Aug 7 2011

Never borrow money to buy a depreciating asset at a young age

Almost everyone does this at some point. However, one must dedicate funds to your retirement objectives and give top priority to investing at young age instead of buying a depreciating asset for e.g. a Car. Do you know what a INR 10000 EMI on your car loan taken at age 25, cost you at retirement (Age: 60)? Assuming a hypothetical 12% returns (Long term average ROI for SENSEX is 18% CAGR since inception), INR 10000 invested every month for 35 years (upto retirement age) will grow to a portfolio value of INR 6.49 crore. That means a potential to earn risk free income of INR 3.24 lacs per month by keeping the above portfolio in fixed deposits yielding a post tax return of about 6%.

So keeping this in mind, one must give top priority to starting systematic, regular investments at a young age rather than indulging yourself. By foregoing just one car purchase and investing the same amount of money in your long term retirement goals, what a huge difference that could make to your choices at retirement!!!

Thank about it and start investing systematically now. Earlier the better.

Aug 6 2011

Does your Advisor help you understand and master the Trading Rules for Success?

Stuart Walton has an excellent track record of achieving an astounding 115% avarage annual compounded return in trading profits for 8 years, with annual returns ranging from a high of 274% to a low of 63%. Following are the rules followed by Stuart Walton in his trading:

  1. Be patient – wait for the opportunity.
  2. Trade on your own ideas and style.
  3. Never Trade impulsively, especially on other people’s advice.
  4. Don’t risk too much on one event or company.
  5. Stay focused, especially when markets are moving.
  6. Anticipate, don’t react.
  7. Listen to the market not outside opinions.
  8. Think trades through, including profit/loss exit points, before you put them on.
  9. If you are unsure about a position, just get out.
  10. Force yourself to trade against the consensus.
  11. Trade pattern recognition.
  12. Look past tomorrow. Develop a six month and one year outlook.
  13. Prices move before fundamentals.
  14. It is a warning flag if the market is not responding to data correctly.
  15. Be totally flexible. Be able to admit when you are wrong.
  16. You will be wrong often. Recognize winners and losers fast.
  17. Start each day from last night’s close, not your original cost.
  18. Adding to losers is easy but usually wrong.
  19. Force yourself to buy on extreme weakness and sell on extreme strength.
  20. Get rid of all distractions.
  21. Remain confident – the opportunities never stop.

How many of the above rules do you follow?  Does your Advisor help you understand these rules and apply them while trading?

Master these rules to trade successfully and multiply your wealth!!!