Ten years ago folks were chasing the next hot property listing. Pre-booking and flipping was generating high annual returns and new constructions were getting sold out pre-launch.
Four years ago, the “game” changed to dot-com companies. Their valuation was doubling overnight. The mobile revolution brought with it the second dot-com boom. Greed was widespread and a presentation and a degree was the hurdle to riches and raising capital at ever increasing valuations. How could you miss out on a sure thing?
And how things have changed – today everyone is running for cover. Properties are selling for a discount, and startups are closing – losing their respective investors in carry and principal respectively. It is not that the economy is not doing well – India is still growing at 7%, faster than the rest of the world. It’s just that every gluttonous feeding frenzy is followed by a diet. In such a scenario what does an investor do? Try and catch the next fad – while running the risk of betting on the wrong fad or even worse the wrong horse in the right fad. Not really a long term plan, is it.
How does this frenzy come to pass? First realize that media likes quick stories – doubling of valuation, yeah that’s a story. So is a company going bust – a sad human story but still eye-ball grabbing. What’s boring for the media is building wealth slowly and steadily over years of patience and discipline. Why would the media pick it up or write about it? Nothing “sensational” there to sell. No noise to be created. It doesn’t matter if that is the best strategy to build life-long wealth without taking too many undo risks. It’s a strategy everyone can implement and take control of their financial future.
We have written about one DIY investment plan and you can read it in detail here. It goes roughly like this:
- Pay back your loans and credit card debt first
- Figure out your surplus income
- Invest surplus income monthly in Direct Index funds
- Roughly 110 – age in equity fund and remainder in debt fund
- Buy a house only after you have 25% down payment or more
If you search the internet, you will find many such plans. They all have a few common features:
- Ignore media / experts
- Start investing early
- Invest regularly
- Don’t pay a lot for investment advice (commissions are a strict no-no)
- Stay invested through market ups and down
We love such plans because they are easily implementable. Such plans do not require the ability to pick winning stocks, do not require the ability to time the market and do not require the ability to pick the next “hot” area to invest in – all tremendously hard things to do.
One thing we can be sure of – the “game” will change again. A new fad will take over, and valuations will get out of hand. I am also sure that most of us will hear about it only after it has passed us by. So, stop chasing and start following the easy steps to lifelong wealth growth.
Visit www.kuvera.in to invest in “Direct Plans” of Mutual Funds and save BIG on commissions!!!
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