There are at least two things that are relevant to every investor. One, he or she does not, and should not, need an advisor. Two, the investor should not attempt market timing. No one is ever able to predict, especially the future. It really sucks. That means any one predicting market prices is a sucker.
That said, it is pretty straightforward to be able to make money from equity markets. For most it is the index route that I recommend.
Index investing is super
Keep throwing cash into a diversified index regularly for a long, long time. That's it. Simple and profound. Over the years wealth creation is guaranteed. It is also a very low risk way of making money. The longer the time you give your cash to compound, the lower the risk of loss it carries. Furthermore, it works as a tax deferred investment, which means value of your investments net of taxes is going to be higher. The beauty of this system is that your will never have to worry about the market prices, price-earnings, price-books, and so forth. Because you are so prompt and frequent in investing, the cost of your investments will average out, and that lets your rate of return higher. That is why index investing is powerful. Select the index; I like the S&P-500 and the Nifty-50; and march forward. The only catch is that you will earn the market returns; not any higher. Yet, for most investors that is sufficient to create long term wealth and be financially independent sooner than otherwise. The irony though is that most investors like the quicker route, and therefore, fail miserably.
Keep throwing cash into a diversified index regularly for a long, long time. That's it. Simple and profound. Over the years wealth creation is guaranteed. It is also a very low risk way of making money. The longer the time you give your cash to compound, the lower the risk of loss it carries. Furthermore, it works as a tax deferred investment, which means value of your investments net of taxes is going to be higher. The beauty of this system is that your will never have to worry about the market prices, price-earnings, price-books, and so forth. Because you are so prompt and frequent in investing, the cost of your investments will average out, and that lets your rate of return higher. That is why index investing is powerful. Select the index; I like the S&P-500 and the Nifty-50; and march forward. The only catch is that you will earn the market returns; not any higher. Yet, for most investors that is sufficient to create long term wealth and be financially independent sooner than otherwise. The irony though is that most investors like the quicker route, and therefore, fail miserably.
There are three variables in making money: The cash investments; the rate of return; and the time in the market. Two of them are under your control; concentrate on them, and ignore the rate of return to be earned. Whatever return you make will be better than the alternative investment opportunities. Try to increase investments and do not (ever) interrupt the compounding concoction.
So chuck those idiots who come on TV and elsewhere to tell you what to do when market prices rise (they tell you to buy) and when prices fall (you know what they tell you). They are clueless, and a bunch of morons; you don't be one.
Stock picking is fun
A few investors who have both time and interest in learning the game should be able to do well by picking stocks. They will have to learn the difference between investment and speculation; price and value. They will also have to acquire one or more of the three skills required to become a successful stock picker: Information edge; analytical edge; and behavioral edge. In today's times of real time information flow, having information edge is akin to insider trading which is illegal. Analytical skill is quite useful and is required. But the behavioral skill is the most underrated one. Having the right behavior can do wonders to a stock picker's portfolio. Buying when no one is buying, selling when others are buying aggressively, and being able to do nothing for a long time is a great skillset to possess.
In short, don't be greedy or fearful; and most importantly, don't be envious. There are plenty of opportunities to make money and be happy. Don't choose to be a whiner. Then you will do well both in investing and in life.
A few investors who have both time and interest in learning the game should be able to do well by picking stocks. They will have to learn the difference between investment and speculation; price and value. They will also have to acquire one or more of the three skills required to become a successful stock picker: Information edge; analytical edge; and behavioral edge. In today's times of real time information flow, having information edge is akin to insider trading which is illegal. Analytical skill is quite useful and is required. But the behavioral skill is the most underrated one. Having the right behavior can do wonders to a stock picker's portfolio. Buying when no one is buying, selling when others are buying aggressively, and being able to do nothing for a long time is a great skillset to possess.
In short, don't be greedy or fearful; and most importantly, don't be envious. There are plenty of opportunities to make money and be happy. Don't choose to be a whiner. Then you will do well both in investing and in life.
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