Now that we are at the end of the “Getting started” series of our blog, we wanted to provide you few Do’s and Don’ts. These are our investment principles that worked for us in our investment journey. While we can never guarantee anything, we have strong conviction that these investment principles will hold you in good stead.
Pay yourself first: Always, and I mean ALWAYS, first money out of your pay cheque should be on yourself. Do not save what is left after spending, spend what is left after saving. Plan all your SIPs, RDs, investments on salary date so that you will have only what is left behind after saving. Conversely, this will help you not to spend much on unnecessary (read vanity) things.
Read things and know stuff: There is no such thing as “Too knowledgeable”. Expand your horizons; know as much as you can about as much as possible. Never make an uninformed decision. Primary tenet of our investment principle has always been about knowing as much we can. We recommend you to adopt a similar approach as it pays huge dividends in future.
Know where your money is / will be: You don’t need to track your investments every day, but be sure where you have put your money. Make sure to re-evaluate your investments on a timely basis. A wise holding today may not be a wise holding in the future.
Be tax aware: Be up-to-date with all tax measures relevant to you. Never pay a single penny in tax more than you absolutely have to. Naturally, optimize by planning your taxes not by skipping ’em (which is illegal btw). Make this a habit because that dude Ben Frank was not kidding about Death and Taxes.
Log your trade: Scribble every single one of money outflows you are making in the same of investment. Maintain a clear record of why you are investing where, how much and purpose of investment. You can review your decisions, tweak your investment principles and can hone your decision making. It may sound too “OCD”esque but you will thank me later for this.
Start early: You are “today” days too late for investing. Sadly, you can’t change the past so start RIGHT NOW. Start saving up immediately in your PF or opening up a FD until you have come up with your investment strategy to stick with. A day you delay investing is a day you are missing compounding your hard-earned money.
Be Prepared: You cannot ever be too “prepared” for the untoward. In the funny little world we live in, there nonagenarian corona recovered patients and then there are kindergarten kids perishing. Always be prepared by having health insurance and term insurance. During the time of turmoil, money should be the last thing in your mind.
Don’t try looking rich, be rich: Amongst multiple perils of social media, (by extension too much details into others’ lives) bank accounts suffer one of the most. A false sense of competition forces us to exotic yet expensive vacation or buying house bigger than needed. It suffocates your financial well-being. Your sustenance will be in jeopardy if you do not reel it in.
Excessive Spending of borrowed money: Credit cards have become near normal these days. However, the eye-popping interest rates will ensure your existence in debt trap if you do not stop misusing it. Use credit in any form responsibly. Never splurge on borrowed money. Depending on credit also makes it more likely that you’ll spend more than you earn.
Live Paycheque to Paycheque: It is of absolute paramount that you have emergency fund. You can never be sure what is going to happen once. We are living in epitome to prove it. I am sure we all would have laughed had someone told that without masks, 99% of Indians won’t bother coming out. Plan your expense, save first and always have 6 months of emergency fund.
Choose Volume over value: When it comes to investing, patience is very important. Don’t be trigger happy and trade frequently. You will end up losing your structure and organized approach resulting in financial disaster. Always remember, in investing, volume doesn’t measure. Value accrued trumps volume traded.
Gamble: At the risk of repeating myself, never take uninformed decisions. There will always be “opportunities too good to pass” or “Hot multi bagger poised to breakout”. It may well be true but take your time, do your research and then proceed.
Once you invest, be patient with it and unless some underlying principle of your decision changes, avoid leaving your position.
Time the market: Nobody, and we mean quite literally nobody, can ever consistently time the market. Guessing what’s ahead is not an investment strategy — it’s a waste of time. Always balance your investment by choosing a longer time frame and stick with your investment principles unless you have strong reasons not to. Always plan, diversify and stick to your plan.
Delay the trigger: We are sure you have a fair understanding of what investing is all about. You will always have doubts and questions. It is all right. Don’t delay your investments any more. You will never be 100% ready. Even seasoned investors have unanswered questions. Start with low risk instruments like bonds, mutual funds and slowly build your portfolio.
We have done our best to guide you and kick start your investment journey. We are more than happy to guide you even further, reach out to us if needed. In conclusion, always remember that the plan you have is best suited to you and never let anyone tell otherwise without proper reasoning.