iCharts Discussions

[MF.iCharts]

Video about how to educate the youth of India to be financially independent.

https://www.youtube.com/watch?v=vU1l1TB7GzI

[MF.iCharts]

Why invest ?

https://www.youtube.com/watch?v=JEAOOjo3xaM

[MF.iCharts]

Investing for Beginners & Finding our own Investing Style


When a lot of people first start to read & learn about investing they invariably end up reading about Warren Buffett in their first few weeks of reading. From there onwards begins this fairy tale dream ride into the idea that someday they can also invest like Warren Buffett. The next automatic step that people tend to take is to read what any other fund manager worth their salt has to say about Warren Buffett. To remind you, at this point there is not a single rupee invested by this person, ever in his life (apart from may be the automated Fixed Deposit certificates & PPF investments).

After having read & being enamoured with Warren B’s performance & his dazzlingly simple explanations of how he analyses businesses, people start with the notion that investing is an easy affair. By this time, the activity of really sitting through an entire market cycle not being able to find great investment opportunities or even spending huge amounts of time & effort in researching industries & their managers has never happened to them.

The problem with a beginner learning to invest is that we tend to immediately get sucked into the investing blog world. In this world, a lot of people are strikingly original in researching their own ideas while a lot are “me too” people who are constantly following what other smart fund managers are doing. Not enough effort is spent to understand why investing is important & what are their unique needs to invest. People rarely do any cash flow analysis of their own life & are massively unaware of their own patterns of spending & making money. People automatically assume (especially salaried people) that they will somehow have enough money by the end of the year to put into some tax saving mutual fund & not to forget the mammoth 8% “tax-free” compounder of public savings – The Public Provident Fund.

Any person who wishes to take charge of their investments & wants to compound their savings at a rate of at least 5% more than the fixed deposit rate has no other legal option but to invest in Stocks.

Investing in stocks, especially from this background is going to be a tremendous uphill task. By this time each new fund manager we read about, we start to feel like we must mimic his/her style of investing. It makes sense when these fund managers lay out their ideas & explain their thought process. Using these fund manager’s ideas as a blind entry point can prove to be disastrous. It is not different from following trading tips from public investment forums or your local broker.

Blindly following fund manager’s ideas & investing styles seems easy & straightforward to do. On the contrary it is the most difficult thing to do. Most of the time, these professional investors discuss ideas with a time lag. A lot might have changed from the time they have invested in that idea & by the time we get to read about it. Instead the best way to learn from someone else’s idea is to use it as a first filter. This way we can get an investment idea from some professional investor & then start doing our own research in order to learn about the business & industry better. Sadly, this rarely happens, unless the investor is genuinely dedicated to learn.

Blind reliance on professional investor’s style has two other drawbacks.

First, we never get to learn what our own style of investing is. We never get to learn how much risk we can tolerate with our own money on the table. We always assume that someone else’s measure of risk is also applicable to us. But we have our own unique cash flow needs which the professional investors may not have. So it makes sense to learn about how we need & use cash in order to plan our investments accordingly.

Second, blindly following someone else degrades our own ability to learn. Cloning other investor’s styles has been popularly discussed by Mr. Mohnish Pabrai. He does it himself. But what we generally fail to consider is the amount of research that goes into reverse engineering the idea & finding out details on our own to validate it. With our diminished will to learn about the business, especially after the investment case is wide open in front of us, we can never hope to be good at critically analysing businesses.

Finally learning to invest on our own has tremendous advantages. Apart from getting to know our own investing style, we also get to know a lot about our own psychology. We start observing ourselves & realise what situations make us feel afraid or what events make us feel greedy. With a logical & rational understanding of investing we can practice the virtues of restraint & patience to hone our investing skills. Researching ideas on our own forces us to read about a lot of businesses & generally what’s happening across the world. How industries work? How do we get to use the stuff we use everyday? Who makes them? What does it take to successfully sell the product or make us buy it? All these details help us paint a vivid picture of this live & dynamic world which exists beyond the prime time reality TV shows & daily TV serials.

In his easy to understand & brilliant book F-Wall Street by Joel Ponzio, he advocates this very basic list of Ten intelligent investing commandments:

Never Invest in anything you do not understand.

Price follows value over the long term.

Price volatility does not imply any additional or reduced risk; the risk is in the price you pay & your evaluation of the opportunity.

The stock market is a place to buy & sell businesses, regardless of the myriad of other (or faster) ways to make or lose money in stocks.

There is no tomorrow, only “five years from now”.

Earnings are for the Income tax department & accountants; business owners & silent partners rely on Cash.

A great business is one that will survive the bad times, wait for the bad times to invest in great businesses.

Unless it affects the business of your company or it is filed with the exchanges, it’s just noise. Analyst opinions and general market trends do not affect the business of your company & are not filed with the exchanges

He who turns over the most rocks, wins.

If you don’t have a margin of safety, you don’t have a good opportunity.


Remember, investing is simple, but not easy. If it were easy, we would all be billionaires & I’d most certainly be on my private yacht instead of writing this blog post.

----

By Raunak Onkar
Raunak Onkar heads the Research department at PPFAS Mutual Fund.

[MF.iCharts]

Plan for retirement early:


Below is the image shows if one would have invested in All the Midcap funds that where available during of 2000 top in both SIP(Rs 500 month) and lump-sum form(Rs 1,00,000).

<img src="http://i.imgur.com/9i3LOOh.png?1">



-> If one increase their sip with inflation it help them to achieve their retirement goals fast and appropriate amount at time of retirement.

-> Lump-sum investor can Re-Invest like example when RSI 5 on monthly chart is over sold (below 30) or use some method where it it allows to you to invest at bottoms and not at highs.



Disclaimer : Information is solely for informational purposes, not for trading purposes or advice.

[AjitS]

This is very good information and helpful comparison. Thanks.

These are mid-cap funds - which have risk of eating into your capital (if the NAV goes down from your purchase price.) Is it true that the same risk will not be there with Debt funds though with lower returns?

In that case, can we get some comparison of the best Debt funds available?

[MF.iCharts]

Like Equity has many diversification like Large Cap, Small Cap, Multi-Cap mid-cap etc.. Debt fund also has diversification like Gilt funds, Liquid Fund, Short Term Fund, Ultra short-term plans, Income fund, High yield bond schemes, Floating rate funds.

Selecting a debt type is more complicated then selecting a debt fund. As it involves corporate bonds with difference rating on them. Which A1+, AAA, AA, A&below A.

Different maturity period and yield to maturity. As long term gilt plans are very sensitive to rate cuts. One needs to decide on them.

Hence selecting a fund type is very difficult. Any how have computed comparison on gilt funds as they usually most safe debt fund category

Below is the image shows if one would have invested in Long Term & Short term Gilt funds 10 years back in both SIP(Rs 500 month) and lump-sum form(Rs 1,00,000).

Note Last Date is 21-06-2016 instead of 21-06-06

<img src="http://i.imgur.com/7WNEPId.png">


Note Taxation : If investment is held for three years or less, the capital gain is treated as Short Term Capital Gains or STCG. It is added to the income of the investor and gets taxed at the marginal rate of taxation applicable to the investor. Thus, STCG gets taxed as per the tax slabs applicable for the investor.

If investment is held for more than three years, the capital gain is treated as Long Term Capital Gain or LTCG. Investor is entitled to the benefit of indexation on LTCG and the capital gains post-indexation is taxed @20% plus applicable surcharge and 3% cess.

Disclaimer : Information is solely for informational purposes, not for trading purposes or advice. Take Assistance of Tax Consultant, Charted account , Registered adviser.

[AjitS]

Thanks for the details. That was quick.

[MF.iCharts]

[MF.iCharts]

[MF.iCharts]

Film actor Rajesh Khanna bought a bungalow in iconic Carter Road in Mumbai for Rs.3.5 lakhs in 1970. His heirs sold it recently for Rs.85 crores. The property has multiplied by 2428 times or an annualized return of 19.38% over 44 years.

Samudhra Mahal in Mumbai is another expensive property. A flat purchased in 1970 at Rs.700 per sq.ft was sold at Rs.1,18,000 per sq.ft in 2013. Money multiplied by 168 times in 43 years. This works out to an annualized return of 12.66%

In 1963, Godrej paid Rs.1 lakh to buy his first house, a 2916 sq.feet apartment at Usha Kiran, Carmicheal road, in tony South Mumbai. In 2011 he sold it for Rs.25 crore. Money multiplied by 2500 times over 48 years or an annualized return of 17.70%

In Dalal Street, Mumbai a sq.feet was Rs.100 in 1980. After 34 years, it sells at Rs.27,000 per sq.ft. Money multiplied by 270 times in 33 years. This works out to an annualized return of 17.90%.

The first three properties can be bought and owned by cream or elite of the society who are worth at least tens of crores, mostly hundreds of crores.

The last property in Dalal street; your father could have bought with whatever money available at his disposal. You can buy it even now. Your son or daughter would be able to buy it even 20 years down the line.

The last property is Sensex. A sq.feet is a metaphor for one unit. If dividend yield is also included (assuming 2% CAGR), Sensex would have delivered 20% annualized returns over last 34 years, higher than the most expensive prime properties in the country.

Good mutual funds and many stocks have delivered returns far superior to Sensex itself.

Power of equity is least understood in this country.

If you can withstand notional loss (if you don’t book) in portfolio during bear markets, not worry about daily price movements, it is possible to make much better money than what can be made out of best of real estate.

Give at least the same importance to equity as you give to real estate.

You don’t mind holding real estate for 20 or 30 years. Please do the same for equity ignoring bull and bear markets, notional profits and losses.

Many of you have been investing for last couple of years. Stay the course for at least another 15 to 20 years completely ignoring market fluctuations. You would be amazed at the fortune created for your retirement or to pass on to your children.
Must read....for those who love equity and for those who hate equity.....

[drsureshbs]

excellent and very informative sir

[shwetabhojwani]

"Investors purchase common asset shares from the actual asset or through a representative for the asset, as opposed to from different financial backers. The value that investors pay for the common asset is the asset's per-share net resource esteem in addition to any expenses charged at the hour of purchase.

The asset generally should send you the installment within seven days.
Before purchasing shares in a mutual fund, read the plan cautiously. The plan contains data about the shared asset's venture goals, dangers, execution, and costs."