ET Wealth Wisdom Ep 131: 10 Rules for Proper Investing


Hello everyone and welcome to episode 131 of the ET Wealth Wisdom Podcast
I am Tania Jaleel
Investing is not easy.
As much as we try to simplify it and talk about it enough to give investors confidence, it stays tough.
There seem to be many ways to invest successfully and one is never sure of what to make of a decision.
The process seems to be filled with too many questions.
In her most recent column, CIEL’s Uma Shashikant wrote about the steps to follow when investing and the pitfalls to avoid.
In this podcast, we take a look at the 10 steps to take when investing after Uma Shashikant
First, there is no excuse for not learning the ropes.
You have to say that first and in advance.
There are many stories about how people made money easily; some talk about trading stocks as if it is the surest route to wealth; and there is the lure of the sales pitch, media hype, and promotions.
Amid all this noise, investing is serious business that requires time, effort, perseverance, patience, knowledge, attitude, and skill.
Do not remain indecisive and make ignorance a virtue.
Start small but keep learning.
Second, you shouldn’t confuse effort with effectiveness.
Many of us believe that if we put many hours of work into it, the end result must be good.
If the effort doesn’t have the focus and value it needs, it can’t be worth it.
We could save all our lives in our Provident Fund.
We can even add a VPF.
And we can also refrain from drawing something or taking out loans. A lot of effort over a long period of time.
But suboptimal results because we choose an income-oriented and not a growth-oriented instrument.
Let your effort count.
Third, even if you make a plan for your future and decide to save and invest towards that goal, you need to identify with the effort and process.
It is unlikely that you will hold on to it if at some point you find it unimportant or tend to deny the importance of the goal at hand.
Parents usually put their children and their education above other goals.
They jeopardize other goals, including retirement, when allocating funds.
With retirement a distant goal, many don’t start saving soon enough.
Your retirement must be just as important as your child’s education.
Fourth, many give up too quickly on saving and investing.
You start a sip; or buy an insurance policy; or even start an RD.
The intention is great.
Similar to diets and exercise.
The temptation to eat a favorite high-calorie meal or the prospect of a rainy day is enough to make you let go. They soon gave up.
Saving and investing to save taxes is one such investment that doesn’t last.
Realize how much you can save and stick with it.
Fifth, the transformation must be experienced after the formation of an investment habit.
The more successful investors are those who started out small.
But the successes of their early investments have the power to change the way you think about saving and investing.
They enjoy the results of their habit and choice.
You spread the word. Persuade them more to do what is good for them.
But their own money habits are changing.
They pay more attention to their income; more targeted in their spending; and more persistent in their investment habits.
Trust in the power of positive results.
Sixth, planning is important.
Being able to visualize the goals you are saving for and being determined to fund those goals is required in saving and investing.
However, one must protect oneself from the dangers of vicarious investing.
Seventh, don’t be obsessed with perfection.
Since we all hate regret as an emotion and we have too many options, we often end up with second best.
There always seems to be a different investment, a different strategy, a different tactic out there that does better. But this striving can become pointless.
Worse, it can take us to a place where we prefer indolence to action.
Make your choice carefully after weighing the merits of your investment strategy.
Don’t question this decision too often and too often.
Eighth, don’t underestimate the place of patience in your investment process.
There are only two options on the larger scale – you act aggressively and invest considerable effort, money, time, and tactics to achieve your financial goals.
Or, you take the time to offer you the rewards for the careful and considered effort you made in the beginning.
Choose what suits you, but be aware that even the simplest savings and investment can bring great benefits if you are patient.
Ninth, don’t rearrange your financial life too often to counter your fear that things have changed drastically.
There is always a new story in town.
There are fancy new products.
New theories are circulating.
Think about what’s going on.
But you have a broader framework for what you save and invest for and what your needs are.
Risk, return, diversification and liquidity are certainly the most important cornerstones of your investment strategy and are crucial for your success.
Learn the science and art of valuation using these core ideas.
Don’t let your defenses drop or invest against your known preferences for fear of missing out on an opportunity.
Tenth, there is always room for errors and corrections.
Be nice to yourself.
Don’t assume that you are not doing enough without realizing your financial situation.
Saving and investing are habits that you must work on in order for them to become part of your nature.
The motivation to persevere will of course follow.
Don’t give up until this transformation has taken place.
Your money, your life.
And all for this week
Come back next week for more wealth wisdom

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