Good Stock Market Blog

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Most of the blogs that I have seen, usually provide "buy" or "sell" recommendations. I have never came across a blog which tells a new investor (esp India centric) on how to start investing in stocks.
I just found a good blog. It has an interesting post "Secrets of Successful Investors". Pretty handy.

How & When to invest in stocks?

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Everyone have heard about the enormous profits earned by people investing in stock markets. This causes a greed among investors to earn quick bucks. Equities have definitely given biggest returns amongst all other investing avenues. But in India, lot of people have still stayed away from stock market. How & When to start investing in equities?

I have seen first timers getting the advice to go the Mutual Fund route to equity exposure. I do not think it should always be that way. If you are willing to do some hard work, have long term goals and patience then despite being a first-timer, you should seriously think about investing in equity markets. Some tips on how and when to start :

1) There is NO best time to start investing. Rather than waiting for a bear phase or identifying the start of bull phase, invest when you can some cash to spare.

2) Keep in mind that stock market means risk. Dont expect astronomical returns or scamper away on the first hint of losses. Stock market wont give you instant richness, but a disciplined approach can help you achieve your long term goals.

3) Stock markets are just one avenue of investing, dont put all your eggs in this basket.

4) Get a Demat Account as soon as possible and choose a online broker who have minimum charges for transactions. Get aware of various terminologies and ask the broker to provide you a demonstration.

5) Read, Research and Understand before investing. Dont go by the tips from relatives, friends, magazines or websites. If anyone provide you any information about any company cross-check it, look at the history and try to identify a trend.

6) Instead of investing large money in a single chunk, spread your investments in time. You may have 50,000 Rs for investing, but do invest it over many months and across different companies.

7) Most first timer think that they need atleast few thousands of ruppees to start investing. You can start with whatever money you have. The lesser the better since if you gain, you will be thrilled that you started building your portfolio from miniscle amount. If you loose, you wont have much regret over the amount you lost and you will gain valuable experience.

8) Dont be greedy if you gain. It is easier said than done. If you gain, start believing yourself and build confidence but dont overdo it. Gordon Gekko said "Greed is good", but for first timers, it is better to start slowly. Think of this as a marathon than a sprint.

9) Dont care much about short term news report of stock markets going up or down. Stay invested for long term.

10) After getting Demat Account, start reading, researching and upgrading yourself about the terminologies and the way to do research. But dont keep lingering too long. Use a small amount and start investing. Unless your money is involved, you wont learn quickly.

Renting Vs Buying a House Dilemma

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I recently read an article in Economic Times. It talked about virtues of buying versus renting a house. Here is a sample calculation done by the author. I fail to understand that why everyone talks about buying a house as biggest thing in your life. In India, parents or peer pressure causes each individual to think on the lines of getting their first house as soon as possible. You finish your education, get married, buy a house, have kids so on and so forth. Some things remain same. Times are changing and so should the needs and priorities.

If you are an individual who has been pressured into buying a house to "build an asset", dont panic. Think really thoroughly before jumping into the buying spree. Here are few questions you can ask yourself before you think of buying a house:

1) Will you be changing the city in few years owing to greater opportunity? If yes, postpone the buying idea.

2) Do you want to settle abroad in coming few years, or you think your spouse might get an opportunity to do that, postpone buying. Everyone now a days wants to settle outside India.

3) Do you or your spouse, wish to pursue higher education (usually MBA), then wait for the house. A higher education can cost a handsome money.

4) Can you really afford the EMI without sacrificing your other needs? There are lot of people (middle class) who want to see the world. You can't do that when you are old and your body doesn't help you. Life is short, enjoy it.

5) Are you thinking of starting your own company? Most of the people don't start companies since they never come out of rat-race. The vicious cycle of adding responsibilities, liabilities and then never able to coming out of it. Think seriously.

  • There is no major income tax advantage with buying Vs Renting for the salaried.
  • Buying a house would imply less money in hand for other needs/enjoyment in life
  • Rent will always be less than the EMI you shell for the entire life typically in a metro
  • A house is usually an asset for you when you retire and have no income. Then it saves your monthly outgo for rent. But with your old age, there are chances that your children will no longer be in India or in the same city. So why purchase a big house which you cannot maintain.
There are so many better avenues to put your hard earned money and getting much better returns that you can think of putting your money for them for long term. Once you are settled in a city, then you can think of encashing that money for buying a house.

If you still think buying a house makes lot of sense, buy a house in a city where you want to retire and stay for rest of your life.