1. Every investor has different long-term goals based on his/her current status, income, risk profile and investment horizon.
2. If we consciously formulate our financial plan, we are likely to be more empowered, create more suitable portfolios and increase the odds of actually achieving our goals through a long-term strategy.
3. If we want to make a quick fortune by taking high risks, trading too frequently, and investing large amounts in short-term fads, we face the prospect of losing capital over a period of time.
4. On the other hand, being patient investors, we will have greater visibility over future portfolio movements, preferring stable returns over a longer period, and investing in long-term themes and in well-researched ideas.
5. We should also avoid "pre-tax" myopia of looking at gross returns, and not calculating "post-tax" returns of various investments, as they have different tax rates.
6. Credit risk, interest rate risk and concentration risk are inherent in all investments in variable proportions, and common precautions such as diversification, investing in high rated companies and funds, etc., will help us in capital protection.
7. To avoid losing money through inadequate knowledge, we should question, query and understand products we intend to invest in, especially their behaviour in different situations.
8. We should also periodically review (not time or churn) our portfolios, as markets are increasingly dynamic with many variables like interest rates, GDP growth, inflation, exchange rates, crude prices, etc. affecting our investments, so that we are not caught by surprise when we really need our target funds.
9. Notwithstanding complexity of the market, we just require to stick to common sense ground rules, which have thankfully not changed, to achieve our long-term goals.
2. If we consciously formulate our financial plan, we are likely to be more empowered, create more suitable portfolios and increase the odds of actually achieving our goals through a long-term strategy.
3. If we want to make a quick fortune by taking high risks, trading too frequently, and investing large amounts in short-term fads, we face the prospect of losing capital over a period of time.
4. On the other hand, being patient investors, we will have greater visibility over future portfolio movements, preferring stable returns over a longer period, and investing in long-term themes and in well-researched ideas.
5. We should also avoid "pre-tax" myopia of looking at gross returns, and not calculating "post-tax" returns of various investments, as they have different tax rates.
6. Credit risk, interest rate risk and concentration risk are inherent in all investments in variable proportions, and common precautions such as diversification, investing in high rated companies and funds, etc., will help us in capital protection.
7. To avoid losing money through inadequate knowledge, we should question, query and understand products we intend to invest in, especially their behaviour in different situations.
8. We should also periodically review (not time or churn) our portfolios, as markets are increasingly dynamic with many variables like interest rates, GDP growth, inflation, exchange rates, crude prices, etc. affecting our investments, so that we are not caught by surprise when we really need our target funds.
9. Notwithstanding complexity of the market, we just require to stick to common sense ground rules, which have thankfully not changed, to achieve our long-term goals.