Yes sir
. Balancing everything is critical.
What Investment mistakes you made that you want others to avoid?
- Thread starter raksrules
- Start date
. Balancing everything is critical.
raksrules
Northstar
Yes I am not investing with the aim to have a huge corpus (well it is needed though) when I cannot even probably walk properly. I had plans of international trip last year and what not but thanks to covid all is put off.
letmein
Guide
Bruh, I can't even with this thread anymore.
After the first few pages I had sworn off it, but I keep coming back to it like a fly smelling something. And it doesn't fail to give me a stomach ache every time.
When this thread started, I written that there was some really bad advice being posted.
My mistake. I really should have stepped in then and there. Instead, I had hoped some other experienced investors would have stepped in, instead I was lazy.
Sarcasm didn't work either.
Third time's the charm.
I'm sorry to be so blunt, especially since most of the bad advice is coming from a mod. I will reiterate and bold this:
Investing in pure equity (doesn't matter if it's directly into stocks or via equity MFs) is not the answer to all your investment decisions!
I will add this to my statement: Equity investments are NOT bad, and they should be a part of (almost) every investor. But to say that investors should forgo every other asset class is just plain foolishness.
I take special offence to these blanket statements:
Equities give 12%-25% returns? Sure. You know what gives 1200% returns? Crpyto. You know what gives 12000% returns? The ponzi scheme I'm about to launch (for the first 10 people only tho).
Can you guarantee those returns? Absolutely not. And if you rely on these past returns as guaranteed returns and use them to ascertain your future returns, more often that not, you'll end up screwed.
Which is why debt instruments (like FD, EPF, PPF) and other assets like Gold or RE should be an important, nay integral, part of your portfolio.
(Disclaimer: I don't invest PPF or NPS, because I don't like the lock-in period. Instead I invest in something even more conservative for my debt portfolio - liquid funds and FDs).
Please just look at the yield curves of the instruments mentioned. Notice how two are smooth/ almost guaranteed, the equity linked is allover the place.
Thought experiment. I have three kids aged 1/ 6/ 16 as of today. I want to save money for their education.
What should I do? Put everything I have in equity?
If I go by the advice given here, the kids aged 1 and 6 (may)be fine.
The kid aged 16 (may)be screwed.
What if the market tanks when he turns 18? The 10 lakh I saved for him is now only worth 6 lakh. Should I just tell him to chill for a year while papa replenishes his education fund?
(PS. If your answer if to move money from Kid aged 1 and 6, just forget it).
Instead, I should have put the 16 YO corpus in a safe debt instrument, split the 6 YOs between equity and debt, and put most of the 1 YOs in equity.
Is this a guaranteed strategy? Absolutely not. But it is a much safer way of investing your hard earned money.
Please, please read up on your own and don't rely on advice from internet strangers (that includes advice by me as well). I can understand trusting people on TE if the question 'What phone to buy' or 'Is a 650W PSU enough for my build?' But when the title of this thread is "What Investment mistakes you made that you want others to avoid?", and my answer to it will be 'Please don't follow the advice of internet strangers, especially on this thread.'
Unlike a PSU or a phone, the quantum involved could be 100x or 1000x.
You can't RMA a bad investment.
You know, I used to think the mods on r/indianinvestments were a bunch of stuck up jerks because of how strict they are wrt to posts on their sub. Now I sympathize with them. Having to moderate hundreds/ thousands of people, who come and post their poor quality advice day after day would be enough to give anyone an ulcer.
I will leave this long post with one final example as to why diversification is not important, if not absolutely necessary.
The Mint Asset Quilt is an annual survey of 10 asset classes, ranging from equity to debt to tangibles (no crpyto here as of yet).
This was the last year's snapshot. Notice the performance of equity vs other asset classes year-on-year. Now imagine if you're invested 100% in equity and need money the very same year equity has tanked.
This was discussed on Reddit as well. One user did the CAGR of all asset classes as well. Please note the returns:
Even after adding the dividends as mentioned by one of the comments, equity doesn't outperform other stable assets by a significant margin.
If people think investing 100% in equity and nothing everywhere else is still right for them then good luck and may God help you.
This will be my last post on this thread. Good luck to everyone on their investment journey.
After the first few pages I had sworn off it, but I keep coming back to it like a fly smelling something. And it doesn't fail to give me a stomach ache every time.
When this thread started, I written that there was some really bad advice being posted.
My mistake. I really should have stepped in then and there. Instead, I had hoped some other experienced investors would have stepped in, instead I was lazy.
Sarcasm didn't work either.
Third time's the charm.
I'm sorry to be so blunt, especially since most of the bad advice is coming from a mod. I will reiterate and bold this:
Investing in pure equity (doesn't matter if it's directly into stocks or via equity MFs) is not the answer to all your investment decisions!
I will add this to my statement: Equity investments are NOT bad, and they should be a part of (almost) every investor. But to say that investors should forgo every other asset class is just plain foolishness.
I take special offence to these blanket statements:
Equities give 12%-25% returns? Sure. You know what gives 1200% returns? Crpyto. You know what gives 12000% returns? The ponzi scheme I'm about to launch (for the first 10 people only tho).
Can you guarantee those returns? Absolutely not. And if you rely on these past returns as guaranteed returns and use them to ascertain your future returns, more often that not, you'll end up screwed.
Which is why debt instruments (like FD, EPF, PPF) and other assets like Gold or RE should be an important, nay integral, part of your portfolio.
(Disclaimer: I don't invest PPF or NPS, because I don't like the lock-in period. Instead I invest in something even more conservative for my debt portfolio - liquid funds and FDs).
Please just look at the yield curves of the instruments mentioned. Notice how two are smooth/ almost guaranteed, the equity linked is allover the place.
Thought experiment. I have three kids aged 1/ 6/ 16 as of today. I want to save money for their education.
What should I do? Put everything I have in equity?
If I go by the advice given here, the kids aged 1 and 6 (may)be fine.
The kid aged 16 (may)be screwed.
What if the market tanks when he turns 18? The 10 lakh I saved for him is now only worth 6 lakh. Should I just tell him to chill for a year while papa replenishes his education fund?
(PS. If your answer if to move money from Kid aged 1 and 6, just forget it).
Instead, I should have put the 16 YO corpus in a safe debt instrument, split the 6 YOs between equity and debt, and put most of the 1 YOs in equity.
Is this a guaranteed strategy? Absolutely not. But it is a much safer way of investing your hard earned money.
Please, please read up on your own and don't rely on advice from internet strangers (that includes advice by me as well). I can understand trusting people on TE if the question 'What phone to buy' or 'Is a 650W PSU enough for my build?' But when the title of this thread is "What Investment mistakes you made that you want others to avoid?", and my answer to it will be 'Please don't follow the advice of internet strangers, especially on this thread.'
Unlike a PSU or a phone, the quantum involved could be 100x or 1000x.
You can't RMA a bad investment.
You know, I used to think the mods on r/indianinvestments were a bunch of stuck up jerks because of how strict they are wrt to posts on their sub. Now I sympathize with them. Having to moderate hundreds/ thousands of people, who come and post their poor quality advice day after day would be enough to give anyone an ulcer.
I will leave this long post with one final example as to why diversification is not important, if not absolutely necessary.
The Mint Asset Quilt is an annual survey of 10 asset classes, ranging from equity to debt to tangibles (no crpyto here as of yet).
This was the last year's snapshot. Notice the performance of equity vs other asset classes year-on-year. Now imagine if you're invested 100% in equity and need money the very same year equity has tanked.
This was discussed on Reddit as well. One user did the CAGR of all asset classes as well. Please note the returns:
Even after adding the dividends as mentioned by one of the comments, equity doesn't outperform other stable assets by a significant margin.
If people think investing 100% in equity and nothing everywhere else is still right for them then good luck and may God help you.
This will be my last post on this thread. Good luck to everyone on their investment journey.
Attachments
The comparison was equity vs fd/gold. Debts/liquid funds are good cushions to guard against bear phases. IIRC withdrawal from liquid funds for upto 50k is instant IMPS, and yes you are right nothing is garenteed.
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Anyone using Smallcase ? Stock investing made easy | smallcase
Any comment?
Any comment?
You are missing on international equities I think.Yes but equities (is the economy in a way) give more returns over fds over time...
Like?
I told some member in this thread earlier I fear this lost decade. BTW this can come very soon thanks to the current goberment.I understand if something like this happens in India we are doomed!
Lost Decades - Wikipedia
en.wikipedia.org
Dope
What are your views on international stock investing? Need a pov from a senior.
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letmein
Guide
I don't invest directly in US stocks. I simply don't have the time to research and make individual stock picks - I've got my hands full with tracking and investing in Indian stocks.
I invest in MO Nasdaq 100, MO S&P 500 and Edelweiss China. Together these 3 funds comprise around 25% of my MF portfolio.
Was invested in Franklin US Opportunities but I exited that last year when Motilal launched their S&P 500.
us stock market requires a bit more due diligence. thinkgs like not watching cnbc and other financial mainstream media, not trusting “financial analysts” etc... and a lot of discipline.
There are too many people hyping up stocks/crushing down stocks with fake news and over reactions. a lot of opinion shaping and social engineering. example boeing in 2020. amd in 2018 and 19. iqiqi and baba before trade wars. nio right now.
you should not even trust my words i say!!!
raksrules
Northstar
I was investing in both MO S&p 500 and NASDAQ FoF but recently stopped the latter. Should I restart it? Any reason to have both?
How has your experience been with Edelweiss Greater China Fund? I find the fund and its performance good but have concerns about the AMC.
https://freefincal.com/motilal-oswal-nasdaq-100-fund-of-fund/ is the tracking error and liquidity issue a turn off for this fund?
True but what about investing in companies like FAANG from a long term perspective?
Aswath Damodaran talks about lemmings committing mass suicides in his first video
Stuck in some personal work. Can you please explain what is mentioned in that video? If mass suicides due to market fall then don't they happen all over the world if all eggs are in one basket?
What I meat by mentioned FAANG was that they are more trustworthy in terms of growth then all Nifty companies combined.
letmein
Guide
If you're bullish on US Tech companies then go for it. If not, S&P should suffice for international exposure. Also matters how much many MFs you have and your exposure to each. Having 2% of your portfolio in NASDAQ (or any other fund) won't matter. Even if it triples, the overall impact to you would be marginal.
It's a fund of funds in any case. Edelweiss is not making the investing decisions - they're investing in JPMorgan Greater China Fund.
I think you mentioned earlier that you can bet on FAANG being around 20 years later in the future. My counterpoint will be that 20 years ago, Facebook and Netflix did not exist. Apple was all but written off. There was no guarantee that Google would win against Yahoo or Microsoft in search. So I'll say it's risky. If you're fine with the risk, go for it. I probably sound like an old man, but technology is changing very fast, two years ago no one would have bet that Zoom could have given so much returns and become an office staple. 20 years ago, when I was trying to download pron on an MTNL dial-up connection, I never imagined that I would be able to stream 4k content on Netflix.
PS. One advantage FAANG have is deep pockets, so they can buyout potential competitors that may kill them (eg. Instagram or Orkut).
i am gonna ruffle some feathers here in this thread.
Also when you look into ETFs. there is an “agency cost” associated with them. that is the ETF managers have incentives to push their favorable companies into the etf.
That is probably why I have been discouraged to invest IN FAANG. Have to dig more though.
***************************************
Just on time:
Mirae Asset makes a global foray with two FANG+ funds
It is launching an ETF tracking the NYSE FANG+ Index as well as an FoF tracking the same.This is a good opportunity for Indians to invest in the world's greatest innovators such as Apple, Tesla
www.livemint.com
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valuation is actually a fun activity. on average it takes me around six months before i get a conviction and start buying stocks. it starts with Aswath Damodaran’s basics and the later goes into road maps ceo board of directors and company culture etc...
what usually happens is with ETFs is that they become famous after they have already made money. example ARKK. and people will start having “hot hand fallacies” and “confirmation biases”. Vanguard VOO etc are the most secure and successful fund in the modern history but it wont make anyone a lot of money. but its a good entry point until you start doing good valuation and finding stocks.
Asking sincerely, unless one is a full-time investor, does spending this amount of time yield significantly better results than an index?
Could be horribly wrong, but my understanding -
Returns are always proportional to risk. By nature, Mr Damodaran's style of value investing cannot yield disproportionate results. This makes absolute sense if one is into full time investing or in the financial sector. But for others, developing skills and building a business can yield far better results IMO. Looking at how the really rich invest, they have 2 components, consistent compounders and moonshots. Consistent compounders are usually just an index. Moonshots are not based on value but early investments based on probability of success, they yield disproportionate results. This is the best approach I have found so far.
The crux of your post is no-one (at least we the common man) has any clue about upcoming multibaggers and overhyping IPOs ETF or anything is very common since WW2 lol. Only thing different with FAANG is these companies are internet based and the current global scene (covid) is forcing people to buy stuff online (amazon Bezos story) /watch movies/zoom/date online more or less. This reason itself I believe is a good one to invest this FAANG. I don't have any clue about the fees/taxes involved and other hidden sinister ****ups. Will dig more for sure.
trust me, as a it guy i got shitton of free time at hand. i think everyone has. this is just like spending time on social networking except it makes money. my story, after bag holding tsla for over 3 years through negative numbers it blew up last year. i was like it doesn’t make any sense why it is going down to it doesn’t make any sense why it’s going up. also my first gold mine was not tsla but amd from 9usd. but i didn’t have patience to ride the run. did mistakes like stop loss etc...
my tsmc went up by 100% in just over 6 months. so yeah. definitely more than index funds.