Investing Wisdom

Recently, one of my friends aged 29 Years who is a motorcycle enthusiast bought Hardley-Davidson motor cycle for about INR 8 Lacs (personal borrowing of 3 lacs), costing him his entire savings. He is an IT Professional and draws around 50K/month. His explanation for this costly affair was primarily his love for the bike for which he had been raising money, secondly he wants himself to be identified by 'HD wala' in his colony. Now, people have started judging him saying he wants to show off. Another uncle commenting 'Agar yahi paisa FD me daal deta to...'. First thing first, it was his hard-earned legally acquired wealth which he used to fulfill his passion. Isn't it wrong to judge him for doing something unusual? There are people who suggest to invest heavily for retirement by suppressing our desires, simply called delayed gratification citing example like 'Marsh mellow experiment'.Well, what if you don't reach that age itself given death is so uncertain...

We all agree on the fact that over the long run, Equity as an Asset class always beats FD return. Of course you have to pay for the extra return in terms of Volatility, riding through booms & the busts. Sensex (as a basket of top 30 Indian companies) was formally started in 1979 with the base price of 100. As I write this, Sensex closed at 38,645.18 today, a solid CAGR of 16%. Astonishing! Isn't it? And this is CAGR of dumb Index whose members are selected just based on Market Cap. Those who were lucky to lay their hands on few of the multi-baggers, are financially independent now. So, if someone during 80s wanted a return of 16%, all he had to do was to buy the Sensex. So, what what the reason of this mind-boggling return? And what if I am starting today? What is the guarantee that I will enjoy the similar return in future also? Aren't mutual funds repeatedly saying that past returns are no guarantee for the future? Well, I am not going to get into usual jargon like India ...

This blog is addressed to those retail investors who either want their finger dip into investing or those retail investors who have already burnt their fingers in trying  miss & hit approach to investing and still wandering in the financial jungle.Blogging University. This blog will serve as a dummy guide to layman investors who are often mis-sold.