What Investment mistakes you made that you want others to avoid?

Mr.J said:
Tangentially related to investing - Tried daytrading. Just don't. Only people who make profit are your broker, government, and big fishes with massive capital at their disposal. Small fishes like us are their lunch.
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Totally. It is not for working people. I will never try that. Know too many people who lost money trading.
red dragon said:
No options of PPF here ( or I don't know about it) Yes, investing small amounts on MFs ( as I don't understand stock market at all)
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You don't need to understand much. Just start SIPS (In India!) avoid PPF.
raksrules said:
At 37, should I still enter NPS?
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No go full equity mid/large cap funds. Over time 7+ years it beats everything!
 
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Rockfella said:
No go full equity mid/large cap funds. Over time 7+ years it beats everything!
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Easy there, tiger :)
What we are seeing now is a bull run and quick recoveries, if we enter the bear phase of the economic cycle our own mind will start playing games against us. Diversification, capital preservation are important aspects of investing as well.

Just like everything else in life, investing should also be done with purpose and specific goals.
 
JMP said:
Easy there, tiger :)
What we are seeing now is a bull run and quick recoveries, if we enter the bear phase of the economic cycle our own mind will start playing games against us. Diversification, capital preservation are important aspects of investing as well.

Just like everything else in life, investing should also be done with purpose and specific goals.
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Since you'll be investing for long term, you're not supposed to check your portfolio everyday. That's how your mind plays tricks on you. Review the folio on monthly or even quarterly basis.
 
Mr.J said:
Since you'll be investing for long term
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My point was that each instrument has a specific purpose and should be used accordingly.
Equity is good for far away goals like retirement, college education of kid etc, not short term, but its a high trust instrument.
NPS has a different purpose, its a tool for people who need a corpus that they themselves or their family should not have access to, its a low trust instrument, which could protect one in old age.
 
Hey forum,

In your opinion, which equity fund is the best to invest in?

I've looked at some options on scripbox and groww, both of which recommend Axis's MFs.

I've also gotten in touch with some folks at Tata AIA and checked out their multi-cap fund (they're claiming it has a 20%+ return over the ~5 years it's been running.)

I'm asking everyone I know for their opinion, so I thought I might as well ask here. I want to invest a relatively large amount (to me at least) and not touch it for 30 years.

Thank you for your help in advance!
 
JMP said:
Easy there, tiger :)
What we are seeing now is a bull run and quick recoveries, if we enter the bear phase of the economic cycle our own mind will start playing games against us. Diversification, capital preservation are important aspects of investing as well.

Just like everything else in life, investing should also be done with purpose and specific goals.
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That is why I said 7 years minimum :)
 
KrishT said:
In your opinion, which equity fund is the best to invest in?
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in principle; if you invest in etfs you expect the financial analyst to do the valuation for you. usually they are dumb as rocks. moreover they are highly incentivized to push their own stocks. learning valuation yourself is a good thing. look at Ashwath Damodaran’s lectures on youtube. they are a goldmine.
 
JMP said:
My point was that each instrument has a specific purpose and should be used accordingly.
Equity is good for far away goals like retirement, college education of kid etc, not short term, but its a high trust instrument.
NPS has a different purpose, its a tool for people who need a corpus that they themselves or their family should not have access to, its a low trust instrument, which could protect one in old age.
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NPS 8-10 % VS potential MF 12% to 20%+. Calculate difference for a decade you'll get the answer :)
 
ibose said:
Both have different objectives and serve different purposes. Else we can all just invest everything in MFs and be done with.
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The only point I can see of doing NPS is to have no access to the money (so that it grows over time) and then get 60% of it post retirement and then get monthly pensions. If one has self control same can be achieved with MF with a lot more returns. If you have a different reason post it here :)
 
raksrules said:
At 37, should I still enter NPS?
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Enter it if you don’t require liquidity and is paying tax. you get tax exemption up to 10% of your basic plus 50000. Thats a lot. That’s as good as guaranteed profit equivalent to your tax slab. Whatever your investment gives is extra. No mf outside 80c can give you that.
 
Rockfella said:
The only point I can see of doing NPS is to have no access to the money (so that it grows over time) and then get 60% of it post retirement and then get monthly pensions. If one has self control same can be achieved with MF with a lot more returns. If you have a different reason post it here :)
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Yes so NPS is intended to serve that purpose and only that purpose. And yes you can definitely get higher returns if you are disciplined with your MF investments. All I am trying to say is that some of us have different objectives at different stages of our lives so it is not just all MFs. Diversification of your investments helps you to hedge your risks and fulfill your different objectives. Eg. I have a mix of PPF, EPF, MFs, Gold Bonds apart from NPS.
 
Rockfella said:
PPF 7/8% VS ELSS 13/20% approx. ELSS 3 year lock in. PPF 15 years.
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PPF will balance and manage your debt portfolio.
Equity MFs will manage your equity portion.
Keep in mind your debt-equity balance ratio depending upon on your risk appetite and time.
Generally it should be 35/40 in debt to 60/65 in equity.
It can vary in bull and bear markets so one had to maintain this allocation by going heavy on equities in bear market and going heavy on debt in bull market.

For Equity MFs - put maximum portfolio 60+ in Index ETF/Index fund and rest in Midcap/Large+Midcap for long term growth
 
Can someone explain why LIC is bad? They are offering me 7% tax free with yearly payouts from 2030 -

Seems like a good option to me and is something I'm considering -
 
Rockfella said:
PPF 7/8% VS ELSS 13/20% approx. ELSS 3 year lock in. PPF 15 years.
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y2s said:
Can someone explain why LIC is bad? They are offering me 7% tax free with yearly payouts from 2030 -

Seems like a good option to me and is something I'm considering -
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PPF at around 8% tax free withdrawal is certainly great as a debt instrument. In fact, you can contribute your basic salary as well to EPF and get the same tax-free returns. This should take care of the debt part of your portfolio. The idea is to manage risk in this case for retirement benefits. If you are already covering 80C benefits using PPF/insurance premiums, then ELSS does not offer any benefit over equity funds and hence is not beneficial as a tax instrument, besides being equally risky.

Regarding the LIC product, not sure which one it is. The catch usually is that the interest figure might be calculated on your current investment amount and paid out 10 years later ignoring the time value of money. INR 100 today will be worth around INR 45 in 2030. If they are paying in installments, then they are actually reducing the value of money even further. It reminds me of the "double your money in x years" schemes LIC used to run in the past that effectively provided only 4-5% returns pre-tax. Also, as far as I know, the debt products from LIC offer tax benefits under 80C due to the insurance premium, but are fully taxable on withdrawal.
 
Good
- Started term insurance at 27

Good and bad
- completed my home loan. Though in a way, it is relaxing with no burden. But if looked at other way round, after getting it done at certain level, could have invested remaining funds in hands - in a better way with more liquid cash in hand. Like with remaining funds, could have opted for another small property which would generate rental income.

Bad
- have not started PPF. Now being non-resident, I can't open one.

Suggestion: At young age of career and life both, start putting money in blue chip stocks. Decide on a certain % of your income and put it in equity. If possible, categorize
it across industries such as bank, pharma, technology, etc. Gold can also be considered for long term passive investment.
 
Mr.J said:
Insurance and investment are two different things. Don't mix them up.
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This !

Being in insurance domain, I can often see why companies come up with stupid annuity and ULIP policies and have it sold. But if calculated the returns in different angle, they are just garbage. Issue with mindset of vast majority towards insurance is, rather than looking at it as an expense to safeguard a risk, we look at it as an investment.

Another advice with respect to insurance is, get term insurance and medical insurance. Generally term insurance is always cheaper compared to money-back policies. Hence money saved after getting a term insurance, should be used to invest based on risk appetite. This strategy could get you higher insurance coverage as well as better returns.
 
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