What are your top 5 Investment Lessons in 2017?
In 2016, the total wealth in India stood at $5.2 trillion. According to market research group New World Wealth, this means we are the 7th richest country in the world!
People are often under the impression that they have to be an economist or have a strong understanding of investments to know how money works. But that’s not true. All we have to do is look at everything that happens around us; the constructions of residences and malls, people vacationing, jobs created by new companies, money earned and spent, etc.
Some look at investing as a science, some look it as an art, and others look at it as a craft. But we can improve our understanding of investments and other related decisions only with practice. There is much to learn from the perceptive insights and thinking. Here are just a few things that we learnt this year.
It’s essential to invest in the stock market for a long-term. The right time to invest in stocks is when they are available cheap, i.e. the bear phase. Purchasing opportunities in the downturn can help your stocks multiply and become wealthy, over a period of time. One should wait till their stock appreciates a good percentage.
Before buying a stock, it’s important to study closely all aspects of the company. Value oriented companies tend to offer higher value for the long term. If there are two products similar nature, go for the one that is less expensive.
For instance, direct plans of mutual funds are priced lower than regular plans. A lower expense ratio directly translates into higher returns for the investor.
Consistent investment in the stock market will reap a lot of benefits. If done right, the stock market will always deliver, though the quantum or strategy of investments can differ.
For instance, the banking and financial sector was benefitted with people forced to deposit cash into their bank accounts during demonetization. Any investor who could have thought about this strategically would have made a windfall from his investments by now.
You can’t make wealth the same way someone else did. You need to do your own research before making any investment. You can take advice and help from someone but it’s important to make your own decisions as per your requirements. One should invest only in businesses that they understand.
Tangible and intangible assets are also considered while valuing a company. Investors must be wary of the intangible assets, i.e. goodwill, involved. Sometimes due to goodwill, companies with good brands usually trade at higher multiples. Paying too much, even for a great branded company, might not be a good investment then.
To sum it up
Here is a quick recap of the important investment lessons:
Time: Buy when stocks are cheap, sell when they are high.
Value: Value-oriented companies offer higher stock value for a longer term
Stability: Consistent, and not sporadic, investment for greater benefits.
Inspection: Advice from experts is necessary as scenario changes for every person.
Evaluation: Tangible and intangible assets (such as goodwill) to be assessed while evaluating company’s stocks.
The coming year could play a crucial role in achieving India’s long-term potential of sustainable economic growth. Investors such as us can participate in this growth story through the equity route.
The Nifty index soared to a historic high of 21006.10 on December 8, following a brief pause in the previous session. The catalyst for this surge was the Reserve Bank of India's decision to maintain the repo rate at 6.5 percent for the fifth consecutive time. Governor Das, in his speech, emphasized the robust fundamentals of the Indian economy, citing healthier balance sheets of banks and corporate firms.
- Dec 08, 2023Read More
“India will become the third largest economy by 2030”, said a report recently released by S&P Global. People buzzed about this news right away. While other countries are struggling with inflation and recession, India seems to be heading towards economic greatness. According to S&P, India is set to grow by 7 percent in the fiscal year 2026-27 and become the third-largest economy by 2030.
- Dec 07, 2023Read More