12 Investment Mantras to keep you ahead

Every New Year brings a new start & to get start, in the New Year I have decided to point out 12 investment mantras which will help you in getting a new perspective to your investments.

12 Investment Mantras to keep you ahead 11. Do not invest without a sensible investment strategy

It is difficult to predict the direction, the markets will take in the coming years. We will see the markets that reflect the fast changing, world shaking events of this era. The markets are going to be unpredictable and full of surprises. We live in uncertain volatile times and the markets reflect these things.

2. Do not fall for get-rich-quick schemes.

A disciplined, long term strategy makes great sense in this unpredictable environment. Many opportunities will emerge in the coming years and these opportunities must be approached prudently by investors with long term objectives. (Read Speakasia – too good to be true)

3. Remain Humble Investor

Do not constantly judge your own success by that of others. Do not resent success of others when your own investments falter. Do not refuse to accept help or advice from others. Do not think that you alone know what the best investment is.

Being humble allows you to guard against thinking too highly of yourself. Humility reminds you not to bite off more than you can chew. It robs greed of its power over you, decreasing the odds that you will want more than what the market can provide you.

4. Beware of deceitful financial advisors

The best way to honor your financial advisor is by choosing one whose fee is based on a fixed percentage of the assets under management. Evaluate your advisor based on comparisons with a reasonable benchmark.

5. Do not be impatient with your investments

Do not press the panic button in a fluctuating market condition. Do not sacrifice long term growth for the quick hit. Your investment decisions must be based on common sense and what cold hard numbers tell you and not on media hype or industry buzz. If you have invested your money thoughtfully, then there is no need to worry.

Do not worship profits and take them just because you have them. It is wiser to hold on to your investment to meet your long term goals.

6. Avoid Speed Investing

For long term investors – slow is always better than fast. Entering and exiting the market with a short term objective is not good for your financial health. Regular and systematic investment for a long time is the best mode of investing.

12 Investment Mantras to keep you ahead 2

Image Credit – Onemint

7. Stop Performance Chasing

Daily price movements seduce people to go for the most attractive investment. Do not buy something just because it is hot.

While it may be tempting to buy the best mutual fund, it makes better sense to stick with an investment plan that is well thought out to suit your investment goals. Chasing performance can prove to be dangerous in the long run.

8. Say No To Emotional Investing

An investor’s worst enemy is not the stock market but his own emotions. Do not let emotions drive your investment decision making. You need to be aware of your emotional temperature while making an investment decision. Calm investors have a far better track record than highly emotional ones. It is best to stay focused on your goals and be aware of risks at play while investing.

9. Show “The Door” to Ignorance

You must know your investments better than you know yourself. Do not act first and ask questions later. Thorough investigation is required before taking all investment decisions. It does not pay to live in ignorance.The only way to eliminate ignorance is by ensuring that you spend more time and effort towards being an informed investor.

10. Do Not Be Over-Optimistic

Avoid being too optimistic, too enthusiastic or too confident while making your investment decisions. Your investment decisions have to be logical and rational. Do not hold on to your investments long after they have lost their value, convinced that some day they will deliver a big return. Optimism is good but over-optimism is definitely a self-kill.

11. Do not sit on your savings

Remember that your money lying in savings account will not create wealth. Remove it from your bank account and put it at some place where it can grow. Accumulated money will not grow as fast as money that is spread across asset classes. Diversify your investments across asset classes to spread your risk. The sooner you start investing your savings the better it is for your financial health.

12. Accept a Loss /mistake

What would you do if you have taken a wrong route? Obviously you will return back, though it may have cost you time and money. But the same thing does not apply with most of the investors when they have chosen a wrong investment. Correct yourself, if you find that there is a mistake, don’t hang up with that investment.

This is a guest post by Anil Kumar Kapila.  He is an avid follower of TFL; and wanted to share his financial tips for the benefit of other readers. The views expressed herein are the author’s personal views.

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Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.

25 COMMENTS

  1. Nice article Anil. It’s the most basic things that are repeated over and over again yet people fail to follow. Good job reminding.

    Hemantji, please do some posts on value investing if time permits. It’s just that you make it simple to understand 🙂

  2. Great article ., though seems to be a repeat–infact items 7 to 11 are an exact repeat ,even the words of what I have been getting e-mails in the last wk of 2011. Hemant, s uggest we acknowledge the source when the matter is not our own. regds

    • Hi N.M.R.Shreedhar
      As far as the fundamentals of investment are concerned they remain same and most of the people use practically the same language to describe them. I read many personal finance magazines and blogs and get influenced by many authors. I have also recently read several articles on new year resolutions and investment strategy to be adopted in the new year by many authors and find that most of them have said the same thing using practically the same language. I do not claim that what has been written is something original discovered/invented by me. I have just tried to share what I have learnt from different sources.

      • Hi Shreedhar,
        I agree with Anil, this is a very generic article – if someone want to write an article of “Benefits on Mutual Funds” – it is obvious that points will be repeated. And I believe Anil has not copy pasted the lines.

  3. Hi Hemant
    I have found that in the investment world there are certain words and phrases which seem to be used by almost all authors daily. I have repeatedly come across – Asset Allocation, Rebalancing, Diversification, Portfolio Construction, Core and Satellite Approach, Not putting all eggs in one basket, Not throwing good money after bad money, Keeping things simple, Not mixing investment and insurance, Emotional investing etc, etc.I don’t think anybody has copyright of these words and phrases. It is quite natural that in investment related articles these words and phrases will be repeated again and again. I don’t understand why anybody should have any issue with use of words.
    Moreover this is not a research paper where a bibliography needs to be given.

  4. Thank Anil ji and Hemant ji for giving us a direction to stick to,
    All the best to you and all the readers may 2012 bring g8 wealth to everyone.
    Keep writing whenever time permits, we will be waiting eagerly for your article.
    regards

  5. Nice , useful and interesting article.Pl keep on writing such types of articles.Also pl write about regarding Gold ETF/Gold Fund with its benefits and drawbacks.

  6. Good mantras not just for 2012 but for one entire financial life! A new year is a good place to revisit the basics. Thanks for sharing it!

  7. 12 mantras goes in sync with 2012 but just remembering them seems a task(I tried telling about these mantras to my friend in the evening and ran out after 7). But was wondering – if I have to choose two, just two which one would you recommend? Doing all these things seems a lot and scares off most people

  8. Hi Kirti
    Just two won’t do. Even one investment mistake can prove fatal for your portfolio. In fact I have many more in mind.

    • You are right Sir, a single investment mistake can prove fatal to our portfolio. Looking forward to more such ideas.
      I would rate your “Do not invest without a sensible investment strategy” as the most important one. If we have a plan in place and follow it then all things would fall in place: we will be able to remain humble, avoid get-rich-quick schemes, avoid deceitful financial advisors, not be impatient with our investments etc.
      Having a plan is foremost as Failing to Plan is Planning to fail and then its execution with realization that things may go wrong and learn to accept a Loss /mistake and correction.

  9. Hi Anil ,
    sorry if I hurt your feelings–the idea was not to malign you in any way.
    keep up the good work . And yes, I do agree that one keeps reading/hearing the same financial planning words repeatedly.

  10. Hi Salil & Experts,

    I am 30, IT Professional (only breadwinner in family), married since 5 years (& have a daughter of 2.5 years).
    I have a LIC Moneyback Policy since last 6 years for which a pay a premium of INR 18000 annually & it pays me back INR 50000 every 4 years. Also, I started a ULIP Child Plan (ICICI Smart Kid) last year, where I pay INR 25000 annually for a SA of INR 5 lakhs.
    These 2 policies, 1 Term Insurance Plan (from ICICI), 1 Mediclaim Plan (Oriental Family Floater) & 1 ELSS constitute my tax planning.
    I am going to dis-continue the LIC Moneyback Policy, immediately & might re-consider dis-continuing the ULIP Child Plan as well. I believe, one should never fall in trap of low-yielding policies such as Moneyback, Pension, Endowment, ULIP etc. at least, at my current stage. I already have monthly SIP worth INR 21000 in 6 Equity mutual funds.
    Could you please suggest where should I channel this INR 18000 annually (+ INR 25000, probably)? My goals are house (2 years from now), daughter’s study & marriage, pension(25 years from now) & a significant health corpus. I dont have any loans/debts etc.
    Your suggestions regarding my portfolio & best possible avenues for investment of INR 18000 annually (or maybe, INR 43000), would be highly appreciated.

    Regards,
    Rahul

  11. Hi Hemant,

    I am 30, married since 5 years & with 2 year kid. My goals are buying house (2 years from now), daughter’s study & marriage, pension (needed 25 years from now) & a significant health corpus. I don’t have any loans/debts etc. Could you please comment on & suggest/modify my MF portfolio below ( started Dec, 2011 ) ? Any advice from your side would be highly appreciated.

    Fund Category Monthly Allocation
    ICICI Pru Focussed Bluechip Equity Fund Large Cap 3000
    ICICI Pru Discovery Fund Midcap & Small cap 3000
    IDFC Premier Equity – A (G) Midcap & Small cap 3000
    SBI Magnum Emerging Busi (G) Midcap & Small cap 5000
    UTI MNC Fund (G) Diversified Equity 2000
    Reliance Gold Savings Fund (G) Gold 2000
    SBI Magnum FMCG Fund (G) Sectoral-FMCG 3000

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