2015 in review

The WordPress.com stats helper monkeys prepared a 2015 annual report for this blog.

Here’s an excerpt:

The Louvre Museum has 8.5 million visitors per year. This blog was viewed about 75,000 times in 2015. If it were an exhibit at the Louvre Museum, it would take about 3 days for that many people to see it.

Click here to see the complete report.

How to use my blog effectively

I started this blog on June 17th of this year, so it has been around for about 4 months and a fortnight. I must say that I am very surprised at the reception the blog has had. The reason I started it was simple – I knew that a blog with such personal dimension in creating awareness about how to arrive at financial independence did not exist, and given the current interest in personal finance related issues, I was quite sure of a decent readership. Even so, a readership of about 55000 views in this period is astounding to me – it has also encouraged me to keep writing regularly, as the 160 posts will show.

Many readers of the blog have asked me queries ranging from insurance to stock picking to mutual funds and everything in between. While I try to answer every query addressed to me, it is getting more difficult to do so with the increasing number of transactions. More importantly, a lot of these queries would actually get addressed if the reader took care to search the blog for the relevant posts and read these properly. At another level, I may also be responsible to a degree inasmuch as I have not explicitly explained how the blog can be used effectively. So, here is my attempt to do so.

Just below the Title of the blog you will see the link “For first time Readers”. Any new reader or even the old ones should definitely click on this link. It will take you to a post which has further links to a host of useful guides that I have written over the last 4 months. All of these are a must read for anyone interested in personal finance and trying to chart out a plan of their own in their journey towards financial independence. Be sure to click on each of the hyperlinks to read the posts.

The top box on the right hand panel is for search, where you can search for any phrase. For example ” MF Portfolio” will lead you to some posts where this phrase is a part of. If you provide your email id by clicking on the Button “Follow”, you will get an email intimation whenever a new post is published in the blog. I will recommend you to do this if you are interested in following any new posts that I write. Going down the right hand panel, you will see a listing of the recent posts and the archives by month. If you have started reading my blog in October, you may want to click on the earlier month’s to check out what I had written about in those months.

The “Categories” section is obviously the most interesting. I have tried to make the category names as self-explanatory as possible and I hope you will not have problems in using this well. For example you can click on the category SIP to check out all the posts I have written on it. A combination of this and the search feature should be getting you what you want.

How can you get in touch with me if you have a question? Well, there are several ways and it really depends on why you want to interact with me. See below:-

  • If you have a query or a comment on a post I have written then you can simply comment in the blog itself. I normally respond to all the comments within a day.
  • If your query is specific to stock markets or stocks, I encourage you to become member of my Facebook group “Market Musings” and post your query there. You will get a response not only from me but also from a lot of other members who are active in the stock market.
  • If you have a query on your personal investment then the best way will be to send me a message on Facebook Messenger. I normally respond within 1 day here too.
  • If you want me to help you with your financial plan send me a message and ask for my email id. Once I respond with it, you can send me the details through email.

I will of course, continue to write the blog but feel that it already contains a wealth of information that you can use effectively in planning out your route to financial independence. Read it and use it well – it does have potential to decisively change your life for the better.

A compilation of all my guides

Over the past 2 months and a bit, I have published several posts in the blog that have pretty much covered most aspects of personal finance and goal based investments. As new readers keep visiting the blog, I get inundated by the same queries which have already been answered in the earlier posts. I thought it will be a good idea to point all readers to the guides that I have published over this time. You can read these to gain a complete understanding of most investment issues.

The following are the guides that you will find to be the most useful:-

As you know I had started a series on how to build your own stock portfolio from scratch. Over the next week, I will get into specifics of the sectors and companies that you can look at investing.

I am happy to see many people have got started out here. Also, become a part of my Facebook group Market Musings where a lot more is discussed on the general market situation and also individual stocks.

Interested readers may pls follow my blog on email by clicking on the relevant button on the right hand panel. I will shortly be stopping the practice of posting the links in different Facebook groups. Following the blog will ensure you get intimated whenever there is a new post.

Building your own stock portfolio – Know the ground rules first

So you have finally decided that you need to invest in stocks. You have defined an amount you can spend, have got a Demat and a Trading account in place and may even have signed up with a broker or some financial adviser to help you select stocks. However, before you take the plunge ans start investing, there are a few critical ground rules that you must keep in mind. This post ia about such rules to be remembered.

  • You will always look to build a portfolio pf stocks and be concerned about performance of portfolio. The portfolio approach is the most important aspect of equity investing. The basic idea is this – as you spread your investment over multiple stocks in multiple sectors, the scale of the risk in each of these is contained. So at an overall portfolio level you have a lower risk of losses. We will discuss on how to build a portfolio at a later date.
  • Ideally no stock should be more than 10 % or less than 2 % of your portfolio value in the long run. All of us will have our own favorite companies whose shares we want to buy. However, if we cap the investment at not more than 5 % of the portfolio value then we are once again containing the risk. Similarly, by investing at least 1 % of the portfolio value in a stock, you are ensuring that the investment is at a meaningful level.
  • You do not need to analyse companies yourself but must have access to the right information. Many people may have told you that you must read tons of financial information and understand every word of the Balance sheet before you can invest in a company. That is completely unnecessary and frankly it is an utter waste of time. Do not reinvent the wheel – there are far better qualified people than you who can do this well. All you need is to have access to such data and an ability to understand simple stuff well.
  • Always buy in small lots and with price triggers for both buying and selling. In stocks it is very important to understand that pricing is dynamic and is impossible to predict in the short run. It therefore does not make any sense to invest a large amount at one go. You can decide on what is a large amount based on the portfolio value that you want to create. We will be discussing this in much greater detail at a later point in time. Also, you must set price triggers for both buying and selling – this will take away the emotion from the decision and enable you to carry out trade calmly.
  • All profits and losses are notional till you make a sale. The value of your portfolio will be changing everyday and it can be like a roller coaster ride emotionally. While we will get elated when it rises by 3 % on a single day, it will be emotionally gut wrenching to see it nose dive by the same amount on other days. Remember that you do not make or lose money till you actually sell. On many days doing nothing can be the best solution.
  • Never bring yourself to a situation so that you have to sell stocks at the wrong time. The most serious risk in stock markets is that we may sometimes be forced to redeem part of our portfolio at the wrong time, as we need the money for some emergency. Your financial plan must address this issue squarely and make sure that you will have other sources of obtaining this money even if there is an emergency.
  • You will make both right and wrong calls on individual stocks do not worry about it. You must always evaluate your portfolio performance, it is impossible for most people to get even 70 % of their stock picks correct. Even if you get half of your stock picks correct for your portfolio, you will make a great deal of money from it.
  • Review your stocks in the portfolio every month / quarter but do not be obsessed with it.
  • You need to try and buy stocks at the right price and also hold these for as long as practical.
  • Do not be sentimental about any stock, if the review shows it has to be got rid of, do so immediately.

We will get into more specific aspects of building a high performing stock portfolio, the next post onward.

Interested readers may pls follow my blog on email by clicking on the relevant button on the right hand panel. I will shortly be stopping the practice of posting the links in different Facebook groups. Following the blog will ensure you get intimated whenever there is a new post.

Guide for buying a first home

Over the last week, I have published a few posts on my blog dealing with issues of first time home purchase. I thought it would be a good idea to combine all these posts to make a guide for home buying. As before you can follow the hyperlinks to get to the individual posts. New readers should read all of these to get a complete understanding of all the relevant aspects.

Should you buy your first home now outlines all the important factors that need to be taken into consideration when you are planning to buy your first home. The first case study talks of a situation where a family can afford the home they are seeking to buy. The next case study is of a situation where buying the kind of home the family is looking at will not be financially prudent. 

There is an idea some people have that investing in equity now and buying a home later on will work out better. This post handles that aspect and discusses it thoroughly. This first time home buying checklist will help you to make a better decision on whether you are ready to buy the home or not.

Most of us will need home loans to buy a home, get a fuller knowledge of it here. The next post outlines why you must try to pay your home loan quickly. The final post of the series looks at my own experience of home buying and home loan.

I hope armed with this knowledge many first time home buyers will be able to buy their own homes in a financially productive manner.

Interested readers may pls follow my blog on email by clicking on the relevant button on the right hand panel. I will shortly be stopping the practice of posting the links in different Facebook groups. Following the blog will ensure you get intimated whenever there is a new post.

My experiences with the blog

One week they say is a long time in politics but, not being a politician, my knowledge of that will only be second hand in nature. As a blogger though, I do have a rich experience of 2 full months now to the day. June 17th was the day when I started the blog and today is the day the blog has completed it’s second month.

Though several people had encouraged and urged me to start a blog on personal finance aspects, I was always reluctant to do so. My main reason for the hesitation was that, I would not want to do something which would be read by very few people. Having been readers of some blogs myself, I know it is hard to get readership and the initial enthusiasm very often peters out and you are left with only a handful of loyal readers. However, the reception I had to some posts I wrote in the Facebook Groups AIFW and Market Musings ( my own group ) assured me that there would be a decent response to my blog.

The trigger point of starting the blog were mainly three. Firstly, I was finding it difficult to handle all queries from readers in the Facebook groups I was in. I thought it would be a good idea to write posts and direct readers to those, instead of explaining the same stuff multiple times. Secondly, my daughter being present at home during her summer vacation meant that she could help greatly in setting up the blog. Not that it was very complex to do, but I doubt whether I would have done it completely on my own.Thirdly, being on my own with the Consultancy practice gave me a fair amount of time to do this. If I was in a CEO role, as I was till last year, it would not have been possible.

The start of the blog was rather auspicious as I had a good deal of viewership almost immediately. I thought it was mainly because of the curiosity value of something new, but I am happy to note that the readership has sustained. The challenge is to keep writing posts that I have conviction about and making sure they are relevant to the readers at the same time. Not knowing, details of statistics on similar blogs at start-up, I am unable to comment on how successful the blog has been, but I can present some basic statistics to give an idea to the readers.

  • Number of posts published in the blog including this = 100
  • Views till today = 26,756
  • Visitors till today = 11102
  • Highest number of views in a day = 970
  • Highest number of visitors in a day = 532

But more than the numbers, I have been really glad that there has been some difference made in the following:-

  • Several people have been encouraged to take up investment in direct equity.
  • Many of my posts tackling controversial topics such as SIP effectiveness have been read widely.
  • Many readers have reached out to me for advice and through these interactions I have learnt a lot too.
  • A lot of the feedback has been quite complimentary, but more importantly, usefulness of the blog has been agreed upon by most readers.

The following posts have been the most popular in the blog in terms of viewership, so here are the links:-

  1. Why you must invest in PPF
  2. My current SIP in Mutual Funds
  3. Why you must be in direct equity
  4. Should you buy your first home now
  5. SIP – A modified version

What of the future? I do plan to continue the blog and hope that it is already in a place where many new investors can come and find useful resources to help them in their own financial planning process.

The century of posts was scored rather easily, but it is now time to take fresh guard.

Interested readers may pls follow my blog on email by clicking on the relevant button on the right hand panel. I will shortly be stopping the practice of posting the links in different Facebook groups. Following the blog will ensure you get intimated whenever there is a new post.

“Well intention-ed” advice which you should avoid

Over the last year I have interacted with several people in the area of personal finance – some have wanted advice, others just a confirmation they were doing the right things and yet others who wanted to tell me why I am so wrong in what I say. I have also come in touch with more financial advisers in this period, both formal ones who take it as a profession and informal ones who run a blog or a Facebook group disseminating knowledge in the area. I suppose, in a way I am one now too.

I have come across a lot of well intention-ed advise which, if followed seriously, will be injurious to financial health or at least mean that you will have sub-optimal returns. Though I have written about most of these, I thought it will be a good idea to point out a few in this post. These are clearly from people who mean well, but also ones you should really avoid.

  • Term plan is the only plan that you should consider for insurance. Yes taking a term plan is a good idea but there are several other insurance products that you can explore. Some of these are quite well suited for specific situations.
  • ULIP is a bad product which you should never look at. It is true that the earlier versions of ULIP products were having very high charges and were not suitable for investments. However, a lot of it has changed with the new guidelines and performance of some ULIP’s match those of better MF’s. Examine this yourself before deciding whether to invest.
  • Home loan can be taken because it gives us tax breaks. There are many good reasons to buy a home but tax breaks are not really one of these. Read a couple of posts I have written in the blog to understand it better.
  • One can never predict the market levels so it is pointless to try. I agree that short term predictions on the market are difficult if not impossible. However, there is enough evidence to show that experts do get the medium and long term trends correct, more often than not. You do not have to try this yourself, just identify good analysts and  follow them.
  • Investing in stocks will require you to understand balance sheets and a whole lot of other stuff. Well, if you have the time and knowledge to do this, try it out by all means. It is however, not necessary to re-invent the wheel. There are far better people than you and me who are doing this for  a living and we just need to identify someone reliable whose analysis we can trust.
  • Risk or volatility in stocks is much more than in MF so avoid stocks. This is clearly wrong as both of these invest in the same underlying asset class and are therefore exposed to the same risks.
  • One good Balanced fund is adequate to take care of all your investment needs. I would not even have a Balanced fund in my portfolio, let alone it being the only fund. One fund of any category is a bad idea as it gives you limited coverage of the market, thereby increasing your risks. Read my posts on Balanced funds as well as MF portfolio selection in my blog to get a better understanding of this.
  • Mid cap and small cap funds have high volatility so you should avoid these. Volatility is a function of the market dynamics at a point in time, so this statement is not universally true. Even if it is true at times, you need to understand these funds also give you the maximum growth in your portfolio.
  • SIP in MF is the only way to invest, do not look at anything else. While there are merits in SIP mode of investment, there are quite a few limitations too. You can read my posts on SIP in the blog. It will be ideal to supplement SIP investments by some well directed one time investments.
  • MF selection is a complex process, use MF calculators and all kinds of ratios. Again, you need to trust people who are doing this as a profession not amateur enthusiasts. Once you have decided on your portfolio structure, go ahead and pick a top rated fund of each category. Use websites like VR online etc for this purpose.
  • You need to stick to an MF for 3 years or more, even if it is not performing. Loyalty is a great thing in life but do not waste it on MF. Review annually and weed out the laggards every year, if you are not sure see for another year.
  • Your expenses in retirement are a function of what your expenses are today. What you will spend in retirement depends on how you want to live in retirement. Read my posts on this to have a better grasp on this.
  • A frugal lifestyle will help you invest more for your retired life. I have never been a fan of frugal lifestyle, though I dislike ostentatious expenditure. It is only when you have spending needs, you will feel the need to become more ambitious with your earning.
  • Fix your investments every month before your spending. Yes, you do need to invest every month but not as has been suggested. Lead the life you need to today, future is important but not at the cost of depriving you and your family today. 20 years down the line you may have a lot of money but limited ways to enjoy the same.
  • Have a separate portfolio for each of your goals. Completely senseless approach, you can read the post I have written on this.
  • Shift money from equity to debt 3 years before your goal is reached. Again, this is a sub-optimal and unnecessary way of doing things. Follow the 3 portfolio structure that I have suggested in my posts.

There are many more but I think this post has already got long enough !! 

Interested readers may pls follow my blog on email by clicking on the relevant button on the right hand panel. I will shortly be stopping the practice of posting the links in different Facebook groups. Following the blog will ensure you get intimated whenever there is a new post.