Rule 1- Never Lose Money in Stock Market and Rule 2 -Don't forget Rule #1..Do you know how to select shares for investment ?

Many of us are busy in day today life and very few of them have real understanding of investing. We know investing could be of different types and could be done through different instruments / mode. However, the one we are going to talk about here is investing in shares or companies also popularly known as investing in stock or share market.

Investing in share market is considered to be confusing and risky for most of the people because of the complexity and fluctuation noted in returns. This I believe is because we don't really follow the right education of stock investing or stock/share selection before investing. This less knowledge creates doubt and anxiety which further leads to moving towards low return or highly safe return giving investment.

Through this blog I will try to cover few of the key points that may help you get educated on how to choose a good company for investment, however having a professional advice from your investment advisor will add further more value thereon.

Following points are some of the Warren Buffet (World's most successful and one of the richest Investor) advices which one can follow, which we will discuss in detail too: 

1. Invest in businesses having leaders with High Integrity and vision
2. Invest by facts not emotions 
3. Buy wonderful business - not cigar butts
4. Buy only those business / stock of business you understand/believe- also been told as Circle of Competence
5. Most IMPORTANTLY – “Be GREEDY when others are FEARFUL and FEARFUL when others are GREEDY” When you see great opportunity take it immediately.
6. Don’t sell unless the business fundamentally changes
7. Buy at price below intrinsic value- (Knowing about future by adding the discounted cash flows value)
8. Always choose company having competitive advantage- for example- companies which have high brand recognition- Jockey, Nike, fast food chain - McDonalds, KFC, these companies can still increase their sales or survive even in inflating economies or price increase.

 Now, let me try to cover each of these Warren Buffet advices in detail :-

 1.     Before you invest in any company and setting your expectation on returns and numbers or goals, do check at the integrity, background, history of promoter or leaders leading the company. This you can check by knowing them better. If you are fortunate enough to know them personally then you may just know about their character, history and commitment directly.

However most of the time, you don’t know the leaders or promoters every time – in such a scenario – you may check about them through different mediums like – Magazine, print/video interviews about their vision, internet, history of claims and achievements, director(s), management report published with auditor / financial reports etc.

 You should always choose to invest with the companies that is handled by leaders of high integrity, great track record, vision and achievements in past.

2.  Invest based on facts and not using your emotions- When I say fact -do check the fundamentals of company, numbers of company like profit and loss, promoter holding, past growth and future of company etc., important financial ratios to be analysed before investing and avoid flowing with emotions when it comes to investing or money.

Let me know in comment box if you like to know more about this will write another blog in detail covering this precious knowledge on investing.

3. Buy wonderful business - not cigar butts- following on above points – do not look for companies that are like cigar butts which doesn’t have any value or poor business or poor future, go and select only those companies which have wonderful past, present and future. Read more about the current and future trends of industry in which company operates to know possibility of increasing value of your investment.

4. Very Important - Be GREEDY when others are FEARFUL and FEARFUL when others are GREEDY-simply means become greedy when everyone is fearful and selling their stocks/shares, because this is the time when stock market is giving you the opportunity to buy stocks at very low or reasonable price.

Alternatively become fearful when everyone is greedy, this is the best time to book profit or do less purchase if you plan to hold for long time because now at this time market becomes -pricy. 

5. Warren says- don’t buy stock/shares of companies which you don’t understand. You should buy where you can relate and understand how it works and start with one that are directly related to your life. Like he himself in his initial days worked for Coca Cola and later on became the biggest investor and wealth maker through investment in Coca Cola only. This is also known as circle of competence – which relates with your circle of competence. 

6.  Don’t sell unless the business fundamentally changes, Here Warren Buffet says if you are sure of your investment – just don’t start selling your stocks due to some bad news in the market about the company. He further says- don’t sell your investment unless the logic at which you invested significantly changes, because otherwise you may end up making loss on your investment.

7.  In case your selected company shares is getting traded at a price which is below the intrinsic value, then it’s a good time to enter for investment or purchase this stock. Intrinsic value of shares is nothing but per value of shares calculated in present time based on future income of company. There are multiple ways to calculate Intrinsic value, but the most popular one is discounted cash flow approach.

8. Future is highly dynamic and it keeps changing, thus for investment check you choose company who can have competitive advantage in future or high brand value or companies with big distribution channel or entry business barrier for other companies. For example- companies which have high brand recognition- Jockey, Nike, fast food chain - McDonalds, KFC, these companies can still increase their sales or survive even in inflating economies or price increase.

Hope this article gives you basic understanding of investing and ideas on your investment thoughts. If you like the article – do like and comment to help me understand on your feedback and what else you would like to know on investing and money matters.

Why Rich are Getting Richer and Poor are getting Poorer

Why Rich are Getting Richer and Poor are getting Poorer

 

Since your childhood in Bollywood and general life, we have seen Rich is getting Richer and Poor getting Poorer.

Sometimes I used to think – why this is generally happens like this only. Then after some thinking I realized that Bollywood movie is the reflection of large population of society i.e. how they work, think and act in their personal and society.

Then this brought me to another thought it is also about the way people think and act on their thinking. Most of the people or I would say nearly 95%-98% population in this world don’t think in the direction of growth and those who think they don’t act accordingly.

Rich people and Poor People have two different extremes of population in our society. Only small percentage of population falls in rich or super rich category.

I have seen many people even after learning for many years, attaining college, professional degrees, don’t lead a luxury life. At prima facie seeing their life, cars, house– you might feel these people are rich, however on the contrary they were just meeting their needs and busy paying bills and debt.

Recently I was listening the audio book – Rich Dad and Poor Dad by Robert Kiyosaki, which I found very interesting and worth sharing some of the points here. So whatever you are going to read here is mostly thoughts and ideas that pushed me to share this information with all of you in my own words.

Rich people are rich because of the way they think and act, on events and situations happening around them, while poor thought is the first thing to make Poor more poorer. This article doesn’t says who is right or who is wrong, it only talks about how Rich becomes richer and Poor becomes poorer.

Following comparison is the quick thought – which will provoke you also to change your thought too and may help you become rich and richer too:-

 

1.   Poor man mentality teaches their kids to learn in school and college to get ready for good job and work for a good company, while Rich man would look to teach their kids to build businesses and create job or learn to takeover business.

 

2.   Poor person will say if I have worked for 20-25 years for the organization, I deserve retirement fund and will look for lazy solutions, while Rich will look for financial independence and would not look for dependence options controlled by others, government.

 

3.   Poor man thinks rich people should pay more taxes to support the under privileges and Rich people think paying taxes is like a punishment to produce more and giving to those who don’t make good amount of effort

 

4.   Poor Man thinks I can’t become rich because I have lot of responsibilities, kids and family which eventually becomes his reality, Rich man thinks and acts for phrase- I should be rich because I need to meet their needs.

 

5.   Poor Man mentality says- Love for Money is the only reason for all problems, Rich Man believes Lack of Money is the only reason for all problems.

 

6.   Poor mentality person –explains why he can’t afford, this shows Lazy attitude, while Rich mentality person says and find answer to how I can afford and teaches to kids too.

 

7.   Poor Person may say- do not discuss money at the table of dinner or lunch, Rich person encourage discussing topics like money making life easier.

 

8. Do you think your house is the biggest asset and largest Investment – then you could be in trouble says rich mentality person who thinks it is a liability.

 

9.   Money is not important to poor people is what he will repeat, Rich person mentality says Money is Power.

 

10. Poor teaches how to earn money, Rich person tells how money should earn for you.

 

11. Rich mentality person will say – considering yourself as poor is eternal while broken is a temporary which means rich person says he will not be poor always.

 

What will make you Rich then?

 

Money is Powerful but more than this knowledge of making money is more powerful. This could also be called as look for Financial Intelligence and not only academic, or professional knowledge, because this will help you and your kids, family lead much comfortable life.

Most people only talk and don’t do anything about it. People who are rich doesn’t mean they never failed, they failed but they never give up. They working on making their mental health strong, because strong mind leads to strong bank balance.

Don’t get pushed by life, rather look to win then looking for reasons to loose, learn to take risk.

Going to school or college is important to learn specific skill, so that they can contribute to their livelihood and society. However, lot of people consider this as last step to earn money while very few think this first step.

Lesson # 1- Rich don’t work for money

When you are young or have time, don’t waste your time to serve and earning money only, invest your time to learn how people make money. Some employee working with an employer never ask how he is making money or managing risk in his business and employee etc. All they ask is how they can get appraisal, do their job only etc.

Everyone wants to change others, don’t want to change themselves which is far easier and quit jobs searching for better paying job or better manager thinking this will solve the problem.

Learn how to have money work for you and not to quit when you fail.

Don’t become slave to MONEY and your pay cycles. If you choose to work for money then life will become terrible and this is how most of the employee feels when they see their checks.

Government takes revenue from you in the form of taxes, and it is poor people who have to pay more than those who make more and they become richer.

 

Lesson # 2- Learn to control your desire and stay away from this trap

Don’t become slave of your desire, fear to loose money, because lot of people who are rich are more concerned and worried to maintain their status and they become part of this trap and work harder and harder to maintain their current status of life.

Learning to have ignorance also is important so that you don’t become part of trap created by emotions, fear of not able to pay bills, or desires, greed because with money increasing desire will also start increasing with a big speed leading to unwanted spending.

Choosing our thought is very important to become rich, instead getting driven by emotions is important rather than reacting to your fear, money or job loss.

Lesson # 3- Learn to work for your dream for free

When you work for a fixed monthly or weekly salary, you become slave of that frequency and amount you are expecting and you would like to work only for that amount. Waking up in the middle of night you have to pay bills, is terrified situation, don’t let money run your life.

Sometimes working for free dedicatedly will help you learn the business and work better and will open up your mind for all other different avenues of business too. Because then you will see opportunities what others can’t see.

Job is always a short term answer for long term problems discussed above.

Conclusion

Friends, there is a lot to learn on this topic, however to conclude for now-please understand to become rich the first thing you have to do is learn to have financial intelligence, change the way you think about money, you want to work for paycheck given every month or look for much bigger picture. Take steps to learn how money will work for you instead you working for money.

Do let me know about your experience reading this article by commenting below and if you liked this information, don’t forget to hare the article with your friends and loved one.

How to Become Rich

I want to do this, I want to do that, become rich or wish one fine day Money Grows on Tree

You must have found lot of people talking about becoming rich and having financial freedom either with their jobs or in business or while smoking, talking, chatting. For this they must have be talking something about doing some business, insurance agent, starting envying someone making money, to ending by going back to their jobs and next day starting again from where they started.

But whenever they try to do something they fail because either they fall short in commitment,  planning, passion or it was just a wish and not a strong desire to succeed. Definitely you can't grow Money but definitely make it Work for you.

So, even if you are short of money and time, as a beginner follow these basic steps:

1. Identify your potential, what you are GOOD at,
2. Set a TARGET what you want to achieve,
3. Check what resources are Available to you,
4. Start working on it with Commitment, Hard Work, Persistence
5. Start Tracking, Don't Loose Focus

What are 10 Financial tips and area where you can learn and earn :-

1. Stock Market- May be a good idea if you have an understanding of companies business, financial numbers, stock trends. Like Warren Buffet said investing in companies requires long time to ripe the benefits of patience.
2. Mutual Fund - If you are not good at stock market investment which involves a lot of risk, go for Mutual fund investment where your money is managed by specialized financial advisers and professionals. These mutual fund adviser invest the fund in diversified areas of market like equity, debt and other government instruments. So you as an investor based on your risk appetite can decide where to invest your money. Mutual fund investment usually target to maximize the profit for investor and for themselves. Good Example of MF investment- If MF House or Manager invest in FMCG company, they may like to have consistent stable return on investment. They may invest in Tea/coffee and Ice cream companies so that with seasonal changes the return on investment (ROI) is not effected, which means when one business. (Tea/Coffee) is down in summer Ice cream business or share will perform and vice-versa.
3. E-commerce portal- Use and learn different ways of doing business on e-commerce along with learning and earning money and reputation in society,
4. Find and work on Niche Ideas : Find Solution in Problems of people
5. Learn the art of investing- Learn to invest along with saving, observe, follow and invest small and learn for bigger dream plans
6. Don't hesitate to ask or seek professional advice- atleast it is better than loosing money.
7. Stop spending unnecessarily unless it is required
8. Invest in learning and yourself that can help you achieve more and become richer
9. Share your knowledge and Network, because Network = Net Worth in current market.
10. Don't Just Plan - Start Now

Always remember there are No Shortcut for success...

Do share this post if you like someone else also to read this article. I would be happy to connect more and share my experience & knowledge to learn further from you.