Simple and Complex

There are many things in life that we complicate for ourselves. Simple thinking can be one good solution for most of the problems.
Investment is one area where we try to complicate too many things. Choosing the right stock, Timing ups and downs , Listening to experts (??) on TV and other media . Still at times our portfolio built by all this complex info processed doesn't yield the desired results...What's a simple solution??? 1) Invest only for long term in equity with definite goals 2) Do most of your investments as systematically as possible ( Be regular) 3) Don't look at your portfolio value everyday and make wrong decisions ( easier said than done!)

Sub-prime crisis and India

There is a lot happening in US because of the sub-prime crisis . I was reading in some website that there was no sub-prime lending in India. Sub-prime lending is about giving a loan to a person with poor credit history. In India, lending to people with poor credit history is minimal . If we look at the chunk of middle class home loan borrowers, they have good credit history.But their hefty home loan EMI payments are dependent highly rather solely upon their pay checks. A lot of borrowers are from IT industry. So, If the IT Industry is hit or even shaken significantly there may be a problem of repayment that can arise in India too.
Although real estate prices are stable for a year or so, they have been at a BUBBLE level only (I feel, a correction in Indian real estate is long overdue now). So, any shake up in the employment stability scenario can shake up the economy a bit..( and also the foundation of a couple of banks??). At this juncture, the impact of US crisis on Indian IT seems to be a significant event. Lets keep our fingers crossed till the event unfolds itself or passes of quietly.
search terms : IT recession, US , Impact on IT companies like TCS, Infosys, IBM, Cognizant. Real estate correction in India, Are you paying High EMIs. Home loans, Job scenarios because of sub-prime crisis, IT recruitment scenario, Recession , economic slow down in India.

Free fall of stocks

There is a free fall of stocks in Indian stocks markets following the global trends. Indian indices grew faster than the global peers. So ,they are falling faster too.
Sub - Prime crisis and US recession seem to be the guiding factors. Earlier we were discounting all bad news .Now we are discounting all good news.
Indian economic growth is also seeming to slow down.
All said and done , the free fall is bringing a lot of stocks to attractive valuation levels. May be its time to start looking out for and prepare a shopping list of stocks for long term investments. There may be further fall too but small accumulations from now on may definitely help in long run. SIP in Equity MF must be the best answer to this situation.

What strategy to adopt now

With a lot of volatility in the market, what is the way to go now.. Buy on every dips???. You never know the real bottom of the markets ...So, never buy on each and every dip .

a) Select your long term stocks

b) Keep aside a fixed amount to invest in those stocks every month

c) Keep buying the chosen stocks on pre-determined dates or when it comes below a particular price.

d) Always invest with a very long term view and never go by TIPs alone.

Or better SIP it out in Diversified equity MFs

Home loan

I have seen many salaried class people say that we took up home loan to save tax...Its a good idea but not always.
When taking a loan understand that your net interest paid get reduced to save extent notionally by the tax you save. If your HRA benefits are greater than loss from house property , you should weigh both options carefully to take a decision. If you are staying in a house bought on loan , its not a real asset which generates income for you. Also, don't go over board in taking a loan. When taking a loan , if your EMI exceeds 25% of your net pay think twice before you take the home loan.

What makes you rich ?

It is not what you eat but what you digest that makes you strong.
It is not what you read but what you remember that makes you learned.
It is not what you profess but what you practice that makes you great.
It is not what you earn but what you save that makes you rich.

Change of season

Season's keep changing. So, does the sentiments in stock market. The stocks that were looking bright and prosperous a couple of weeks back are beaten to death by the street. What are the lessons to learn from this. 1) We should always buy stocks trying to understand its fundamentals. Do not buy something because the stock is the ' In thing/ fashion". 2) Invest always for the long term ( at least five years) 3) Once you have made a decision stick to it and be patient to reap the result. Do not get disheartened by short term fluctuations.
Like we seamlessly adapt to seasons, we should adapt to bull and bear sentiments in the market. If you don't adapt to the changing season will become a blamer and would never derive benefit from equity.

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These are just opinions/ ideas exchanged. No one can claim us responsible for any investment failures /losses based on the ideas expressed here.

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