Investing tips..

Here are some tips that can help you manage your investments better

  • If you are an impulsive spender and it seems difficult to control your expenses
    • Dump your credit card now, don’t leave too much cash in savings account.
    • Start a SIP in liquid fund with 50% of your expense and redeem if you need money.
    • By just making it hard to spend you put a deterrent to your impulsive spends
  • No one can time the market
    • Always keep 15-20% in ultra short terms funds and switch this into equity is market falls by 5% in any month.
    • Keep refilling the ultra short term fund corpus.
    • This strategy has personally helped me sail through volatile markets
  • Exiting is equally important
    • Start a STP into liquid fund from your equity fund at least 2 year before your goals.
    • This way you can average your exit cost just like you average your entry cost through SIP.
  • Monthly cash-flows
    • If you need monthly cash-flows with certainty, invest at least 5 years before you start the Systematic Withdrawal Plan.
    • This will most likely ensure that you don’t eat into your principal in first 5 years and let it generate some returns.
    • Never go for dividend option for monthly cash-flow needs. They are not certain and tax a lot than SWP. 
  • Chasing past performance can be disastrous
    • Past winners can’t guarantee you a win next year or thereafter.
    • While good past performance indicates that fund is being managed well, but expecting similar performance to sustain in immediate future is where many investors go wrong.
    • If you selected a fund for a reason beyond performance it will help you stay invested fund for long and even during performance is bad. For example, you are invested in a fund because you like the fund mangers philosophy and style you will ignore short term under-performance. 
  • Goals help you stay focused
    • Investing for a goal helps. Investing is a journey, if you don’t know the destination you will get lost and focus more on the road which at times can be rough and boring. 
    • Attaching your investments to specific goals is must.
    • Goals may not only be buying a house, child education or retirement. Goals can be intangible, like to save as much you can and just keep investing for wealth creation. But then maintaining discipline to achieve such intangible goal is really tough.

Happy Investing!

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