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Psychology plays a part in whatever decision we make, including investment in stocks. Sometime our built in psychology is helpful and many a times it is not. When psychology is not helpful we call them psychology traps. Investment in stocks is also guided by few psychology traps which influences us in making bad investment choices and lose money. Since on most occasion we are not aware of our psychological built up which guides us in taking bad investment decisions, chances are we keep on repeating such mistakes. If we are aware of them the probability of bad investment decisions reduces considerably. Let us look at some of these common psychological traps in which we unknowingly (most of the time) get entrapped. Psychological Trap No.1: Becoming a Blind Fan As people love to be in there comfort zone, they get attached to some of their choices of companies in which they have invested. In 1990s, UTI was the biggest mutual fund in India and its products were a rage. One of its pro...

I do not know what kind of shoes Warren Buffet wore. However, I am sure that a lot of people would definitely want to be in his shoes. I am not in a position to promise his shoes to the readers, what I can do is share a few timeless investment principles which if followed, will surely give the investor a firm standing, as firm as Buffet’s, no less. Warren Buffet owed his financial grooming to his mentor and teacher, Benjamin Graham. Concepts like security analysis and value investing acquired a new dimension under Graham. His timeless books on investments – Security Analysis (1934) and The Intelligent Investor (1949) provide an insight into the realms of investment dynamics. In the following paragraphs the essence of his teachings are laid out for the modern day investor to reap its benefits. Principle I: Invest with a Margin of Safety Better be safe than sorry. In financial-investment parlance, ‘margin of safety’ signifies buying of securities at a discount to its actual worth o...

“We provide sure-shot stock market investment tips. Enjoy the free trial for 6 months. If you are satisfied, you can enrol for the premium investment tips package anytime” Have you received an Email or SMS similar to the above? Also have you wonder, how could anyone provide sure-shot tips? If they know a sure-shot investment tip, why do they reveal it, instead of investing and making money for themselves? Let me reveal you today their trade secret. The secret behind the scam: “Sure-shot Investment Tips” and why you should not fall prey for this. The Scamsters Strategy!!! Scamsters, usually, pose as online stock market advisers. They somehow collect 1 lac contact details to start with. Once these scamsters have 100000 retail investors’ email id or phone number, their scam activities will start. And how it works!!! The modus operandi is simple. They give tips. Say in a particular month they will predict the market will go up or go down. Accordingly, their 100000 clients will ...

Ever seen a hurdle race? Noticed how the athlete concentrates on overcoming the hurdles? How they time their leap at the right moment to sail smoothly over them? For these people the barrier is just a physical obstacle and not a mental one. It is the mind which has to be geared to overcome barriers and this dictum holds true for investors too. It is often that investors behave in a manner which is just the opposite of what they should be doing in the first place. Instead of concentrating on facts they are driven by rumors. They chase the elusive winning stock and trip on the hurdle, losing money as a result. These mental hurdles which the investors encounter can be overcome by identifying and eliminating them by following some simple rules. Emotional Imbalance: Emotion is a barrier which may look harmless and passive but it has the potential to wreck havoc and bruise the investor financially. ‘Buy low and sell high’ is a simple mantra which investors need to follow. They forget...

It is said that money makes life simpler!! However, when it comes to manage that money people just run –away from it. As far as money management is considered, there are a few tasks like evaluating a stock that needs deep understanding and a specialised skill. There are few other simpler tasks, which everyone can do. At the outset, they may appear harder. However, they are simpler if you understand the basics and you start practicing it. It is our attitude at the beginning of a task which, more than anything else, will affect its successful outcome. 1) Budgeting: “Every young man should have a hobby. Learning how to handle money is the best one.” Jack Hurley. Budgeting, simply means being aware of where you are spending your money. If you want to learn about this concept then there are no. of books, blogs and tutorials dedicated to this topic. There are certain other websites also which freely guides you about every detail of budgeting. But take a minute to think, just apply...

A disciplined approach towards building an investment portfolio is in itself a very good investment for the investor. Investors aim to achieve their financial goals through their investments and these goals vary widely across the investor community. There are different types of investors who belong to different age brackets, have contrasting disposable incomes, and have a plethora of different preferences for which they need money during their lifetime. These factors and motives decide the investment pattern and the portfolio which needs to be built. Here are four small steps to build an effective investment portfolio which will help the investor achieve their dream run as far as investment yields are concerned: I. Get the right Asset Allocation for your needs Assessment of individual’s financial status, their investment goals are of prime importance for building a effective investment portfolio. Investor’s age decides the term period of the investment. A 21 year old, starting h...

The season of filing of tax returns is here. This year all those who have taxable income are required to file their return. Also those with income above Rs five lakhs have to compulsorily e-file their return. It’s very important to file error free Income tax Return to avoid future problems. Let’s see the most commonly committed mistakes those could be avoided. 1. Incorrect personal details: Every year a large number of returns are rejected for incorrect personal details like name, bank account number, IFSC code and address. This leads to delays in refunds. So please be sure to fill correct personal details. 2. Mistakes in claiming deductions under section 80C: Many of us think that employer’s contribution to EPF has to be included in claiming sec 80C benefits. It’s incorrect. Similarly only the principal repaid on housing loan is eligible for sec 80C. Many other deductions are claimed under wrong heads leading to their rejection and consequent arising of tax liability. 3. Fai...