What is the best investment strategy to earn more return on investments? Is there a simple, hassle-free, proven, sure-fire investment method available? Having a routine on investing, yield more rewards. Is this a true statement? How can we set a routine, that too, on investments? Is it really possible? Confused with lots of things spinning in your mind? Read ahead to get all your doubts clarified.
Have you noticed the way the women work at home, especially in the workday mornings? There will be many seeking their care for one thing or another, cooking sounds and aroma needing their attention every minute, they multitask at ease. If you keenly notice, you will be amazed at the pace and efficiency in everything they do. How is this possible, without having a degree or diploma in ‘home management’? Having a routine set in every action they do, they are able to effectively keep up with their work.
What everybody ought to know about setting up a routine investment?
You can fix a percentage from your monthly salary as an investment. Saving 10% every month from your monthly earning will be a good start. A challenge in having a routine is to keeping up with it. Whatever happens, you should never compromise on investing a fixed percentage as you have decided. How can we escape from an unexpected additional expense in a particular month? For emergencies, you can spend from your savings but never to miss adding 10% on your savings for that month.
For example, a lower middle class bank clerk starts investing 10-20% every month from his salary, when he is about 25-30 years of age. In 15-20 years down the lane, he could easily use the returns from his investments, on his family health, children’s higher education and marriage. He can set aside funds to solve each purpose and live an independent life even after retirement. The pensioners can still continue with the routine of investing from their earnings. Isn’t it a hassle-free mode of investing? Don’t ever skip; stick to the routine.
Warning: Not setting up a routine for investment may destroy your wealth…?
Not having a routine will leave you in a dependent mode or in a disaster state at a later point. You will be running around to earn at an old age when you should be living at peace. Look at Michael Jackson who earned more than 100 times compared to the bank clerk. What did he leave when he died? Michael Jackson had $400 million worth of debts hanging over him when he died.
With lack of knowledge in investments, even the once rich and famous personalities have lived in a poor state at their old age, especially when they need to have a relaxed life.
The biggest threat to your stock market investments and what you can do about it:
Investors who were very active during a bull run will not be active during the bear run. Investors who committed a mutual fund SIP will hesitate to renew when the market falls down. This is a biggest threat.
Do not stop your routine of investing on stocks, even while the market crashes. There will be less number of buyers when the investors are scared to sell. Keep going with your routine and utilize this time to buy more stocks and mutual funds, of course, for less money. Look at the history, Sensex was at its peak in 2007, but crashed and bottomed out in Mar 2009, again up in the end of 2010. If someone had invested by buying more stocks in mar 2009, he would have rewarded substantially at the end of 2010.
Instead of having and following the routine people look for short cuts and quick money or they will stay in their comfort zones by not investing. So they skip the routine and loose the returns. Routine brings more discipline.
Invest like you do shopping:
As quoted by the bestselling author of ‘Beating the Street’, Peter Lynch, "There are substantial rewards for adopting a regular routine of investing and following it no matter what, and additional rewards for buying more when most investors are scared into selling".
Why do people buy and shop more during Diwali or New Year? The reason is there will be a Big Sale happening in the malls because of that you will get things for discounted rate. If the price discount is more the crowd will be more.
Do we do the same thing with stock market? When the market comes down (discounted price for shares and mutual fund units) do we invest more? Instead of investing more investors will mindlessly sell. If we do invest more during the market fall, we will get compensated well for taking this audacious valiant decision.
Time to Take Action:
Now take your investment diary and write down the answers for the below questions.
What percentage of your income you are able to save regularly?
Under what situation, you may skip this regular savings?
Do you invest in stock market or mutual funds regularly?
Do you skip or discontinue your routine investments in stock market or mutual funds?
If you could have continued your routine investments (regardless of your personal situation or market situation), how much additional money you could have made?
The answers will prompt you to set a routine and follow the routine investment irrespective any adverse condition. You are on the way to the simple, hassle-free and more profitable investment method.
The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in
Have you noticed the way the women work at home, especially in the workday mornings? There will be many seeking their care for one thing or another, cooking sounds and aroma needing their attention every minute, they multitask at ease. If you keenly notice, you will be amazed at the pace and efficiency in everything they do. How is this possible, without having a degree or diploma in ‘home management’? Having a routine set in every action they do, they are able to effectively keep up with their work.
What everybody ought to know about setting up a routine investment?
You can fix a percentage from your monthly salary as an investment. Saving 10% every month from your monthly earning will be a good start. A challenge in having a routine is to keeping up with it. Whatever happens, you should never compromise on investing a fixed percentage as you have decided. How can we escape from an unexpected additional expense in a particular month? For emergencies, you can spend from your savings but never to miss adding 10% on your savings for that month.
For example, a lower middle class bank clerk starts investing 10-20% every month from his salary, when he is about 25-30 years of age. In 15-20 years down the lane, he could easily use the returns from his investments, on his family health, children’s higher education and marriage. He can set aside funds to solve each purpose and live an independent life even after retirement. The pensioners can still continue with the routine of investing from their earnings. Isn’t it a hassle-free mode of investing? Don’t ever skip; stick to the routine.
Warning: Not setting up a routine for investment may destroy your wealth…?
Not having a routine will leave you in a dependent mode or in a disaster state at a later point. You will be running around to earn at an old age when you should be living at peace. Look at Michael Jackson who earned more than 100 times compared to the bank clerk. What did he leave when he died? Michael Jackson had $400 million worth of debts hanging over him when he died.
With lack of knowledge in investments, even the once rich and famous personalities have lived in a poor state at their old age, especially when they need to have a relaxed life.
The biggest threat to your stock market investments and what you can do about it:
Investors who were very active during a bull run will not be active during the bear run. Investors who committed a mutual fund SIP will hesitate to renew when the market falls down. This is a biggest threat.
Do not stop your routine of investing on stocks, even while the market crashes. There will be less number of buyers when the investors are scared to sell. Keep going with your routine and utilize this time to buy more stocks and mutual funds, of course, for less money. Look at the history, Sensex was at its peak in 2007, but crashed and bottomed out in Mar 2009, again up in the end of 2010. If someone had invested by buying more stocks in mar 2009, he would have rewarded substantially at the end of 2010.
Instead of having and following the routine people look for short cuts and quick money or they will stay in their comfort zones by not investing. So they skip the routine and loose the returns. Routine brings more discipline.
Invest like you do shopping:
As quoted by the bestselling author of ‘Beating the Street’, Peter Lynch, "There are substantial rewards for adopting a regular routine of investing and following it no matter what, and additional rewards for buying more when most investors are scared into selling".
Why do people buy and shop more during Diwali or New Year? The reason is there will be a Big Sale happening in the malls because of that you will get things for discounted rate. If the price discount is more the crowd will be more.
Do we do the same thing with stock market? When the market comes down (discounted price for shares and mutual fund units) do we invest more? Instead of investing more investors will mindlessly sell. If we do invest more during the market fall, we will get compensated well for taking this audacious valiant decision.
Time to Take Action:
Now take your investment diary and write down the answers for the below questions.
What percentage of your income you are able to save regularly?
Under what situation, you may skip this regular savings?
Do you invest in stock market or mutual funds regularly?
Do you skip or discontinue your routine investments in stock market or mutual funds?
If you could have continued your routine investments (regardless of your personal situation or market situation), how much additional money you could have made?
The answers will prompt you to set a routine and follow the routine investment irrespective any adverse condition. You are on the way to the simple, hassle-free and more profitable investment method.
The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in
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