks. Most of her friends who are invested in other stocks are really boasting about their multi-bagger returns. But somehow her MRL has corrected 10% from when she bought it. She is devastated. She looks at her long notes of conviction and starts doubting it. She is unable to face her friends since her portfolio is in RED while all her friend's portfolio is surprisingly in GREEN. Or atleast that's what she thinks ;)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A month passes. No movement in her stock. It is down 15%. It is consolidating very well but Kiran is unable to look at that. She is only seeing RED in her stock. Suddenly a friend pings her and informs about another company "Not My Research Ltd (NMRL)" and tells her that it is going to really move up. Kiran now starts researching into NMRL and starts preparing notes in the same way. As she is researching, NMRL moves up 5% while her MRL goes down. She now makes a quick decision.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">She sells MRL with a 17% loss and buys NMRL. NMRL moves up 2% after her buy and she is so happy. Immediately, NMRL consolidates and surprisingly it also comes down a little. After a month, her initial company MRL moves up by 50%. She feels devastated. Another friend talks to her about another company called "Its Hot and Fast Ltd (IHFL)" and now Kiran starts researching this. She finds IHFL more interesting than NMRL and ends up selling NMRL to buy IHFL. This story continues.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Is there a Kiran in each of us? How many of us actually stick to our research of a business and hang on with our investment? </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In today's highly connected world, we hear about exciting business stories every single day. With so much information, we keep hearing of new cheap stocks and our mind is always on the lookout for something better. And we always feel that the grass is greener on the other side. We fail to hang on to our conviction and keep believing that other stocks are better than ours. Also, everyone seems to be earning money except us. Let us stop looking at how others are doing. Most of the people only talk about their success stories but fail to look at the losses and the charges paid on every short term trade.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There are thousands of opportunities out there which will make money for us. We fail to understand that we only need one solid idea or business which we understand to make wealth for us. We try to take part in all business stories and end up never milking any business to the fullest.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Based on my experience, let me share a few pointers which might help everyone:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) Try to research a stock to the fullest. Try to gather as much information as possible and see if there is enormous growth available ahead. With future growth, stock price will also rise.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) Take your time before allocating capital. Once capital is allocated to the stock, and if the stock is performing as per guidance, do not lose faith in the business. Even if the stock falls, do not bother.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) Once you are invested in a story, try to research the existing story further and see if you have missed anything. Do not try to research other new stories until you know everything about the existing business.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) If a few businesses which you have researched play out well, you will become much more wealthier than trying to play each and every business which is moving up.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">5) And lastly, you DO NOT need to know each and every business in the market. No one can become an expert in all businesses. Try to identify a few which you can relate to.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I am not saying that you should not research new businesses or stories. Being informed is one thing. But losing focus on the existing and looking out for new businesses just is not worth.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Don't move from one WINNER to another. It is worse if you move from a WINNER to a stock which looks like a WINNER. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this bull run, there are lots of good companies which are overvalued and a hell lot of bad companies which are crazily overvalued. With research you can separate the progressive ones from the junk. With conviction, take the leap and enjoy the run.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">Here is the link for all my articles. Bookmark it so that you don't miss anything...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Too much research in too many companies can be injurious to your investment career !!! Now, dating or marrying - Its your choice !!!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com8tag:blogger.com,1999:blog-303837536783625365.post-70327713205089727042017-03-19T17:45:00.002+05:302020-10-09T18:33:41.855+05:30Fundamental vs Technical Stock Picking<div dir="ltr" style="text-align: left;" trbidi="on">
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Ever wondered what is the difference between Fundamental and Technical approaches to Stock Picking? Is Technical Analysis a form of betting your money? Is only investing with Fundamentals in mind enough? <a href="http://www.fundamental-investor.com/2017/03/fundamentals-vs-technicals.html" target="_blank">Read on</a> to get more clarity...</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Dearest investors and friends,</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Hope you are all enjoying the upswing in the market. Nifty has bounced back and bounced back in a really awesome way. I wrote an article long back when the overall market was bearish and those who shopped for quality stocks at that time are sitting on huge profits.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Here is the article just for a refresh</span><br />
<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif"><a href="http://www.fundamental-investor.com/2016/01/is-it-right-time-to-invest-in-stock.html" target="_blank">Is it the Right T</a></span><a href="http://www.fundamental-investor.com/2016/01/is-it-right-time-to-invest-in-stock.html" style="font-family: "Trebuchet MS", sans-serif;" target="_blank">ime to invest in the Market</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">New Readers can read all prior articles by <a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">clicking here</a>. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Please bookmark the same: </span><a href="http://www.fundamental-investor.com/p/articles.html" style="font-family: "Trebuchet MS", sans-serif; font-size: x-large;" target="_blank">FI Articles</a><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Recently, I was part of a discussion where there was a heated argument between two sets of friends. The discussion was on which approach is much better and advantageous for stock picking. One set was purely a fundamental group and the other was a technical group. If you are wondering what this really means, don't worry. We will clear this confusion in this article.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">I have heard a lot of people calling Technical analysts as Gamblers and Betters. There is a great respect for Fundamental analysts. Many people stay away from market after losing huge sums to hot tips from Technical Calls.</span><br />
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<span face=""trebuchet ms" , sans-serif"><span style="font-size: large;">The reason I chose this topic is because we need to understand both approaches in this dynamic market. It's something everyone needs to know and digest so that good gains can be made from investing in businesses. You must be wondering what a fundamental analyst like me is going to write about on this topic. I am a Fundamental Investor. But, I am well connected :-)</span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Before I go further, I have two abbreviations (short forms)</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">TA - Technical Analyst</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">FA - Fundamental Analyst</span><br />
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<span face=""trebuchet ms" , sans-serif"><span style="font-size: large;">As you all very well know, I pick stocks purely based on fundamentals and hence I am a FA. However, I am very lucky to be in touch with some amazing Technical analysts (TAs) who make amazing returns in the market mainly with their discipline, emotion control and speed. Let us first understand the two words - <span style="background-color: yellow;">Fundamentals and Technicals.</span></span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">A basic general criteria for any business is that it needs to be fundamentally strong. What this means is that the company needs to be <span style="background-color: yellow;">performing well consistently and hence providing handsome returns to shareholders</span>. Some of the fundamental criteria for any business are:</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Promoter strength and integrity</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Past Growth rate of the business</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Potential to grow in the future with the same growth rate</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Use of working capital efficiently to increase profits</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Rewarding shareholders with dividends</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Able to run the business with comfortable debt</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Have positive cash flow so that business is able to sustain itself</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Grow market share consistently and retain it</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Turnaround in business growth</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Paying tax regularly and excellent balance sheet</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">I have listed a few above. Now, FAs look at the criteria above and more before picking a business to invest in. When the business is meeting most of the strong fundamental requirements, it becomes attractive to fundamental buyers. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">FAs make calculations based on the balance sheet and future potential and come up with a valuation for the business. If the stock is trading well below the valuation, they buy it. Even if the share falls further, they do not sell it. They hold on knowing the enormous fundamentals of the company. And FAs generally sell the business only when one of the following happens:</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- They need money badly and hence have to liquidate</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Fundamentals weaken</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Share price goes way above their valuation</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Since market ups and downs are not in our control, <span style="background-color: yellow;">FAs sometimes wait for years and years and make handsome returns</span>. They mostly never lose money since they are invested purely and purely based on the fundamental strength of the company. They strongly believe in betting on fundamentals of a company hoping that <span style="background-color: yellow;">some day, market will pay for the growth and potential of the company</span>. Also, compounding always works on long term.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">So to summarize the investment approach for FAs - <span style="background-color: yellow;">Compound money, no matter how much time it takes.</span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">We need to remember that the value of any business is after all, <span style="background-color: yellow;">how much a buyer would pay for the business</span>. It is never on how much the seller quotes in a dynamic market such as ours.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Let me explain above statement. Based on my fundamental analysis of various parameters, I concluded that a stock is worth Rs 100 per share. Let's say it is quoting at Rs 60 per share. I buy truck load of it. Now, is this is a good buy? At first look, of course it is a great buy and a steal. However, unless more and more investors find value at 60 per share, the price will never move up. Sometimes, the stock would stay at Rs 60 - 80 per share for 4-5 years and then suddenly go up 3 or 4 times. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><span style="background-color: yellow;">Hence, in market, it is important that more and more investors buy the stock and hence it moves up. Buying or selling interest is a key element to stock price movement. Unless demand picks up stock will not rise and unless supply picks up stock will not fall</span>. Keeping this in mind, let us move to Technicals.</span><br />
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<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif"><span style="background-color: yellow;">For TAs, Timing is Everything</span>. I have lots of TA friends. </span><span face=""trebuchet ms" , sans-serif">TAs work on charts of stocks. Let's try to understand why TAs look at charts of any listed business. What is there in a chart after all, you might wonder.</span></span><br />
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<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif">In stock market, <span style="background-color: yellow;">Information is everything</span>. Traders or investors who get any news first make the most of any stock movement. The retailers like us generally get news last on TV channels and we enter at the fag end of the movement. Great results, a big money deal in a business, a loss making unit being sold off, some big order wins, release of pledge etc. are some of the information which will make a stock run up. R</span><span face=""trebuchet ms" , sans-serif">ising prices of raw materials, </span><span face=""trebuchet ms" , sans-serif">shares getting pledged without justification, union problems in companies, forgery in balance sheets, government interventions which impacts certain businesses negatively etc. will make a stock run down quickly.</span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><span style="background-color: yellow;">The thumb rule is, if you notice the charts carefully, a stock price begins to react even before the news is actually out</span>. Whether it is positive or negative news, stock price movement begins before the actual event happens. So, a TA, analyses a chart of a stock and tries to find out if some action is happening. A TA ideally need not have any idea of the fundamentals of the business. Decisions are purely based on chart movements. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">When the chart shows that there is heavy accumulation with volume, or a major breakout of a resistance, the TAs buy heavily without even looking at whether the stock is fundamentally strong or not. If the chart shows heavy selling or breaks some major support points, they sell the stock like there is no tomorrow. Technical analysis is a vast field by itself and takes a lifetime to perfect. I have huge respect for disciplined technical analysts.</span><br />
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<a href="https://3.bp.blogspot.com/-Y8JEyKBmFDA/WM5sJJz1vZI/AAAAAAAAAnM/EcETuAcj2QcXuOaar3EaUHYiZZQwYULRwCLcB/s1600/WhatsApp%2BImage%2B2017-03-19%2Bat%2B4.29.55%2BPM.jpeg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="436" src="https://3.bp.blogspot.com/-Y8JEyKBmFDA/WM5sJJz1vZI/AAAAAAAAAnM/EcETuAcj2QcXuOaar3EaUHYiZZQwYULRwCLcB/s640/WhatsApp%2BImage%2B2017-03-19%2Bat%2B4.29.55%2BPM.jpeg" width="640" /></span></a></div>
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<span face=""trebuchet ms" , sans-serif">Above chart is of Force Motors</span></div>
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<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif">My dear Technical Analyst friend Ashu <a href="http://theteambringit.blogspot.in/" target="_blank">(TEAM BRING IT</a></span><span face=""trebuchet ms" , sans-serif"><a href="http://theteambringit.blogspot.in/" target="_blank">)</a> summarizes TA as follows:</span></span><br />
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<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif">If someone bought Force Motors at Rs 950 per share in 2006. </span><span face=""trebuchet ms" , sans-serif">He/She waited for 11 long years to make 4 Times money which is ₹3800 per share. </span><span face=""trebuchet ms" , sans-serif">Now from the above chart, have a look at that smart person who bought shares at Technical breakout at Crossover of ₹1000-1025 weekly basis in 2014.</span></span><br />
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<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif">Force motor price hit ₹3800 in 2015. </span><span face=""trebuchet ms" , sans-serif">So it was a 4 Times gain in Just 1 year Time Frame approx.</span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Force was moving in a broad range since Years but those volumes in 2014 were exceptional which was not witnessed prior to 15 Years History of Force Motors. </span><br />
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<span style="font-size: large;"><span face=""trebuchet ms" , sans-serif">Soon there was breakout at various levels & the Beast was unleashed. </span><span face=""trebuchet ms" , sans-serif">Consequently Force motor hit ₹4800 from ₹300 in just 3 Years and became a Multibagger. </span><span face=""trebuchet ms" , sans-serif">It is 16 Times Returns in 3 Years in </span><span face=""trebuchet ms" , sans-serif">comparison to person who made that same in 10-15 Years. </span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Ashu also goes on to highlight from experience a few points in the world of technicals:</span><br />
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<span face=""trebuchet ms" , sans-serif"><span style="font-size: large;">- Exit is more hard and important in this market than Entry. </span></span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Technical analysis is a golden tool to decide Exit from a stock.</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Price & Volume if used effectively, then one can make big money in Short Span of time. </span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Sometimes news burst later while market makers discount the event prior. </span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- In that case technical analysis help us to know that major event, before it come in general public, with help of Price & Volume. </span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">- Fundamentals tell us What to buy & Technicals tell us When to buy & most importantly when to Exit & encash gains.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Another interesting article which I read on my dear friend Abhishek Ninaniya's website is a must read.</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><a href="http://www.themultiplier.in/2016/01/the-unspoken-truth-of-being-day-trader.html" target="_blank">Click to read - The Unspoken Truth of being a Day Trader</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">However, TAs need not always be right. Hence, they always place their money with a </span><span face=""trebuchet ms" , sans-serif" style="background-color: yellow; font-size: large;">Stop loss</span><span face=""trebuchet ms" , sans-serif" style="font-size: large;">. You would never hear a FA talking about stop loss generally. Good TAs will book loss the moment their stop loss gets triggered or book profits the moment their targets are hit. They need to be extremely disciplined and need to closely watch their stock movements every single day. </span><span face=""trebuchet ms" , sans-serif" style="background-color: yellow; font-size: large;">They will go through multiple emotions like excitement, stress, happiness, anger and also high blood pressure since they watch their stocks very closely. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">On the other hand, <span style="background-color: yellow;">a FA only needs to ensure that every quarter, the business performs as per his/her expectations.</span> If one quarter goes bad, a quick sync up with company secretary can give a guidance on whether any major change has happened as per fundamentals. If fundamentals have not changed, a FA will add more of the business at a lower price.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">So, friends. What's the best combination? Just being a good FA or TA might not be enough in the market. <span style="background-color: yellow;">If we can strive to develop a good combination of both fundamentals and technicals, we can make mind blowing returns in the market.</span> For eg: If a stock is fundamentally looking cheap, buying after a technical breakout etc. can give huge multibagger returns. Also, if we are holding on to a stock which is being sold with heavy volumes, it might help to recheck our fundamentals and help in taking a wise decision. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">On the other hand, a good TA, with help from fundamentals can really filter the companies well and take chances on better companies to make healthy returns with less stress. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">So friends. <span style="background-color: yellow;">Let's respect both TAs and FAs. Let us develop the Art of Stock Picking and be open to various approaches to creating wealth in the Stock Market.</span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Good luck,</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com11tag:blogger.com,1999:blog-303837536783625365.post-49688910249312044122017-01-21T00:23:00.000+05:302017-03-19T19:33:16.242+05:30Diversified vs Concentrated Portfolio !!!<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Portfolio Structuring is key to Wealth Creation. Which Portfolio works better? Is it Diversified Portfolio or Concentrated Portfolio? What are the advantages and risks associated with either? <a href="http://www.fundamental-investor.com/2017/01/diversified-vs-concentrated-portfolio.html" target="_blank">Read on..</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Dearest investors and friends,</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">2016 was an interesting year for all of us. We together learnt and shared a lot of fundamentals in the Investing World.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">I would like to begin this year by wishing you all a Wonderful New Year 2017. I hope this year turns out to be yet another year of learning and wonderful experiences for all of us.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">I have a wonderful group of investor buddies where we have candid discussions on various topics. Today, a question was raised for discussion </span><span style="font-family: "trebuchet ms" , sans-serif;">by one of my close friends which eventually everyone had an opinion on. This question has been answered time and again by multiple investors over various periods of time. This question defines the mindset and the overall rewards of investing in the Stock Market. The Million Dollar question is:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">"Which is better? Diversified Investment? Or Concentrated Investment?"</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">My close friend and investor recently disclosed to me, that his friend invests Rs "X" every week on a New Stock. One New Stock every Week. He doesn't repeat stocks and he doesn't check the screen after the investment. In the last three years or so, he must be having more than 150 companies he has invested in. In some he has gained. In some he has lost. But he continues to invest in this way.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">How many of us invest like this person? How many of us have more than 150 - 200 companies in our portfolio? When was the last time we ever tried to track the performance of all the companies we HOLD in our portfolio? If we don't understand most of our companies in our portfolio, but hold a lot, this is called "Unknown Diversified Investing". In this kind of investing, we would never know why we are invested in most of our companies and would never know when to exit a particular company in our portfolio. We would never be able to explain the rationale behind investments mainly because after a few months, reasons change, conditions change. Companies evolve and their returns vary over a period of time.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">When we follow "Unknown Diversified Investing", we can never figure out whether our capital will grow or perish over time. The most dangerous part of this type of investing is:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">We will HOLD stocks which are in LOSS</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We will SELL stocks which are in PROFIT</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We will average out the stocks which are in LOSS</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The cycle continues...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Lets stop here for a moment. Let us introspect whether we fall in above category or not. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Now that we have seen the effects of Unknown Diversified Investing, let us look at what is Intelligent Diversification.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">In our economy, all sectors would not do well at all points of time. Sometimes, Information Technology would do well due to Currency Fluctuations and Order wins. Sometimes, Manufacturing would do well due to high Demand and conducive economic conditions. Sometimes, Finance would be in flavor while some other times Real Estate would be the talk of the town. Pharma would do well and suddenly Consumption Stocks would surge. Our Stock Market is extremely dynamic. Traders and Investors rotate and churn their money from sector to sector based on the performance and overall growth prospects of various sectors & companies. Hence, you will see some sectors dipping while some other sectors booming up. To avoid serious losses, investors Diversify their Investments into various sectors which they understand. In this way, one sector's notional profit would neutralize another sector's notional loss and hence, hopefully, capital would not degrade.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Most of the Mutual Fund houses follow this principle of Diversification so that the portfolio gets a steady growth without capital degradation over a longer period of time. But again, when we have a large number of companies in our portfolio, it again becomes difficult to track their performance and prospects. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">In Diversification, our capital gets divided over a number of companies across sectors. Let's assume that we had Rs 1,00,000 which we distributed among 20 companies in January 2016 (Each company Rs 5000)</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">I have taken the first few companies which are popular and having high market cap and normally part of any diversified portfolio. The last few companies are companies which are not very big but growing well and have been in news for various reasons.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">This is how our portfolio would look today.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If you notice, the returns in the above example portfolio is 12% in the last one year. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">The Nifty has moved from 7458 to 8362 in the last one year. This is around 12% gains from overall market. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In the above example, some companies gave negative returns and some outperformed. However, the final gain is still 12%. This means that capital was not lost in this exercise with the above companies.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">With a decent Diversified Portfolio, we might get steady returns which might be on the lower side. The returns basically depend on how all companies really performed in our portfolio.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There is a famous saying - Never Put all your eggs into one basket.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There is another famous saying - Put all your eggs into one basket but ensure that you are closely monitoring the basket</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Contradictory right? Confusing? Assume that you had invested all your money into HCC in January 2016. All eggs in one basket. You would have doubled your capital from Rs 1 Lakh to Rs 2 Lakh. However, what would have happened if you had invested your capital into INDIGO in the last one year. All eggs in one basket. You would have had Rs 80400 with you. What if you needed some money when your Concentrated Portfolio was in RED. Will you be able to sell or liquidate? Having all investments in one company puts you in a risky position. Whether you are in profit or loss, you would spend hours everyday in front of the computer screen waiting for the loss to become profit or the fear of losing profits. Exit point becomes very difficult when all eggs are in one basket. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Let us say that we have researched a company very well. We have done all homework and all our calculations are perfect as far as the future is concerned. We put all our money on that company. What are the risks? What if the company takes more time to perform? Maybe 2-3 years. What if the macros do not support during the current year? What if some order doesn't materialize? Basically there is a risk of money getting stuck mainly when we need it. We might remain in notional loss for a couple of years. Sometimes, for a month, we will be in profit. For next quarter, we might be in loss before swinging back into profits. What if better opportunities come up when we are in notional loss?</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">When we put our money into one company, we need to have a Long Term Mindset. We need to allow the company to manifest through all our calculations. We need to stay with the company while it grows. It might take a long time, but if our calculations and homework is good, we will eventually make a lot of money. We need to closely track the performance of the company every quarter and ensure that it is on track. This is the commitment we need to make before concentrating our money on one company. We also need to ensure that we do not get distracted by other new stories so that we can focus on the one invested.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">There are lots of investors who have been really part of multi-bagger companies by investing a big sum of money and staying with the company as it grows. </span></span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">If a multi-bagger is part of a diversified portfolio, the gains get subdued. Like in above example, HCC and INDIGO were part of Diversified Portfolio which gave 12%. However, concentrating in HCC would have given 100% returns and same amount in INDIGO would have been in Notional Loss. So, what do we do? Can we take best of both worlds?</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">According to me, the best combination is to Concentrate Capital in a small Diversified Portfolio of companies. The number of companies in portfolio can vary from 3 to 10 based on the individual. Of course, this is just my personal opinion and has worked for me.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">If we can find 5 companies from 5 sectors which are bound to outperform in the next 3 to 5 years and invest 20% of our capital into each, we can end up making a lot of money. But with Concentration comes great Responsibility. We need to ensure that our 5 companies are on track and perform as per our calculations in the long term. We should also have the guts to accept our mistakes and move on, if the company doesn't perform as per our expectations. We should also have the Patience to wait until the company really gets the value from investors in long run.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Always remember that Compounding is a Powerful Tool in the Investing World. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">5 companies which compound well can make your portfolio huge in a matter of 5 years.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Another investor friend of mine shared with me a unique portfolio structuring which I found quite interesting. He has 3 companies in Core Portfolio which is around 80% of his Capital. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">For eg:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">30% of PF - Company 1 (High conviction and tracking)</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">25% of PF - Company 2 (High conviction and tracking)</span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">25% of PF - Company 3 </span><span style="font-family: "trebuchet ms" , sans-serif;">(High conviction and tracking)</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Remaining 20% - Invests in trades, positional investing, small bets, penny stocks, high beta stories etc.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Whatever profits he earns from the "remaining 20%", he pumps it back to the 3 top companies. He also shared with me that he never ever touches his Core Portfolio of 3 stocks.</span></span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Many investors, out of greed for quick money, play with core portfolio instead of keeping it untouched. We end up allocating small portion for high conviction stocks and heavy portion for bets. Because of this, we miss the real opportunity to make money in stocks which perform and lose by taking huge bets.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Today, I have touched upon various structures just so that we can put on our thinking cap.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Finally, its upon us to decide how to structure our portfolios. Let us understand ourselves well and decide our own strategy. Let us spend good time in analyzing future prospects of companies which we understand from sectors which will do well in times to come. </span></span><br />
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Remember - THE BEST STRATEGY IS THE ONE WHICH WORKS, FOR US.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Let us make this decision wisely and make good money. HAPPY NEW YEAR 2017 !!!</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Good luck,</span></span><br />
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com8tag:blogger.com,1999:blog-303837536783625365.post-44921667533724116082016-10-14T09:31:00.000+05:302017-01-21T14:35:06.723+05:30Pledging of Shares and its Impact<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In the Shareholding Pattern of Listed Businesses, we see a section called Pledged/Encumbered shares. Ever wondered what it meant? Who pledges shares and to whom? Why does this happen? What's the impact? What should we do? <a href="http://www.fundamental-investor.com/2016/10/pledging-of-shares-and-its-impact.html" target="_blank">Read on</a>...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dear investors and friends,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I have been getting really busy and hence trying to write one article a month.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">So far, we have all got familiar with some market jargons and we also covered how to read the shareholding of a business. I got a good number of emails and it was nice to see all of you actually studying the shareholding patterns of your businesses and replying back. I like it :-)</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank"><span style="font-size: large;">Here is the link for the best articles till date</span></a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><a href="http://www.fundamental-investor.com/2016/05/shareholders-in-stock-market.html" target="_blank"><span style="font-size: large;">Click here to read about the Shareholders of a Business in the Stock Market</span></a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, lets come to another important aspect which we investors look at in a business - The pledging of shares.</span><br />
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<a href="https://1.bp.blogspot.com/-yzcnOjk1F9U/V_4KlZ2o4jI/AAAAAAAAAlc/xvx-Efc_sXQgxTt1tsgLsEgaLbCDC_xkACLcB/s1600/Pledging.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://1.bp.blogspot.com/-yzcnOjk1F9U/V_4KlZ2o4jI/AAAAAAAAAlc/xvx-Efc_sXQgxTt1tsgLsEgaLbCDC_xkACLcB/s320/Pledging.png" width="320" /></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, what is pledging of shares? Who does it? Why is it done? What is the impact? I think you need to understand these concepts thoroughly.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A promoter generally would oversee the operations of the company and is the brand ambassador of the company. He/She believes in the company and is the face of the company. The promoter's report card will certainly drive the valuations of a business. If the promoter is having an excellent track record, is honest, a visionary, investor friendly etc., the business has a good chance of getting a nice and strong, smooth valuation.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, a promoter normally would hold a good chunk of shares (It is present in the Shareholding Pattern or SHP). A good promoter holding normally signifies the confidence of the promoter in the company. A promoter buying shares from the secondary market also is a positive sign for long term investors. As you very well know, nothing happens overnight.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, when promoters need money, they pledge/encumber some or all of their shares with some lenders. This essentially means that their shares are given as security/collateral to the lenders in exchange of loans. Since equity is a highly liquid asset, the lenders also are in an advantage to recover the money easily (in case there is a major problem) as compared to other security. Normally promoters pledge their shares to raise money for capacity expansion, pay off debts. etc. Ideally, a high promoter pledging signifies that the cash is not utilised well and it calls for caution.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Please note that, pledging doesn't mean that the lenders own the business. The ownership of the shares is still with the promoters only. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, normally, what is the impact of promoter pledging? Firstly, it should be very clear as to why the promoters have pledged their shares. More importantly, the plan for releasing the pledged shares also needs to be clear for investors. Ideally, I do not find it wrong if a promoter pledges his shares and is slowly releasing them from pledge over quarters with higher cash flows. The problem is when there is no certainty or vision of when the shares will be released. If there is no plan, poor investors get caught in the volatility of the share price due to greed (as always).</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Also, you will find that the share price of highly pledged businesses will be very volatile in a falling market. This is mainly because, if the market price of the business falls, the promoter will have to pump in more assets for the loan taken and hence, there is extreme pressure on the share price and the promoters. Also, please note that if the promoter is not able to service or repay the loan on time, the lender may sell the shares in the open market to recover it. This would bring the valuations extremely low and would result in huge wealth loss for investors who didnt do their homework. Also, if the share price falls below a certain price limit, the lenders can choose to sell off the shares to recover the collateral. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today, there are some regulations for the pledging and all, but there is a large number of companies who have pledged their shares. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Time to have a look at your businesses and see if there is a pledging. If yes, why? What is the plan to release them? Is the business intact? You need to know this, my friends. If not, its time to pick the phone, write emails and bug the CS/MD until you get the answers. Else, you will be sitting on a volatile stock which would be a risk.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Think about it.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com7tag:blogger.com,1999:blog-303837536783625365.post-60975901732503994052016-09-02T13:53:00.004+05:302021-06-09T14:34:10.367+05:30Impact of Bonus and Split of Shares - Myth Unraveled<div dir="ltr" style="text-align: left;" trbidi="on">
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Multiple listed companies go for a Bonus Issue or Split their shares. Do we actually understand what that means? What is the implied impact? What does it really signify? Should we get excited? Has anything really changed? <a href="http://www.fundamental-investor.com/2016/09/bonus-issue-split-of-shares.html" target="_blank">Read on...</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Dear investors and friends,</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">In my investing experience and my interaction with various investors, I see a lot of people getting very excited and overwhelmed when a listed business offers bonus shares or splits the shares. Some are carried away without actually understanding the basis or the concept. I actually get a lot of emails asking whether a business can be bought since it is going for a split or offering bonus shares. Today, I would like to present a good perspective about the two and the difference. Once this is properly understood, all of us can take an informed decision and try to put the pieces together.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Before we move ahead, please read the following articles, if you have not yet read them. This is important for some terms which Ill be using in this article.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><a href="http://www.fundamental-investor.com/2016/02/initial-public-offering-ipo.html" style="font-family: "trebuchet ms", sans-serif;" target="_blank">IPO - Initial Public Offering</a></span><br />
<a href="http://www.fundamental-investor.com/2016/02/stock-market-basics-value-vs-price.html" style="font-family: "trebuchet ms", sans-serif;" target="_blank"><span face=""trebuchet ms" , sans-serif" style="font-size: large;">Stock Market Basics - Value vs Price</span></a><br />
<a href="http://www.fundamental-investor.com/2016/05/shareholders-in-stock-market.html" style="font-family: "trebuchet ms", sans-serif;" target="_blank"><span face=""trebuchet ms" , sans-serif" style="font-size: large;">Shareholders in the Stock Market</span></a><br />
<a href="http://www.fundamental-investor.com/p/articles.html" style="font-family: "trebuchet ms", sans-serif;" target="_blank"><span face=""trebuchet ms" , sans-serif" style="font-size: large;">Best Articles of FI</span></a><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: medium;"><span face=""trebuchet ms" , sans-serif" style="font-size: x-small;"><br /></span><span style="font-size: large;">Alright, lets understand the Bonus issue first.</span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: medium;"><span style="font-size: large;"><b style="background-color: yellow;"><u>Bonus Issue:</u></b></span></span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">When a business offers shares to others, the understanding is that, the profit and loss will be borne by investors as well (in terms of market price). Whenever there is a surplus earnings which a business makes, the patient investors get rewarded with a small part of the earnings called dividends. The rest is kept as reserves and shown in the balance sheet as well. Many companies choose to keep the entire earnings with themselves and let it grow over a period of time. This accumulates over a period of time and finally the company decides to distribute a huge chunk. Instead of doing this in terms of dividends, the businesses decide to expand their authorized share capital by increasing the number of shares. What this essentially means is that the company converts a part of their reserves into shares.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">From my previous articles, I am sure you understand some basic terms. Let's try to put the above understanding in terms of an example.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Lets say that a company has issued 1 Lakh shares to the public at Face Value 10. Lets say that the reserves are 100 Lakh (1 Cr). Let us assume that the company wants to give 1 bonus share for every existing share. This means that the Paid Up Share capital will now increase by 1 Lakh shares. </span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span face=""trebuchet ms" , sans-serif" style="font-size: large;"><br /></span></div><div dir="ltr" style="text-align: left;" trbidi="on"><span face=""trebuchet ms" , sans-serif" style="font-size: large;">Now, for a FV of 10, out of Reserves of 1 Cr, 10 Lakh will be used to create the extra 1 Lakh shares at FV 10.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Number of shares created by reserves = Part of Reserves / FV</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">1 Lakh = 10 Lakh / 10</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">So now, in addition to the 1 Lakh shares in the market, we have 1 Lakh shares created out of reserves. This means that for every share the company has given, there is one bonus share. This comes out as 1:1 bonus issue.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Now, there will be 2 Lakh shares in the market. Now since the number of shares have doubled, the market price would halve. Essentially, please remember that market price would not change in terms of value since nothing has changed in the company in terms of its business. So, even though the number of shares have doubled, there would be no increase in the value of the holding in any way.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">If the market price of the share was Rs 100, after the bonus issue, it would be at Rs 50.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Market cap before bonus issue = Rs 100 x 1 Lakh shares</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Market cap after bonus issue = Rs 50 x 2 Lakh shares</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Market cap has no effect.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Now lets understand the stock split.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><b><u style="background-color: yellow;">Stock Split:</u></b></span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">A company's market price depends on its profitability, sustainability and future vision. As a company keeps outperforming, its market price goes up and up. There are so many companies like MRF, Eicher, Page etc which trade at a very high price. For eg, as I write this article, MRF is trading at around Rs 38000 with a Face Value of Rs 10. Lots of retail investors cannot afford to buy even 1 share of MRF since it is quoting at such a price. If an investor wants to start a SIP at Rs 10000 per month, he will not be able to buy a single share of companies trading at above Rs 10000.</span></div>
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><a href="http://www.fundamental-investor.com/2016/03/become-rich-with-systematic-investment.html" target="_blank">Read about Getting Rich with Systematic Investment Plan here</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">To help all investors to participate and own shares in a business, companies go for a stock split. A stock split means splitting the stock into multiple smaller units of lesser Face Value, so that the liquidity increases. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">If a company has 1 Lakh shares of FV 10 and is trading at Rs 20000 and decides to split the shares into 5 parts, we will have each share of Rs 4000. </span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Market cap before split = 1 Lakh x 20000 (FV 10)</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><span face=""trebuchet ms" , sans-serif" style="font-size: x-small;"><span style="font-size: large;">Market cap after split = 5 Lakh x 4000 (FV 2)</span></span></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">So even though the new market price becomes Rs 4000, the value doesn't change. I hope you are understanding the difference between value and price in this article as well..</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Lots of punters use these opportunities to artificially raise the price and many poor investors get excited by the bonus/split news and get stuck at high levels. With a good understanding, this can be avoided.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Now with this understanding, you will be able to analyze things in a more mature way. You will not be carried away by any of these. You need to understand that, by giving a bonus or split of shares, nothing really has changed. Everything depends on how the company performs and that's all matters.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Having said this, read this article on how patience alone can create wealth in long term <a href="http://www.fundamental-investor.com/2016/06/10000-compounded-more-than-500-cr.html" target="_blank">(Click here)</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><b style="background-color: yellow;">Please remember that Market cap is a function of future profits and trends and since nothing has changed, it would remain same.</b></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Think about it :-) Any experiences?? Good, bad, ugly?? Let us know..</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Good luck,</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><span face=""trebuchet ms" , sans-serif" style="font-size: x-small;"><span style="font-size: large;">Fundamental Investor</span></span></span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com17tag:blogger.com,1999:blog-303837536783625365.post-71580168138387194002016-07-16T15:14:00.001+05:302016-09-02T13:56:13.922+05:30Wealth Creation with Natural Business Partners<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Can we ever imagine creating wealth using the waste we generate every single day? That too, with business partners who work well with you at all times? Nature is the best, when we cooperate. Introducing Vellore Srinivasan ji and his amazing initiative using Solid and Liquid Resource Management (SLRM) which he has popularised and proven over the years... <a href="http://www.fundamental-investor.com/2016/07/wealth-creation-with-natural-business-partners.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors and friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">How are you all doing? I am sure many will be enjoying the returns in solid stocks in the last few months. Patience has always helped, I am sure.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">New readers should have a look at the fundamental articles in this link (<a href="http://fundamental-investor.com/p/articles.html" target="_blank">Click here</a>)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Last time, I had introduced Narayana Peesapaty ji for his edible cutlery initiative - <a href="http://www.fundamental-investor.com/2016/03/edible-cutlery-tasty-eco-friendly-innovation.html" target="_blank">Click to Read</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I actually happened to visit a scrap/junk shop a month back. I found the owner really "well to do" and I started digging deeper. I found that he had amazing items in his scrap yard. It was a very very clean & organised place. His workers were busy in segregating, cleaning and stacking the waste. Every couple of hours, the so called "waste" was coming in a van into his junk yard. He had amazing computer tables, chairs, televisions, dustbins, buckets, flower pots, pipes, screws, pins and what not. Anything which is garbage or useless for anyone, ends up in shops like his. The prices were very good and the products were clean. The perspective is changing. He had been making gold out of waste.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Some statistics (from Shri Prakash Javedekar's press conference in April 2016)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">62 million tonnes of waste is generated annually in the country at present, out of which 5.6 million tonnes is plastic waste, 0.17 million tonnes is biomedical waste, hazardous waste generation is 7.90 million tonnes per annum and 15 lakh tonne is e-waste.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">43 million TPA is collected, 11.9 million is treated and 31 million is dumped in landfill sites, which means that only about 75-80% of the municipal waste gets collected and only 22-28 % of this waste is processed and treated.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Waste generation will increase from 62 million tonnes to about 165 million tonnes in 2030.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today, waste management has become the need of the hour. Waste is not going to get any lesser. Its a common sight to see so much garbage being thrown out on the streets.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We need to act NOW...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today, I am going to introduce all of you to an inspiring person, Vellore Srinivasan ji, who has some amazing business partners. They are not people who wear suit and boot, travel in amazing cars or stay in awesome bungalows. They neither ask for salary hikes, nor strike at any point in time. However, they are very much part of nature, as much as we are.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">While many of us are helplessly living our lives, Srinivasan ji has been creating wealth from waste using our ancient technology and working closely with nature. He has impacted so many lives by educating and employing them to make this world a better place to live in.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The following piece taken from The Hindu, based on Srinivasan ji 's interaction in Bidar.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">“With planned waste management based on people’s participation, governments can turn garbage into a gold mine,” the waste management expert Vellore C Srinivasan ji said.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">“Making cities free of garbage is a headache for most city governments in the country. With a little effort, garbage can be changed into a source of job creation and endless resources,” he aded.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">According to Srinivasan ji, segregated and processed garbage yielded over 150 types of recyclable materials and over 200 byproducts that had an assured market.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Srinivasan ji feels that the success of a waste management programme hinged on multiple levels of segregation at home and at the processing centre. Identifying different types of garbage and using distinct processing techniques to clean, treat and sell them, training workers and officials and creating awareness among residents to work with the government are the biggest challenges.</span><br />
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<a href="https://2.bp.blogspot.com/-0wgwqjKJw2Y/V4n_nA2WVWI/AAAAAAAAAis/JqpPyLshwRwrR_kHRY_McADOVMScJU47wCLcB/s1600/30bg_BIRBD_wast_31_2603950f.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="250" src="https://2.bp.blogspot.com/-0wgwqjKJw2Y/V4n_nA2WVWI/AAAAAAAAAis/JqpPyLshwRwrR_kHRY_McADOVMScJU47wCLcB/s400/30bg_BIRBD_wast_31_2603950f.jpg" width="400" /></span></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Srinivasan ji, who was featured on Aamir Khan’s TV show ‘Satyameva Jayate’, prefers to call it solid and liquid resource management (SLRM). “Calling it garbage or waste creates a mental block in most of us who don’t want to take it up later. Hence there is a need to change the vocabulary,” he said. He said that Vellore town had evolved a system of waste management that used age old techniques like composting and targeted processing. The city had eliminated roadside dust bins and was using self-help groups to collect segregated waste from every family. Various processing plants create products like fertilizer, natural gas, plastic and metal which were always in demand, he said. This had come to be known as the Vellore technique and was now followed by several cities.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">He gave examples of cities like Vellore, Coimbatore, Jodhpur and Ambapuri that had successfully adopted the SLRM technique.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">He showed videos of how Mysuru City Corporation was using vegetable waste to feed cows that produced compost, fish market waste fed the ducks that aerated waste waters and how chicken and fish ate away larvae and maggots and completed the cycle.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">“Bidar city has 45,000 houses and 4,000 shops and offices. If it can properly segregate and process the garbage that it produces on a daily basis, the city municipal council can earn up to Rs. 40 lakh a month from recycling and reuse alone,” Srinivasan ji said. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">He said that a city like Bengaluru could earn over Rs. 1,500 crore a year from garbage, rather than spending similar amounts on garbage disposal, he said</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Watch this video to know more - (</span><a href="https://www.youtube.com/watch?v=6357WexayZU" style="font-family: "Trebuchet MS", sans-serif;" target="_blank">Click here</a><span style="font-family: "trebuchet ms" , sans-serif;">)</span></span><br />
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<span style="font-size: large;"><iframe allowfullscreen="" class="YOUTUBE-iframe-video" data-thumbnail-src="https://i.ytimg.com/vi/6357WexayZU/0.jpg" frameborder="0" height="266" src="https://www.youtube.com/embed/6357WexayZU?feature=player_embedded" width="320"></iframe></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Srinivasan ji was also featured on Satyameva Jayate show. This video is also amazing (<a href="https://www.youtube.com/watch?v=7fj6CZOfxAU" target="_blank">click here to view</a>):</span><br />
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<span style="font-size: large;"><iframe allowfullscreen="" class="YOUTUBE-iframe-video" data-thumbnail-src="https://i.ytimg.com/vi/7fj6CZOfxAU/0.jpg" frameborder="0" height="266" src="https://www.youtube.com/embed/7fj6CZOfxAU?feature=player_embedded" width="320"></iframe></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A document which I found online giving more insight about the model SLWM (Solid and Liquid Waste Management)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://rural.nic.in/sites/downloads/pura/ZWM_models.pdf">http://rural.nic.in/sites/downloads/pura/ZWM_models.pdf</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Srinivasan ji is an inspiration for all of us. I am proud that a fellow Indian has been taking this noble initiative and thinking about our future generations. Can we all do our bit?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Something to think about in the weekend.</span><br />
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com13tag:blogger.com,1999:blog-303837536783625365.post-46946280360407205602016-07-02T22:48:00.002+05:302016-07-16T15:16:36.595+05:30Play Safe by Investing in Debt Instruments<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We all want to create enormous amount of wealth by investing. However, a lot of us would have burnt our hands by playing in the stock market. Can we play safe and still make decent returns over the long run? After all, we need to beat inflation as well right? <a href="http://www.fundamental-investor.com/2016/07/debentures-bonds-fds.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dear investors and friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope you are having a good time with family and friends. <a href="http://www.fundamental-investor.com/2016/06/mutual-funds.html" target="_blank">In my previous article, we had a look at the various aspects of investing in a Mutual Fund</a>. Obviously, a mutual fund might end up giving awesome returns in the longer horizon, but it has its own risks involved.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Saving for one's future is a habit which needs be cultivated early in one's career. Disciplined investing for oneself in instruments which compound can create enormous wealth in a matter of a decade.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Before, we proceed, please read the following two article as well (if already not read)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/2016/04/power-of-compounding.html" target="_blank">Click here to read Power of Compounding</a></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/2016/03/become-rich-with-systematic-investment.html" target="_blank">Click here to read Systematic Investment Approach</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, today, let us discuss about playing safe with our hard earned money. <span style="background-color: yellow;">By investing in equity or equity related mutual funds, we actually become shareholders of a company or a business</span>. While we would end up making money while the business does well, we also have an enormous risk of losing our capital if the business does not turn out as per expectations of the street. Also, if the overall market loses sheen due to economic conditions, world instability, sentiments etc, we would end up in dire straits.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">However, <span style="background-color: yellow;">imagine a situation where we are lending money to someone else for a fixed period of time</span>. Our capital would be preserved for sure and also, the borrower would pay some pre determined interest to us. Isn't this a much safer option than investing directly into equity or equity mutual funds?</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">It is always good to have some exposure in safe instruments. Today, we will look at 2 such instrument</span><span style="font-family: "trebuchet ms" , sans-serif;">s - Fixed Deposits and Debt Funds</span></span><br />
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<span style="font-size: large;"><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif;"><u>Fixed Deposit:</u></span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">This is an instrument where you park your capital with a bank for a fixed period of time after which, you will receive your capital along with interest. The interest is taxed as per your income tax slab set for you. If you close the fixed deposit (by withdrawing your capital) before the maturity period, you will have to pay a penalty for the same.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;"><u>Debt Mutual Funds:</u></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, before we move into debt mutual funds, we need to understand two more instruments:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">Debentures </span>- Debentures are basically loans given to companies. This is debt for the company, for which the lender (us) is entitled to a fixed interest payment for a fixed period of time. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">Government Bonds</span> - Similar in concept, only instead of company you have given a loan to the Government.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Debentures holders are given first preference in case of a company winding up. Also, the interests for the debenture holders is first paid off before giving dividends to the other shareholders. There are various types of debentures (can be a mix of the below):</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">- Convertible Debentures</span></span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Most debentures have the option of converting into shares of the company after a fixed time. Since the conversion features is present, the rate of interest is generally lower here.</span></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">- Non convertible Debentures</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">However certain debentures cannot be converted into shares. These are called non-convertible debentures. Since, there is no option of ever converting this into shares, the rate of interest is generally higher that the Convertible Debentures.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">This is where the issuing company gives you a security backing for the debt taken. This can be in the form of some asset of theirs.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">- Unsecured debentures</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">No security for the debt taken, completely based on the accountability and trust that the company or government will not default the repayment.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">- Payout Debentures</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">In payout option you receive your interest payouts regularly and the interest is not reinvested to the capital.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">- Cumulative Debentures</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The interest earned every year is kept with the company & re-invested which means you are earning interest on interest. </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Cumulative option has a higher effective yield, i.e. you earn more on them.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Debt Mutual funds are those where the capital allocation happens mainly into debentures and bonds.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, basically, a Fixed Deposit or a Debt Fund will give you low returns as compared to equity investments, but provide a high margin of safety by providing capital protection and interest payment.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, which is better? Is it Fixed Deposit or Debt Funds?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">For this, we need to understand a few things. Both Fixed Deposits and Debt Funds would provide almost similar rate of interest to the lender (investors like us). However, when it comes to taxation, there is a good amount of difference.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">For a debt funds here is the tax:</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">1) Interest taxed as per income tax slab if sold within 3 years (Short Term Capital Gain)</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">2) Interest taxed as 20% of the interest after indexation (Inflation considered)</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">For a Fixed deposit, the tax on the interest earned is as per the income tax slab. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Now, let us say that we invest a capital of Rs 1,000,000 (Ten lakh) with an interest of 8% per annum, an inflation of 5% per year and tax slab of 30%.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- After 3 years, the sum is yearly compound interest of 8% to the capital of 1,000,000</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- I have assumed inflation of 5% for 3 years. Indexed cost of purchase is calculated by compounding the capital at 5% for 3 years (There is another formula for it, but using this just to keep things simple. Concept is important. Please have a detailed read on Indexed cost of purchase or I will write another article on the same)</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Since it is more than 3 years, Debt Funds are taxed at 20% of the Taxable Gain</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Fixed deposit is taxed at 30% of the Taxable Gain</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Effective return is per year (Compound interest after tax)</span></div>
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">As you can clearly see, the returns from the debt fund clearly beats the returns from the fixed deposit mainly due to the indexation benefit.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, we need to clearly understand that Fixed Deposits comes with most minimal risk. The debentures and bonds have a clear advantage due to their taxation benefits as shown above.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><u style="background-color: yellow;">Risks in Debentures:</u></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">While debentures are safer than equity and tax efficient compared to Fixed Deposits, they come with certain risks which should be known:</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- The credit rating of the company issuing the debenture is extremely important. Their repayment history also needs to be monitored</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Higher the rate of return from a debenture, the higher the default risk</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- NCD (Non convertible debenture) offer higher risks than Convertible Debentures due to higher rate of interest</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Unsecured Debentures are higher risk compared to Secured ones</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Since there is a lock in period for taxation benefits, debentures are illiquid compared to equity</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Longer the holding, the lesser the risk of default - This is key to understand</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Ideally, the initial years of our career are the ones where we can take a reasonable amount of risk. We may choose to allocate a major part of our portfolio in solid companies and progressive mutual funds. Along with dividends of the companies, we also enjoy the long term tax free capital gains. We can allocate a smaller portion of our savings into debt instruments as well.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">However, as we get closer to retirement, it is always better to park a large capital in Debt Instruments to ensure a Fixed Risk Free Income. We may choose to allocate to equity as well, but can be minimal.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Understanding what kind of person we are is extremely key to investing..</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/2016/03/are-you-investor-or-trader-in-stock-market.html" target="_blank">Read - Are you an Investor or Trader in the Stock Market</a></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I hope you got a decent understanding of Debt Instruments and its advantages. With this basic information, I urge each of you to dig further and let me know if you have any questions which I can try to answer.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We are all learning together.. Enjoy..</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large; line-height: 30.6px;">Please share this post on multiple public platforms so that many more can get benefited and master the art of Investing in the Stock Market !!!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com16tag:blogger.com,1999:blog-303837536783625365.post-59453502576126389142016-06-19T23:00:00.002+05:302016-07-02T22:50:29.792+05:30Wealth Creation with Mutual Funds<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">The English word Mutual means "held in common by two or more parties". So when there is something common among a large group of people, it is called Mutual. </span><span style="font-family: "trebuchet ms" , sans-serif;">A Fund is a place where a large group of people contribute something. Now, since the two words are clear, let us see what Mutual Funds are really all about. <a href="http://www.fundamental-investor.com/2016/06/mutual-funds.html" target="_blank">Read on...</a></span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dear investors & friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope you are all doing great. We have seen a lot of simple concepts until now. Just for your benefit, I have created a Menu bar with all the articles segregated according to their relevance. I hope the new visitors will go through my previous articles to understand some basic fundamentals which are key to creating wealth in the Stock Market.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="http://www.fundamental-investor.com/p/articles.html" target="_blank">Click here for all previous articles</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In the last couple of years, I have received a lot of email queries asking me, "Which is the best investing instrument available today?". The answer truly depends on the lifestyle, personality, financial goals & saving habit of the individual.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I am sure most of us have been investing in shares. Today, let us look at another investing instrument which is considered much safer and steadier as compared to investing directly in equity shares. We have all heard about Mutual Funds. Today, let us try to understand what they really are.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">A Mutual Fund is an investment instrument that allow various investors to pool in their capital or resources in order to collectively purchase stocks, bonds or other such securities.</span> Please remember that, in this unique investment vehicle, you are joining hundreds and thousands of other investors to invest in a common pool. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let us take a quick look at the brief history of Mutual Funds in India. The Mutual Fund industry in India began in 1963 with the formation of the Unit Trust of India (UTI) as an initiative of the Government of India and the Reserve Bank of India. Much later, in 1987, SBI Mutual Fund became the first non-UTI Mutual Fund in India.</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">Subsequently, the year 1993 heralded a new era in the Mutual Fund industry. This was marked by the entry of private companies in the sector. After the Securities and Exchange Board of India (SEBI) Act was passed in 1992, the SEBI Mutual Fund Regulations came into being in 1996. Since then, the Mutual Fund companies have continued to grow exponentially with foreign institutions setting shop in India, through joint ventures and acquisitions. </span><span style="font-family: "trebuchet ms" , sans-serif;">As the industry expanded, a non-profit organization, the Association of Mutual Funds in India (AMFI), was established on 1995. Its objective is to promote healthy and ethical marketing practices in the Indian Mutual Fund Industry. SEBI has made AMFI certification mandatory for all those engaged in selling or marketing mutual fund products.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">Fund Manager</span> - This is probably the most important aspect of investing in a pool. When multiple investors collect their money, someone needs to manage it meticulously. The Fund Manager is responsible to invest the collated money on the behalf of investors into various investing instruments. This is a huge responsibility since he/she is managing hard earned money of the investors. The track record of the Fund Manager is extremely important while picking a Fund.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">Assets under Management (AUM)</span> - The total market value of the collective funds invested. If you look at any mutual fund, you can find the AUM Value. The higher the AUM, the more stable the fund is.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">Mutual Fund Company</span> - The organization which manages the funds of the investors.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">Portfolio</span> - The combined underlying holding of the Fund is known as Portfolio. </span></span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;"><span style="background-color: yellow;">NAV (Net Asset Value)</span> - NAV</span><span style="font-family: "trebuchet ms" , sans-serif;"> is a Mutual Fund's price per share or Exchange-Traded Fund's (ETF) per-share value. In both cases, the per-share rupee amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">Units</span> - The portion of the portfolio which the investor owns in the Fund. Generally, based on the NAV, we can buy the number of units which we can afford based on our investment plan.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There are many kinds of Mutual Funds in India today:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Open-Ended Funds</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this scheme, the investors can buy or sell units at any point in time. Generally, this does not have any lock-in period or maturity date. Under Open Ended funds, we can further classify as follows - </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">a) Equity Funds</span> : Equities are the most popular mutual fund category amongst retail investors. Although it could be a high-risk investment in the short term, investors can expect capital appreciation in the long run. If you are at your prime earning stage and looking for long-term benefits, growth schemes could be an ideal investment. <span style="background-color: yellow;">In equity funds, you have funds allocating capital to certain sectors (Sectoral Funds), index stocks (Index Funds), Small/Mid/Large Cap stocks or Diversified across various sectors.</span> </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">In Equity Funds, apart from the above mentioned, the <span style="background-color: yellow;">Tax Saving Equity Linked Savings Scheme (ELSS)</span> is very popular. These funds choose outperforming companies which give return over the long term. Many investors choose these Tax Saving ELSS Mutual Funds to save tax and invest over a longer horizon. Once the Tax Saving ELSS scheme is chosen, the <span style="background-color: yellow;">capital is locked for 3 years</span> from the time the units come into the Demat Account.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">b) Debt Funds</span> : In a debt scheme, a major part of the fund is channelized towards debentures, government securities, and other debt instruments. Although capital appreciation is low (compared to the equity mutual funds), this is a relatively low risk-low return investment avenue which is ideal for investors seeing a steady income.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">c) Money Market Funds</span> : This is ideal for investors looking to utilize their surplus funds in short term instruments while awaiting better options. These schemes invest in short-term debt instruments and seek to provide reasonable returns for the investors.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">d) Balanced Funds</span> : This scheme allows investors to enjoy growth and income at regular intervals. Funds are invested in both equities and fixed income securities; the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive investors.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Closed Ended Funds</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In India, this type of scheme has a pre defined maturity period. Please note that investors can invest only during the initial launch period known as the NFO (New Fund Offer) period. This will be announced when the Fund is getting launched and the brokers come to know about it.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;"><span style="background-color: yellow;">a) Capital Protection</span> : The primary objective of this scheme is to safeguard the principal amount while trying to deliver reasonable returns. These invest in high-quality fixed income securities with marginal exposure to equities and mature along with the maturity period of the scheme.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">b) Fixed Maturity Plans (FMPs)</span> - These schemes normally comprise of debt instruments which mature in line with the maturity of the scheme, thereby earning through the interest component (also called coupons) of the securities in the portfolio. FMPs are normally passively managed, i.e. there is no active trading of debt instruments in the portfolio.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Interval Funds</u></b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Generally, a combination of Open and Closed Ended funds where investors can trade units at pre defined intervals. Also, periodically, the investment company offers to repurchase the shares from shareholders. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Advantages of Investing in Mutual Funds</u></b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) The main advantage of investing in a Mutual Fund is that the <span style="background-color: yellow;">Fund Manager takes care of your Portfolio allocation and works hard to create wealth for you</span>. They analyze the Market trends & Sector Growth to choose the best companies to invest at any given period of time. Since they do all the homework, you will normally create good amount of wealth in a long term (10 to 15 years)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) When we collectively pool into a Mutual Fund, the money is invested in a wide range of securities. <span style="background-color: yellow;">Due to this diversification, the risk is minimized</span>. When we choose our funds based on our temperament and long term goals, we can create wealth in the long term. Choosing the type of mutual fund (Sector, Large/Mid/Small Cap, Debt etc) is key.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) Even small investors with Rs 500 per month can take part in the Mutual Funds scheme. This is a very big advantage and <span style="background-color: yellow;">ensures maximum participation</span>. When the number of investors become larger, the risk also gets distributed evenly. This is the reason, we will not see major fluctuations in a Mutual Fund NAV on a day to day basis</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) Mutual Funds provide very <span style="background-color: yellow;">high liquidity for the investors</span>. It is very easy to sell off units at any given point of time if we are in need to money. In equities, there are some shares which have low volume. That kind of risk is minimal in Mutual Fund since there is diversification.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">5) <span style="background-color: yellow;">Tax Saving ELSS Funds</span> are the best way to save tax and create wealth over a long term.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">6) <span style="background-color: yellow;">Normally, the returns on most mutual funds, when held more than a year, are tax free</span>. This is also a very good motive to hold quality funds for longer term.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Disadvantages of Investing in Mutual Funds</u></b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) The main disadvantage of Mutual Funds is that you <span style="background-color: yellow;">cannot expect to get quick returns</span>. You need to give a Mutual Fund time to perform. In equities, the returns can be much faster. When the major population of investors are looking at daily returns, this is the wrong place for them.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) The Mutual Funds are classified as High, Medium and Low Risk schemes. I have seen many investors who do not choose the Funds based on their risk taking ability. Even though these things are clearly mentioned in the Offer Document, investors tend to ignore them. I am placing this in disadvantage section, since <span style="background-color: yellow;">the investors have to completely understand the allocation, returns, risks etc while investing in a Mutual Fund</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) Even though locking periods are a necessity in Mutual Funds, <span style="background-color: yellow;">investors get trapped when they need urgent cash</span>. For example, ELSS has a lock-in period of 3 years. If money is required during this period, the investor will not be able to withdraw the same easily. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) Since Mutual Funds are managed by professional Fund Managers, <span style="background-color: yellow;">investors do not even care to see the Portfolio allocation</span>. Hence, they sometime choose the wrong fund and buy at a high, which gives them lower returns. So, the disadvantage is that <span style="background-color: yellow;">people become lazy</span> and don't perform their homework correctly.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Mutual Funds give us returns in 2 main ways:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Capital Appreciation</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Dividends (Not all mutual funds give dividends)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We may choose to invest in Mutual Funds with a Systematic Investment Plan (<a href="http://www.fundamental-investor.com/2016/03/become-rich-with-systematic-investment.html" target="_blank">Click here to read about SIP</a>)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Mutual Funds mainly work on the Power of Compounding (<a href="http://www.fundamental-investor.com/2016/04/power-of-compounding.html" target="_blank">Click here to read about Magic of Compounding</a>)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The units which we have purchased get into Demat Account (<a href="http://www.fundamental-investor.com/2016/01/choose-perfect-stock-broker-for-wealth.html" target="_blank">Click here to read about Demat Account</a>)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, friends.. Mutual Funds are amazing investing instruments which should be given time to show its real potential. It's a slow and steady way to create enormous amount of wealth in the long term.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Whenever we see an advertisement of a Mutual Fund, we hear - Investments in Mutual Funds are subject to Market Risk. Read the Offer Document carefully before investing.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let's do our own study and create wealth in the Stock Market...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large; line-height: 30.6px;">Please share this post on multiple public platforms so that many more can get benefited and master the art of Investing in the Stock Market !!!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b>Inputs taken from Google, Investopedia, Times of India</b></span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com14tag:blogger.com,1999:blog-303837536783625365.post-2092612311967201052016-06-04T21:26:00.000+05:302016-06-19T23:23:48.413+05:30How a mere 10000 compounded to more than 500 Crore?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">It's been 36 years since Ahmed took his first plunge into this wonderful ownership model. The total worth of his shares is a mind boggling 518 Cr. He has also been receiving dividends which is cumulatively more than 100 Cr. Multiple residents of Amalner have benefited a lot by holding on to their shares for the last 30 years. They believe that there is no reason to sell of their holding, when the leader is able and amazing. Read this wonderful thought provoking article.. <a href="http://www.fundamental-investor.com/2016/06/10000-compounded-more-than-500-cr.html" target="_blank">Click here to read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Dear investors and friends,</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">How are you all doing? So far in my articles, we have covered various fundamental concepts and I sincerely hope that you are able to appreciate the capabilities of this wonderful stock market, with patience and homework. We have seen how this whole thing begins with an <a href="http://www.fundamental-investor.com/2016/02/initial-public-offering-ipo.html" target="_blank">IPO</a>, then trades in the secondary market, <a href="http://www.fundamental-investor.com/2016/04/power-of-compounding.html" target="_blank">power of compounding</a>, <a href="http://www.fundamental-investor.com/2016/03/become-rich-with-systematic-investment.html" target="_blank">systematic investment approach</a> and the <a href="http://www.fundamental-investor.com/2016/05/shareholders-in-stock-market.html" target="_blank">different kinds of shareholders</a>. I had also written a piece on the <a href="http://www.fundamental-investor.com/2016/01/fundamentals-of-investing-in-stock.html" target="_blank">Fundamentals of Investing in the Stock Market</a>. Today, I am going to touch upon a highly thought provoking, interesting journey of some really long term investors.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">350 kms away from the busy city of Mumbai, on the banks of the Bori river, in Jalgaon district, is a small city Amalner. In 1946, a company named Western Indian Vegetables Product Limited (WIPRO Ltd) was listed in the Stock Exchange. </span><span style="font-family: "trebuchet ms" , sans-serif;">In 1947, the company's first plant was setup to make Soap, Vanaspati, Ghee and Edible Oil in Amalner by Mr. Mohammad Hussain Premji. Many residents of Amalner worked in the plant and eventaully became shareholders of the company. In 1966, highly respected, Mr. Azim Premji took over the reins of the company by becoming Chairman.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">A right's offer in the late 1970s wasn't fully subscribed and the Face Value of the Stock was Rs 100 at that time. There were investors who bought just 1 share of the company at that point in time since even a Rs.100 was a big deal. It might be interesting to note that the share price even moved down to Rs 35 without any buyers at one point in time. A few of them held on, with complete trust in the capabilities of the management.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">A resident of Amalner, Mohammed Anwar Ahmed's father owned a large farmland in the 1970's. After his father's demise, he had around Rs. 20000 with him. In 1980, while Ahmed sat near a tea shop, a young stock broker from Mumbai stopped to ask a question. This meeting would change the life of Ahmed. The broker had come to Amalner to buy as many shares as he could on behalf of some clients in Mumbai. The question that the broker asked was, “Do you know anyone here who owns shares in that factory?” pointing to the WIPRO plant. Ahmed replied that the owners of the factory stayed in Mumbai and that many residents worked in the plant and they would be holding shares of the company. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">In the next 15 minutes, the broker explained to Ahmed, how owning a share could make one a part owner in the company without working in the company. This made Ahmed inquisitive and the meeting lasted for 30 more minutes. Ahmed, completely convinced of the ownership model, helped the broker go door to door to collect shares from willing sellers (in very small towns nearly everyone knows each other) and for himself bought 100 shares of Rs.100 face value, thus investing Rs.10,000 from the total of Rs.20,000 that he had.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Friends... Just hold your breath now...</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Over the last 36 years, this is how his wealth has grown.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">In 1981, the company declared a 1:1 bonus. He now had 200 shares.</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1985, the company declared 1:1 bonus. He therefore had 400 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1986, the company split the share to Rs.10. He thus had 4000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1987, the company declared 1:1 bonus. He hence had 8000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1989, the company announced a 1:1 bonus. Now he had 16,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1992, the company declared a 1:1 bonus. By now he had 32,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1995, the company declared a 1:1 bonus. He then had 64,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1997, the company declared 2:1 bonus. He now held 1,92,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 1999, the company split the share to Rs.2. He now had 9,60,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 2004, the company declared 2:1 bonus. He thus had 28,80,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 2005, the company declared 1:1 bonus. He came to have 57,60,000 shares.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In 2010, the company declared 2:3 bonus. He now had 96,00,000 shares.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">It's been 36 years since Ahmed took the plunge in this ownership model. As I write this article, the share price of Wipro is around 540.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">The total worth of the shares is a mind boggling 518 Cr. He has also been receiving dividends which is cumulatively more than 100 Cr. </span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Multiple residents of Amalner have benefited a lot by holding on to the shares of Wipro for the last 30 years. For them, Azim Premji, who transformed Wipro into an IT Giant is the reason, why they are still holding on to the shares. They believe that there is no reason to sell of their holding, when the leader is able and amazing. There are residents who sell around 10-20 shares a year and are able to meet all their needs.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Now, what is the takeaway from this article.</span></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif;">1) Investing in a good company with visionary promoters is extremely important.</span></span><br />
<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">2) Holding the share as long as there is no fundamental change is definitely worth the wait.</span><br />
<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">3) There might be short term gyrations, but if the story is good, the stock will compound your money.</span><br />
<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">4) Dividends are extremely important and can create extreme wealth as the holding period increases and the business flourishes.</span><br />
<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">5) A good business will also give bonuses which will prove to be a great asset in the long term.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Many times, we buy good companies, but we let go even when the story is intact. We look at the unrealized loss, forgetting about the unrealized potential of the stock. We also, try to time the market without spending time in the market. Friends, let us come out of this mindset of quick money. Let us be focused and try to create wealth over a period of time.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Let me remind you that there are so many companies which are worth holding on in today's market at current prices. Think about it.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Good luck,</span></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Courtesy: Economic Times & Internet</span></span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com5tag:blogger.com,1999:blog-303837536783625365.post-78775489908890424052016-05-21T23:49:00.000+05:302016-06-04T21:27:39.613+05:30Who are the shareholders of a business in the Stock Market?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There are multiple investors in a listed business. The primary market is the place where the company raises funds by giving its shares at a premium based on future potential. The interested buy the shares at a premium. But who are the real shareholders who finally hold shares of a company? <a href="http://www.fundamental-investor.com/2016/05/shareholders-in-stock-market.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dear friends and investors,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope you are enjoying your weekend. I am having a lot of fun and enjoying myself. I have been travelling for the last few weeks and hence couldn't write any article. Anyway, this week, lets look at something very important and is, for me personally, a key aspect in fundamental analysis of a business.</span><br />
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<span style="font-size: large;"><span style="font-family: "trebuchet ms" , sans-serif;">In one of my previous articles, we looked</span><span style="font-family: "trebuchet ms" , sans-serif;"> at the share allotment in an IPO - <a href="http://www.fundamental-investor.com/2016/02/initial-public-offering-ipo.html" target="_blank">Click here to read it</a>. We understood the main reason for a business to get listed and give shares to public</span></span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Let us now have a quick look at the shareholders of any business and what it essentially means.</span></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">There are multiple investors in a business. <span style="background-color: yellow;">The primary market is the place where the company raises funds by giving its shares at a premium based on future potential.</span> The interested buy the shares at a premium. But who are the people who finally hold shares of a company? Let us have a look.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) <span style="background-color: yellow;">Promoters group</span> - A promoter is a person who understands the business well enough to be a face of the company. Normally a promoter would be the founder of the company. But it is not always necessary. He/She can be an ambassador for the company, and due to rich experience can ensure that the business attracts customers and investors alike. Raising capital is a piece of cake for promoters with excellent track record, since they have built their brand image and shown success in their experience. They have a huge say in the company and can control the company. They are instrumental in the plans and visions of the company and also in giving shares to public investors. Please note that the director / officer of the business who is doing so just professionally will not be a part of the Promoter Group. The Promoter group can be the promoter, and immediate relative of the promoter, or a company as well. You will have both Indian as well as Foreign Promoters. The experience and history of the promoters play a huge role in the success of the company and the valuation which the business will command.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><u style="background-color: yellow;">Institutional Investors:</u></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Banks, Financial Institutions, Insurance Companies, Mutual Funds, private Corporate bodies, Trusts etc.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) <span style="background-color: yellow;">Foreign Institutional Investors</span> - Foreign Institutional investors (FIIs) are entities established or incorporated outside India and make proposals for investments in India. They can be international fund houses who have collected money from investors and invest in companies outside their country or region (internationally). In order to invest in the primary and secondary market, they have to go through some schemes like the Portfolio Investment Scheme. Now, there are some RBI regulations which also set an upper cap for the percentage of shares to be given to FIIs. More FIIs entering is normally considered as a good sign since it also shows the confidence of foreign investors in the business. Normally, when the business has a good global presence, FIIs would be interested to invest.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) <span style="background-color: yellow;">Domestic Individual Investors</span> - As the name suggests, the institutional investors who are Indian would fall into this category. This includes the mutual funds and big big business houses which would fall in this category. They have huge money power and buy in bulk for long term.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><u style="background-color: yellow;">Non institutional Investors:</u></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) <span style="background-color: yellow;">Bodies corporate</span> - This can be any legal entity, a company, associations etc who want to invest in the business.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">5) <span style="background-color: yellow;">Retail investors</span> - Investors like you and me who want to buy a chunk of the shares.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><span style="background-color: yellow;">When an IPO issues shares in the primary market, the preference is generally given to the Institutional Investors since they buy the shares keeping a long term view in mind. The retail investors are generally given a smaller chunk so that the secondary market does not get lots of shares to trade on a daily basis.</span> </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now when you are investing in a business, please have a look at the shareholding pattern in the BSE/NSE/Moneycontrol websites.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- <span style="background-color: yellow;">High promoter holding shows that the promoter is highly confident of the business</span>. He would also be more than happy to pump in money and also raise money to fund the business. A very low promoter holding shows that the confidence on the business is low.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- <span style="background-color: yellow;">If the promoter shares are significantly lesser in current quarter as compared to previous quarter</span>, we need to be prudent to understand why the promoter sold shares. The earlier we diagnose, the better our decisions will be. This information can be easily procured from the BSE/NSE websites in Disclosures.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- <span style="background-color: yellow;">High FII and DII holding is also a great sign</span>. You can try to see the shareholding pattern on a quarterly basis to see if the Institutional investment is going up. If it is, that means that they are very confident on the future and hence your investment is a good one. The only bad part if that, if the FII or DII holding is high and they offload the shares, the price comes down crazily.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">With this information in mind, try to have a look at the shareholding pattern of your business which you own. How does it look??</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I hope I am sowing the seeds in your minds... Have a relaxed week ahead...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
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Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com17tag:blogger.com,1999:blog-303837536783625365.post-67939473036411427662016-04-29T10:24:00.001+05:302023-09-02T10:13:55.706+05:30Share Bazaar of Monkeys and Goats !!!<div dir="ltr" style="text-align: left;" trbidi="on">
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Making Investment Decisions is not easy. This is a beautiful story of Monkeys and Goats which illustrates how to make investment decisions.. <a href="http://www.fundamental-investor.com/2016/04/share-bazaar-of-monkeys-and-goats.html" target="_blank">Read on...</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Dear investors and friends,</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">How are you doing? Before you read further, please <a href="http://www.fundamental-investor.com/2016/03/monkey-story.html" target="_blank">click here to read "Monkey Story of Stock Market Dynamics"</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">We are all learning in this wonderful market. Valuation of a company is an arduous task by itself. There are multiple things to be taken into consideration before you can put a price on a company's share. But, differentiating a good company from a junk one is fairly easy. We sometimes falter in this basic decision and end up losing nights of sleep.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><a href="http://www.fundamental-investor.com/2016/02/stock-market-basics-value-vs-price.html" target="_blank">Click here to read about Stock Value vs Price</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Apart from the story which I shared previously, I read one more story which gives us a lot of insight on how to make investment decisions. After all, we are putting our hard earned money into something which should give us decent returns forever.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Enjoy this beautiful story which illustrates this concept. Read it slowly and try to relate :-)</span><br />
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<a href="https://4.bp.blogspot.com/-SdtGCYxcBj4/VyJW96Njq3I/AAAAAAAAAZY/oEwGZfexVykg-lrE5nsyRWIXXMVVetq5ACLcB/s1600/MonkeyGoat.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://4.bp.blogspot.com/-SdtGCYxcBj4/VyJW96Njq3I/AAAAAAAAAZY/oEwGZfexVykg-lrE5nsyRWIXXMVVetq5ACLcB/s320/MonkeyGoat.png" width="320" /></a></div>
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Long ago, in a village a man appeared and said that he wanted to buy monkeys. He said that he would pay Rs 100 per monkey. The villagers caught all the monkeys in the nearby forest and village and sold them to him for a hundred rupees each. Soon another man appeared and said that he would pay Rs 200 for each monkey. But there weren't any more monkeys around. They were all owned by the first man. So the villagers went to him and said that they were willing to take the monkeys back and return his money. But the monkey owner was unwilling to sell. The villagers raised the offer price to Rs 150 per monkey, then Rs 175 and finally to Rs 199 but the man just didn't want to sell, even though he clearly didn't have any use for the monkeys. Eventually, just to see whether he would sell, they offered him Rs 200 but he still refused.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">The villagers were puzzled by this. Finally, one of them figured out that there must be someone else who was going to come to the village and offer even more money for the monkeys. Convinced that this was the real explanation, they went and offered the man Rs 300 for each monkey and sure enough the man accepted. Joyous at having landed such a good deal, they quickly paid him off before he changed his mind and took possession of the monkeys. The man went away with his money and lived happily ever after. The villagers waited for the next buyer. And waited… And waited... But no one ever appeared who wanted to buy a monkey.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">But wait.... </span><span face=""trebuchet ms" , sans-serif" style="font-size: large;">If you think you've guessed the moral of the story, you are wrong because the story isn't over yet.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">There was another village nearby. In this village a man appeared one day and offered Rs 1000 each for a goat. Now goats were valuable, but not as much as a thousand rupees so the villagers sold the goats to this man. A similar thing happened here too. A second man appeared, offered Rs 2000 for each goat. The villagers tried to buy the goats back from the first man but the first man refused and eventually the villagers ended up buying the goats back for Rs 3000 each. Here too, the two men disappeared and no one ever came and offered so much money for a goat again.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">But there was a difference.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Goats weren't monkeys. They were easier to look after, cheaper to maintain, could be milked every day and the milk was good and healthy. Even the goat droppings could be used as fuel. The goat's hair could also be sold. When the goats eventually grew too old to be milked or died, the villagers could use their skin as leather or eat their meat. All in all, it wasn't a complete disaster.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">But the monkey-owners were not so lucky. They could not be kept in the house for long. The monkeys ate too much, shouted and shrieked all day and sometimes bit people. They could not be controlled and they destroyed most of the stuff in the village. They were a nuisance to the villagers.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Eventually, when it became clear that the monkeys were worthless, their owners abandoned them and tried to forget about their losses.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">And that's the Moral of the Story.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="background-color: yellow; font-size: large;"><b>In the stock markets today, there are good companies that are overpriced and there are worthless companies that are overpriced. If you are going to be a fool and pay absurd prices because you think that a greater fool will appear in the future, make sure you buy a goat and not a monkey.</b></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">We might not get the optimum price, but buying solid performing companies is like buying a goat which gives us long term returns. Buying some companies which have a tainted past and weak fundamentals is like buying a monkey and it is a worthless bet, whatever the price.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><a href="http://www.fundamental-investor.com/2016/01/fundamentals-of-investing-in-stock.html" target="_blank">Read about Fundamentals of Investing by clicking here</a></span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Many times, due to greed, we end up buying some penny stocks or some recommended stocks without really gauging the worth of the company.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Let's be wise in choosing the right companies. They will give us steady returns in longer term.</span><br />
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Stay wise :-) Stay wealthy...</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;"><br /></span><div class="separator" style="clear: both; font-family: "times new roman"; line-height: 30.6px;"><span style="font-size: x-large;">Please share this post on multiple public platforms so that many more can get benefited and master the art of Investing in the Stock Market !!!</span></div>
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<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Good luck,</span><br />
<span face=""trebuchet ms" , sans-serif" style="font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com1tag:blogger.com,1999:blog-303837536783625365.post-55105052247693850902016-04-16T22:49:00.000+05:302016-06-01T12:25:37.893+05:30Become a Millionaire with Power of Compounding<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Can you imagine the power of Compounding your money? Unleash the potential of Exponential Growth with discipline, long term vision & homework. <a href="http://www.fundamental-investor.com/2016/04/power-of-compounding.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors & friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Hope you are all doing great and learning various financial aspects along with me. In the last article, I planted the seed for <b style="background-color: yellow;">becoming Rich by Systematic Investment</b>. Hope you read the same. The attitude and mindset is extremely important if you want to become rich and create wealth.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">If you have not read that, <a href="http://www.fundamental-investor.com/2016/03/become-rich-with-systematic-investment.html" target="_blank">Click here to read</a> !!!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Today, I am going to cover a very basic, fundamental and important concept. We have heard this word multiple times - <b style="background-color: yellow;">Compounding</b>. People talk about the Power of Compounding and its enormous potential. </span><br />
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<a href="https://1.bp.blogspot.com/-WpdjNilQfL0/VxJy5pZMhHI/AAAAAAAAAYg/N7SlBz_3I0g84-MwcNknkXIBDbrLGq8WgCLcB/s1600/Compounding.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><img border="0" height="320" src="https://1.bp.blogspot.com/-WpdjNilQfL0/VxJy5pZMhHI/AAAAAAAAAYg/N7SlBz_3I0g84-MwcNknkXIBDbrLGq8WgCLcB/s320/Compounding.png" width="320" /></span></a></div>
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<b><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">But what exactly is Compounding? How does Compounding work? Is Compounding really advantageous? If yes, how does it make THE DIFFERENCE?</span></b><br />
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<a href="https://1.bp.blogspot.com/-6_qN1Zj_3gM/VxJ0wC5JmLI/AAAAAAAAAYs/OVVlZWtRUiIZTNFTjI6BN-0hp-jI4J-cwCLcB/s1600/Einstein.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="298" src="https://1.bp.blogspot.com/-6_qN1Zj_3gM/VxJ0wC5JmLI/AAAAAAAAAYs/OVVlZWtRUiIZTNFTjI6BN-0hp-jI4J-cwCLcB/s400/Einstein.jpg" width="400" /></a></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Back in the old, golden school days, we were introduced to the concept of Interest in Mathematics. Interest is a predefined percentage of our Principal which is given back to us along with Principal when we keep our money in a Financial Instrument for a specified amount of time.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">When we park our money in a Bank, we will get some interest for our Principal amount. Let us try to understand <b style="background-color: yellow;">Simple Interest</b> first.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Note:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Keep a notebook & pen ready to follow the calculations.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A calculator will also be handy.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let's say that, on the first of every month, we deposit Rs 1000 in a Savings Bank account. We continue to deposit this monthly amount for a period of 120 months (10 years). Let us consider that the Bank provides us 8% Annual simple interest for the amount. So, now, let us see what happens to our money.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, since Annual Simple Interest Rate is 8%, the Monthly Simple Interest Rate would be:</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">8% divided by 12 months = 8/(100x12) = 8/1200</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 1:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 1000 x 8/1200 = Rs 6.66</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 2:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 2000 x 8/1200 = Rs 13.33</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 3:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 2000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 3000 x 8/1200 = Rs 20</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">.</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 120:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 119000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 120000 x 8/1200 = Rs 800</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="https://drive.google.com/file/d/0B9nNUXPxXiwOUW14a0haNnAwMk0/view?usp=sharing" target="_blank">Click here to see Simple Interest Excel for 120 months</a></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">At the end of 120 months, when we withdraw the amount, we will get our Principal (120 months x 1000) plus the Total Interest (S</span><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">um of Interests for each month -> 48400) = </span><br />
<b><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Rs 168400</span></b><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As you can see, in this case, the Total Interest is added to the Final Principal amount.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u>Compounding:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Compounding is the process of <span style="background-color: yellow;">getting Interest on Interest</span>. In Compounding, your Interest gets added to the Principal (either Monthly, Quarterly, Half Yearly or Yearly) and the next Interest is calculated based on the <span style="background-color: yellow;">Principal + Accumulated Interest</span>. Confused?? Let's take the same example as an approach.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><u><b style="background-color: yellow;">Monthly Compounding - Interest computed Monthly and added to Principal</b></u></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Let's say that, on the first of every month, we deposit Rs 1000 in a Compounding account (Recurring Deposit). We continue to deposit this monthly amount for a period of 120 months (10 years). Let us consider that the Bank provides us 8% Annual Interest for the amount. Let us assume that Interest is Compounded Monthly.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, now, let us see what happens to our money.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Now, since Annual Compounding Interest Rate is 8%, the Monthly Compounding Interest Rate would be:</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">8% divided by 12 months = 8/(100x12) = 8/1200</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 1:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 1000 x 8/1200 = Rs 6.66</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 2:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 1000 + Rs 6.66 = Rs 1006.66</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 2006.66 x 8/1200 = Rs 13.37</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 3:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 2006.66 + Rs 13.37 = Rs 2020.044</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 3020.044 x 8/1200 = Rs 20.13</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">.</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 120:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 181946</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 182946 x 8/1200 = Rs 1219.64</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="https://docs.google.com/spreadsheets/d/1qgl_a2xxUJqaQqRb1wEaLupFdb77Wo17fsSNBQp4QlQ/edit?usp=sharing" target="_blank">Click here to see Monthly Compound Interest Excel for 120 months</a></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">At the end of 120 months, when we withdraw the amount, we will get our Compounded Amount = <b>Rs 184165.7</b> </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">We can see a clear difference here of Rs 184165 - 168400 = Rs 15765</b></span><br />
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<u><b style="background-color: yellow;"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Quarterly Compounding - Interest computed Quarterly and added to Principal</span></b></u></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span></div>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this case, as the name suggests, Interest is added to the Principal Quarterly instead of Monthly (in the previous case) </span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 1:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 1000 x 8/1200 = Rs 6.66</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 2:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 2000 x 8/1200 = Rs 13.33</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 3:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 2000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 3000 x 8/1200 = Rs 20</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for the quarter = Rs 6.66 + Rs 13.33 + Rs 20 = Rs 40</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 4:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 3000 + Rs 40 (Quarterly Interest) = Rs 3040</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 4040 x 8/1200 = Rs 26.93</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 5:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 4040</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 5040 x 8/1200 = Rs 33.6</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">For Month 6:</span></u><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount already present - Rs 5040</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Amount deposited - Rs 1000</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for that month - 6040 x 8/1200 = Rs 40.26</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Interest earned for the quarter = Rs 26.93 + Rs 33.6 + Rs 40.26 = Rs 100.8</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="https://docs.google.com/spreadsheets/d/1Y3r4JPg3oWEsqAAUOKc1oCKg-nlLL0sjLXkuk3dGJHQ/edit?usp=sharing" target="_blank">Click here to see Quarterly Compound Interest Excel for 120 months</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">At the end of 120 months, when we withdraw the amount, we will get our Compounded Amount = <b>Rs 183622</b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b style="background-color: yellow;">As you can clearly see, the Amount we get by Monthly Compounding is greater than the Amount we receive after Quarterly Compounding. But Compounding fetches far greater returns than just Simple Interest.</b></span><br />
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<u><b><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Half Yearly Compounding - Interest computed Half Yearly and added to Principal</span></b></u><br />
<u><b><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span></b></u>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this case, as the name clearly suggests, Interests are added every 6 months and added to the Principal.</span><br />
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<a href="https://docs.google.com/spreadsheets/d/1DrHzMeenhRqX1bVAMLn6mNb7i9_ntj3jLm9p-MIj6rY/edit?usp=sharing" target="_blank"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Click here to see Half Yearly Compound Interest Excel for 120 months</span></a><br />
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<u><b><span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;">Yearly Compounding - Interest computed Half Yearly and added to Principal</span></b></u><br />
<u><b><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span></b></u>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this case, as the name clearly suggests, Interests are added every 12 months and added to the Principal.</span><br />
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<a href="https://docs.google.com/spreadsheets/d/1oP90yTdcKsYVG9GPR9K3DuqSUtT1oew-0E-G_WVv9WQ/edit?usp=sharing" target="_blank"><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Click here to see Yearly Compound Interest Excel for 120 months</span></a><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As the periodicity of compounding decreases (Monthly -> Yearly), the returns also decrease appropriately.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As you can clearly see, Compound Interest works for you if the following discipline is followed:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) <span style="background-color: yellow;"><b>Systematic investment</b></span> - A certain amount needs to be invested periodically, preferably every month in a Compounding plan (Recurring Deposit, Mutual Funds or Equity) without fail. Of course, RD (Recurring Deposit) is the safest since the Principal is guaranteed. But, the Rate of Compound Interest provided by Banks for RD will be very less. Hence, people try to invest in Mutual Funds or Equity in solid companies which can provide a better Compounding Interest over long term. If the bright company manages to grow at a rate of above 15% every year, the money gets compounded at the same pace.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) <b style="background-color: yellow;">Start early </b>- Saving is a habit which needs to be cultivated at an early stage of life. A person who invests Rs 1000 in a RD with 8% Compound Interest for a period of 30 years will get Rs 1484262 on Maturity. The earlier you start the better.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) <b style="background-color: yellow;">Stay invested for a longer period of time</b> - Compounding works only as the Principal + Accumulated Interest grows. The longer you are in the plan, the Interest starts working for you. The real power of Compounding can be seen when we continue this discipline for decades. You can retire rich.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">So, with discipline, homework and long term vision, enormous wealth can be created with the amazing power of compounding. Its no wonder that the investors who created enormous wealth, are those, who stayed invested for a long long time.</span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;"><b>Tap the Power of Compounding.. Don't underestimate its Wealth Creating Ability.</b></span><br />
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<span style="background-color: yellow; font-family: "trebuchet ms" , sans-serif; font-size: large;"><b>Watch these videos to understand the Power of Compounding:</b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large; line-height: 30.6px;">Please share this post on multiple public platforms so that many more can get benefited and master the art of Investing in the Stock Market !!!</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><b><u style="background-color: yellow;">Note:</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- I have tried to explain this concept in a simple layman term. Try to understand the fundamentals and then explore on your own.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- Ideally, when we calculate the monthly interest, I have taken 12 months for easy understanding. The more accurate method would be to calculate based on the number of days in the month. But, for understanding, this is good enough</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">- If there are any doubts or suggestions, please feel free to email me so that I can add/correct my thoughts. After all, we are all learning.</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com5tag:blogger.com,1999:blog-303837536783625365.post-39656042714250288632016-03-27T16:41:00.001+05:302016-06-01T12:26:31.929+05:30Become Rich with Systematic Investment in the Stock Market<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Do you want to rich with Systematic Investment for a longer period of time? <a href="http://www.fundamental-investor.com/2016/03/become-rich-with-systematic-investment.html" target="_blank">Read on...</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Dearest investors & friends,</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">How many of you are already rich and made enough money for your lifetime?? :-) If you already are in this category, the chance of you continuing to read this article will be extremely minimal.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">How many of you want to become rich and are on the path? I am sure almost all of you will want to retire early and do the things which really mean something in your life. Many people struggle day and night at work, losing a lot of family time and aspiring that one day, they would be relaxing in some nice place without any tension or stress.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In the stock market, most of the people get in to make some extra money. They put money in a listed company hoping that it would grow really fast. But, does it really work? Ask yourself this question. Have you really created wealth in the Stock Market?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">I get tons of emails everyday from traders & investors around the world asking me to review their portfolios and asking me where they went wrong. Many times, I see that they have chosen good, quality companies. But they would have slightly got their timing wrong. The stock they have chosen would be around 20% below their buying price (I am sure we have all experienced this). But, as we all know, no one can time the market. Also, they do not give enough time for their investments to start churning out wealth.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Friends, the Stock Market is a Wealth Creating Machine. Considering the inflation, this is one of the best forms of investment. But the matter of the fact is that most of the people gamble their money away in the same market, where a few people create massive wealth? What is the secret? How do some people really create wealth?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-size: large;">Pause and click to read some interesting articles before proceeding further.</span></span><br />
<a href="http://www.fundamental-investor.com/2016/01/lets-begin-how-does-warren-buffet-value.html" style="font-family: 'Trebuchet MS', sans-serif;" target="_blank"><span style="font-size: large;">How did Warren Buffet become rich?</span></a><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><a href="http://www.fundamental-investor.com/2016/01/fundamentals-of-investing-in-stock.html" target="_blank"><span style="font-size: large;">Attitude for Investing</span></a></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><a href="http://www.fundamental-investor.com/2016/01/top-5-questions-before-investing-in-stock.html" target="_blank"><span style="font-size: large;">Questions you need to ask before Investing</span></a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">We all work for money. Have we ever tried making money work for us?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Most of us would have heard about SIP. Please remember that SIP is not a product or a company :-) It's a discipline. It's a mindset. It's an approach to investing. It's a long term vision with patience.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">SIP is a Systematic Investment Plan. </span><span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A SIP is a strategy where we allocate a fixed sum of money to be invested in an instrument at a regular interval of time (mostly monthly). We have various instruments to invest in, like Recurring Bank Deposits, Mutual Funds, Equity etc.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Most of us would have invested our money in a Recurring Deposit or Provident Fund. In this case, the rate of interest will be stated clearly before we begin the investment and we are assured of that interest. Whether, the interest given can beat inflation or not, is a big question. The purchasing power of money declines over time. Fifty years back, the value of Rs 100 was much more than what it is today. In the next 20 years, the value of Rs 100 will diminish much more. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">In this case, a SIP in Mutual Funds or Equity might seem a better choice. Let's look at it from different angles.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A SIP in Equity gives the following advantages:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) It creates a habit of saving and investing regularly. When we get our salary every month, we generally spend first and invest the remaining (if it remains). This approach will never give us returns in the long term. We need to inculcate this habit of intelligently parking a certain amount regularly into a money creating machine.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) Many times, we would not have a lump sum in hand. In this case, investing a small amount of money every month would not be very difficult. SIP is the best for that.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) Never invest the money which you need immediately. A SIP is designed for investors to park their extra money without touching it for longer period of time.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) The law of averaging helps investors in SIP. When we buy shares of a company every month, we will get advantage of both rise and fall of shares. If the company is going to do well in the longer horizon, we will get the full benefit of it.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">5) If the company's revenues grows at a significant rate (more than 10-12% every year), we will start compounding our money. Ill write another articles on Power of Compounding sometime.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">A SIP in Equity has the following disadvantages:</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">1) If we go for a SIP in a low quality fund or stock, we are bound to be in trouble. We need to choose high quality stocks.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">2) Even if we manage to choose a high quality stock, we need to track it well in the course of the SIP. If there is some negative news on the credibility of the company, this will become a disaster.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">3) Since we invest the amount in a share regularly on a particular date of the month, we might not get it in the best price of the month.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">4) A SIP will work for investors with a long term horizon. I am putting this in this section since SIPs can create enormous wealth in 5 - 10 years of time. You might not get immediate returns.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Please watch this video which was made in 1957. The relevance and the explanation is valid to this date. This video touches upon the basics in a very simple way and easy to relate to. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Watch and enjoy..</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;"><a href="https://www.youtube.com/watch?v=CgM68Yf-C0Q" target="_blank">Click here to watch</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">The bottom line is that with Discipline and Homework, we can all create wealth in the long term. Systematic investment in quality, dividend paying companies can yield a lot in the longer term. But patience is key...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">As we all know it, the intelligent time spent in the market is far more important than trying to time the market.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Stay long friends.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Good luck,</span><br />
<span style="font-family: "trebuchet ms" , sans-serif; font-size: large;">Fundamental Investor</span></div>
Fundamental Investorhttp://www.blogger.com/profile/07190089883197425447noreply@blogger.com8