Category Archives: investment

Investment Lessons from poker

Instead of gambling away all money in Poker, we can learn Investment from it. Don’t trust me, hop on..

1 – ALL IN

Poker tells you to bet as much as you can if the odds are extremely in your favor (remember never to bet your life savings, and to keep some buffer for emergency).

If you come across an Investment which totally completely makes sense to be the next big thing, based on the information you have and the potential it holds (or what you perceive it holds), and you are convinced; then you should probably Invest as much as you can to see that small cap, Crypto or whatever it is, turn Multi-bagger! (remember only Invest the amount you won’t regret if you lose)

2 – Preserving Wealth is difficult than Accumulating it!

Seriously, I have found it very difficult to preserve my balance in Poker, and very easy to lose it all. Well, I know these games are designed this way, nevertheless it teaches us how difficult it can be to stop your urge to spend that extra buck in real life, or to throw that shit loads of money on your next luxury (not saying you should not do it, but be watchful) .

3 – Greater the risk higher the reward >

In Poker the more chips you stake in, the bigger the pot you can win! Well this may not be true everywhere in Life, but it sure is true for some Investments of your life.

Look at the Cryptocurrency in its early years, it sure was risk (well it still is risky but not as much as it used to be), market adoption was low, real use cases or utility was hard to be found, but nevertheless it gave huge returns to those who took the risk or say understood its power. Same applies to some small cap stock which later goes onto become multi-bagger and star of your portfolio.

4 – It feels good when you have a little extra

I don’t know about you, but it feels good to me every time I see my poker chips soaring in value. I hate depleting capital! even if its just a video game.

5 – Money makes money

The more you have, the more you can stake, the higher you can win. Same thing applies to every Investment, the higher you can stake in, the more the ROI (Return on Investment). But be careful remember #2, it is easier to lose wealth than to accumulate.

6 – Kindness

You maybe thinking what does kindness has to do with Poker, or Investment. Well, remember the last time you won a big pot of say some million dollars, have you not given it as tip to the dealer, and as weird as it may sound, have you not felt good giving it away? Answer is you probably did! And it applies more to real Life than Poker, the more you give the happier you get!

So, if you want to just take one thing out of it than let it be ‘Kindness’, why not? Happiness > Money.

Thank you for reading. ‘Leaves with a Poker Face’…

Why I Invest?

I Invest, because,

————————————————

I have Extra cash

I believe in power of Compounding

I don’t like to Spend

I don’t like to Save

I love Investing

I like the way Money grows Money

Uncle Sam told me

My Dad used to do it

I love Assets

For Financial Independence

For my Future

For my Kids

For my Livelihood

For Retirement

Just to grow Wealth

——————————————

While I can go on and on, the point is there are plenty of reasons to Invest! And the earlier you Invest the better it is!

So, In case you have not yet, Invest Now!

Further articles that you can read –

Thank you for reading 🙂

unusual Investments

You would have heard a lot about Investing in Stocks, Real Estate and Gold. But have you ever heard about the not so common Investments, the Investments that not everyone knows about? Perhaps, they are worth exploring too, lets peak into some.

1 . MLPs

Master Limited Partnerships (MLP) is a unique Investment that combines the tax benefits of a limited Partnership with the liquidity of a publicly traded stock. MLPs may be a business pertaining to natural resources (like petroleum), commodities or real estate enterprises. Read more here.

2 . Wine

Wine bought at a fair discounted price and kept to age, can give good returns as Vintage Wine down the line provide you have a climate control space and enough will power not to drink your Investment. But to Invest in, it only makes sense if you are a connoisseur of wine.

3 . Classic Cars

Cars, OMG!, You are saying a liability can be an Asset? Cars are an Investment? Don’t they depreciate in value?, well hold on, pause, breathe…

Buy a Car and let it rot, well not exactly, if you are into Cars, buy a Vintage Ford, Ferrari or a Car which will potentially be replaced by a better variant while the Old becomes Gold. Down the line find a crazy car lover like you who will appreciate it for its uniqueness & antiquity.

4 . Fine Art

Probably not so uncommon, if you have an eye for Art, hodl onto it for generations and generations, well its never worth its value or is it?

Buying & selling famous paintings has been the domain of the ultra-wealthy in past, but today there are ways that the average Joe can get in the game. You can checkout Companies like Masterworks which pool people’s money and purchase blue-chip artwork. You can make up to 10% or more on your investment per year through it.

5. Music Royalties

Go to sites like SongVest.com and TheRoyaltyExchange.com and purchase a share of the song at auction. You will continue to receive royalties for up to 95 years after the Artist’s death!

Do you remember the Theme Song from the Monkees? Hey, hey, we’re the Monkees. That song still produces on average $10,000 a year. Read more about some of the weird unusual Investments here.

Looking for some popular, easy, conventional ways to Invest, read where to Invest your Money by riteFinance.

investing for Gen-Z

Born between 1997 to 2012, oldest Gen Z today would be 24 years old, read carefully, what we are going to tell you may decide your financial future in years to come.

If you have just started to earn or going to be soon, and you might have some plans for life, well, you may know by now, life doesn’t go as planned, always. Covid 19 and the stock market crash of 2020 is the most recent and vivid memory with many of us.

So, How should we take care of our Finances? What should we do to avoid black swan events like Covid from affecting our finances in future? How can we make sure that we are self sufficient!

Well the short answer is INVEST, Invest now!

Note- how early you invest matters more than the amount you Invest, because Compounding works best later down the time.

Lets discuss how to Invest when you are in your 20s:

  1. You must first save some portion of your money, in-fact one thing that we all get to learn from Covid is we should have an emergency fund (3 to 6 months of our expenses saved) before investing, so that we can rely on it incase of any unfortunate event. Read more about Emergency Fund here.
  2. Divide your Income into 3 Brackets, Save, Invest and Spend. A rule of thumb to start with is Save 20 bucks, Invest 30 bucks and Spend 50 bucks of your monthly income (more better approach would be 50, 20, 30; but consistency matter more than the amount you Invest)
  3. Spend low, live below your means, or expand your means. Yes I get that you may be fresh out of college and in your prime youth, thinking to party like crazy. While no body is saying, don’t party at all, but limit it as much as you can, the earlier you get into saving and investing rather than spending the better your quality of life will be. so shush the Party Animal within or just tone it down a bit. I know its hard to digest, But think do you want to live like king as you grow or you want to cut on your expenses and go take some huge loan to maintain all that family expenses that are inevitable at an older age. Somewhere down the line, I assume you would like to have your own house, a car and what not, so better you start investing now & be frugal, for more peace later in life.
  4. Do Invest in Stocks, own them as your own Business! Don’t stress too much on getting it right, everybody makes mistake and so will you.

Do you need to be conservative or do you need to go wild, all in?

I would suggest a balance approach, now that you have 30% of your Monthly Income to Invest, I would suggest you to divide it further into different assets like Crypto, Gold and Stocks (now if the money is very less to even divide you can alternate the asset class every month).

  1. 10% (of Investing Income) -> Cryptocurrency, where in further you should divide in Bitcoin & Etherum or at least a few coins to be safe and not miss the opportunity at the same time. What I would do would be to have 50% of my Money (of this 10%) in Bitcoin, 40% in Ethereum and 10% in Others (like Zcash, Dash, etc). You may like to read more about Cryptocurrency here.
  2. 5% (of Income) -> In Sovereign Gold Bond or some form of Gold at least, if the amount is too small you may consider something like ‘ICICIGOLD’ ETF which is currently priced at 44 rupees a share.
  3. Left with 85% of your Investing Income, you can go into Stocks directly. (In case that 85% of your income is exceptional, you are richie rich, I am glad you came here, you can further divide the amount into real estate and stocks!)
    • 10 – 50% in Broad Market ETF that tracks the index like ICICINIFTY, HDFC Sensex Plan for India or VTI, VOO for US Markets. You can make your portfolio 50% of this in case you not at all care about markets and don’t have time even look at your portfolio once a month. As a matter of fact, the legendary Investor Warren Buffet himself suggest a low cost ETF for all Passive Investor. Read more about Index fund here.
    • 25% in Momentum stocks, these are basically risky Mid & Small cap stocks, and since you have time in your hand you can take some risk. You can use smallcase for this. Click here to know more.
    • 10% on long term trend/idea you like for example Electric Vehicles, or The Great Indian Middle class, whatever you believe will be huge with time.
    • 0 – 40% in Direct Stock picks, now seriously I want you to take some risk, look around buy stocks of brands you own, you consume like that ITC cookies you eat, or Hindustan Uniliver Soap you use or Bajaj Bike you Vroom vroom… (Disclaimer – we are not suggesting / advising any pick). Now this can be most volatile part of whole portfolio, but it can be most rewarding if the research is done right, also with time you get better in this. Always always avoid buying on someone’s advice do your own due diligence. If you are someone who believes more in the promise of blockchain & cryptocurrency than you may like to flip the percentages 10% here and 40% there 😉

To Recap, put numbers in to perspective, lets say you have 30,000 as the salary than 30% would be 9000, Put 900 of it in Crypto (450 BTC, 360 ETH, 90 other Coins), 450 in Gold, 7650 in Stocks!

Remember – If you can’t achieve the percentages listed above, let it be, a bit up or down here and there won’t matter.

The Idea is to Diversify, Invest Early and Be consistent. Time is your best friend.

CAGR

To Read about the Common Mistakes that every Investor make, and to avoid them, click here.

Looking for some Earning Opportunity, click here.

Some TO DOs’ of Investing (recommended reading)

Thank You for Reading, We wish you loads of Happiness, Success & Wealth in Life. ~Team RiteFinance.

is 2021 the year of the bull?

My Outlook for 2021

Stock Market – While we are in good Bull rally so far in terms of Market in US, India and most of the parts of the world, we may see some rotation or correction going forward. By Rotation I mean we may see a flip or the Investments flowing more into the sectors of the market like Metals, Auto, Banks that was ignored in 2020 away from the stars IT, Pharma. Also there is nevertheless a chance of double digit correction in 2021, and this is where we need to be cautious and hold for long, not panic sell like most of us did in 2020. (If you are new to stock market you can open an account with Zerodha here)

Bitcoin/Cryptocurrency – Cryptocurrency specifically Bitcoin may see a slight correction going into 2021, but nevertheless the concept of Cryptocurrency is promising and it looks like it is here to stay for long at least unless an alternative is found. So I would like to be Vigilant here and Invest in dips. Remember always do your own due diligence before investing. To know more about Crypto click here.

Gold/Precious metal – I think Gold still holds value, and can surpass its 2020 high by 2021 end. Given the volatility in Market, and monetary policies of Govt., Bitcoin & Gold both can shine together for most part of this decade. Also this looks like the asset where Smart money will keep on flowing for most part of 2021. (Sovereign Gold Bonds is one good option if you are looking to invest in Gold in India, and best place to buy SGB is in open market using demat account like zerodha as the prices there are usually lower than current market price).

Real Estate – Now this is something I am totally unsure of, while Commercial real estate looks to be in decline, residentials and real estate in general may see some positive growth in 2021. I am expecting more growth in tier 2 & 3 cities compared to tier 1 in India.

NoteWhile above is my Outlook for 2021, By No Means I am here to encourage or influence you to make your Investment. Always do your own due diligence before Investing.

Read More here –

Thank you for reading. I wish you loads of Happiness, Health & Wealth in 2021. Happy New Year!

Oops! I picked itC.

Stock picking is tough, and therefore you must always do your due diligence before proceeding. Today, let me share you my developing on going strategy, which I recently followed to select a stock.

An Amateur approach to Stock picking:

  1. I hear about Stock in news, among consumer, from friend or are a consumer of the product yourself, have seen that soap Ad and wonder whats the brand behind this successful Ad.
  2. I google search to see the stock price and trend (least helpful), but tells you if it is fine or it is very fluctuating something that happens when stock has very low volumes.
  3. I log on to simplywall.st (you can check the company site if you can or some other site where you can read up about below information) –
    • The Area graph of company (for look and feel and comparison among alternative stocks), check Fig 1 below.
    • Current Price of the Stock is it fair, over or under value (not doing any calculation as an amateur), check Fig 2 below.
    • Finance Analysis, the part I read carefully and specifically focus on Debt (in current Covid scenario it becomes even more important), check Fig 3 below.
  4. Head on to Moneycontrol and look for (check Fig 4 below)-
    • P/E (Price to Earning) ratio of the company compared to the Industry (it should not be way below or above). A low ratio indicates company is undervalued, high indicates its overvalued.
    • P/B (Price to Book) ratio, how is the stock trading with respect to its book value. I prefer usually a little higher than 1, but it may differ based on sector.
  5. Look at the Sector, for example – if the Stock is ITC, FMCG or Consumer Staples being the sector how will that be in near future.
  6. Current Geo-political or Economic scenario (remember only in long run stock market correlates with a nation economy)

But Salrite I do have some extra time, Are we done? – well, perhaps you can:

  1. Look for Consumer Sentiments on the Product, dig up the Social media see if you can find something about its product/services
  2. Management Information how is the company management.
  3. You may also look at other ratios like EBIT, or EBITDA; I usually don’t to avoid paralysis by analysis.
  4. Check if the Stock pays Dividends or not?
Fig 1 – ITC Stock dynamics
Fig 2 – Is the Stock trading at a fair price?
Fig 3 – ITC Balance Sheet
Fig 4 – ITC Valuation (Source – MoneyControl)

Remember – No Matter how much you analyze there will always be some risk involved, and there is no guarantee the stock you pick will give you good return no matter what others say! So If you are new to this game and are passively into it, please go for a low cost Index fund, here is my article explaining why?

Thank You for reading, Happy Investing!

Cheers for index!

Hello Riters, its been a long time out there, getting ready for Winter in Northern Hemisphere?

Today lets discuss why Invest in Index ETF and why avoid Mutual fund, lets dive in.

  1. In long Market always rise, thats not me saying, the likes of legendary investor Warren Buffet himself believe so. So, lets say if market always rise what is the best way to be on winning side?, of course buy into overall market low cost index fund like VTI
  2. On average 90% of actively managed mutual funds have underperformed benchmark indexes over a preceding 15 years period.
  3. If your Mutual fund have 2% of fees (expense ratio, portfolio fees, handling charges and other hidden fees), than that can eat 61% of your portfolio growth in long run. Shocked? No?, let me explain, suppose you have invested $10,000 and kept it for 50 years in Stock market just assuming a return of 7% (ideally returns are above 9%), your portfolio will grow to a lump sum of $294,600 by end of 50 years, now if it was a Mutual Fund with charges of 2%, then you only avail benefit of 5% CAGR, leaving your portfolio to grow to $114,700 (61% lesser or 39% of $294,600 market returns) read more here.
  4. Still not convinced? Lets say recession hits you in that case your portfolio will likely decrease in value but at the same time you will be charged the fees (the so called Active fund managers will still win this game).
  5. Expense ratio of Index fund is very low and there is no hidden charges, for example – VTI has an expense ratio of around 0.03% and If you are in India checkout ICICINIFTY with expense ratio of just 0.05% (let me know if you find something better in comments below, the likes of VTI is missing in Indian market)

Don’t take my words for it, always do your due diligence before investing. If you want to read more grab your copy of ‘Common Sense Investing’ the book by the founder of Vanguard Group.

Bonus Content – what to do in current stock market scenario? (for retail investors)

  • Stay Invested, don’t sell value stocks so as to be able to avail the benefit of further highs
  • Sell the stocks that lacks value & strong fundamentals and are up just in the Bull due to investor sentiment.
  • Don’t invest a lump sum new investment amount, as the market is still prone to volatility due to Covid.
  • Remember you have to buy in dips, sell in highs.

To read more on mistakes to avoid in Stock market check this. And if you are worried if Stock Market can crash in 2021 read this, click here.

Don’t let them take your hard earned money, get control of your money now! Be Financially aware, be financial literate.

Have a great weekend, happy investing! Happy Holidays… Stay Invested, stay safe, stay positive.

Where to Invest your money?

Lets look at a list of Investment available to you globally.

  1. Direct Equity (Stocks / Shares) – High risk Investment with greater return in long run and volatility in short, Equity today is one of the easiest to invest in terms of accessibility with just a few clicks you can own a piece of Tech giants like Amazon, Apple etc. (not suggesting/recommending). A good thing for a beginner to Invest when starting with Equity is to invest in broader market indices like Nifty, Sensex (in India) and VTI, S&P 500 in US. By Investing in S&P 500 you can own a piece of 500 of the significant publicly traded companies in US. (Link to Open a Demat account with Zerodha to start Investing today)
  2. Mutual Funds – A mutual fund is made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. But be aware of the Expense ratio and hidden fees, they can eat a big chunk of your portfolio in long run.
  3. Real Estate – Own a house and rent it, while you wait for the upside. Real Estate is the physical asset that you can own and feel unlike the Stocks. But you need to research before investing, and you may need to learn something called house hacking to start with, where in you own a Duplex and rent one portion while you continue to live in other. And if you like Stock Market and hate the extra work to put in for the physical asset you may be better of owning the REIT (real estate investment trust), a company that owns, operates, or finances income-generating real estate. Modeled like mutual funds, REITs pool the capital of numerous investors.
  4. Commodities – A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. For investors, commodities can be an important way to diversify their portfolio beyond traditional securities. Because the prices of commodities tend to move opposite to stocks, some investors rely on commodities during periods of market volatility. Commodities that are traded are typically sorted into four broad categories: metal, energy, livestock, and agricultural. When it comes to Commodity it is good to own a small portion of your portfolio in precious Yellow Metal – Gold to hedge against the paper money.
  5. Bonds – Bond is a debt security, borrower issue bonds to raise money from investors willing to lend for a particular period of time. Bond is a fixed Income Investments. There are wide variety of Bonds such as Agencies, Treasuries, Corporate, Municipal etc. A T-Bond, Treasury Bonds issue by U.S. Federal Government is considered to be safest of all, regarded as risk-free since they are backed by the U.S. government’s ability to tax its citizens. One good Investment in India is SGB (Souvenir Gold Bonds) issued by GOI (Govt. of India), and it can be bought via Zerodha (Link to Open a Demat account with Zerodha to start Investing today)

Whatever you Invest in remember to diversify well, and also remember no matter what there will be a time where your investments may lose 50-70% of its value. The key to avoid huge downside especially with volatile investment like Stocks is Asset Allocation. Diversify not just across different investments but also within one investment.

Further to the list above, below are some great articles published by us to refer before Investment-

# 7 Ways to lose money in stocks

# Caution! Dalal Street Ahead

# Invest your Money

Also, a great Book that I can recommend anytime to dive deep into Investments for an ordinary man and achieve financial freedom is MONEY Master the Game.

Thank you for reading. Have a great weekend. Let us know in comments below, what is your favorite go to Investment.

7 ways to lose money in stocks

Hello Riters, Hope you are doing great. We are back to help you do the personal finance. Today lets take you through some don’ts of a Investor. Lets discuss 7 ways to lose money in stock market and how to avoid them.

As Benjamin Graham, once said, “In the short run, the market is like a voting machine. But in the long run, the market is like a weighing machine.”

Read more on Investing –

*Mistakes to avoid while Investing

*5 To Dos of Investing

*What is a Stock Market Bubble?

*How to earn more money, Hustle?

*Why prefer a low cost Index Fund?

Happy Reading 🙂 Come back for more, follow us on Instagram for Financial News @ritefinance

Caution! Dalal Street Ahead

Yes, you heard it right, there are things that you should avoid, no matter what its a Big No. Like Trespassing Area 51, or buying the stock of your favorite Pizza Chain. Just Kidding, there is more to it, today lets talk Stocks.

When it comes to Stock Market Investing you should do your due diligence before Investing and never listen to any random guy online, but trust me you can listen this random guy (me) on this one.

Below are the 5 mistakes every Investors should be avoid –

  1. FOMO (Fear of Missing Out) – As the name suggest it refers to the Fear of missing out on the Opportunity. It is one of most common mistake that a new Investor makes. Basically when you see a stock rally you worry that you might miss the boat and hence try to invest as much as you can to get your share of the pie. But often times it leads to unnecessary investment, and at times you end up buying stock way too higher than its intrinsic value.
  2. Panic Selling – Selling a stock when its price is low i.e. in a Bear Market. When a stock is undergoing correction or has been the victim of some bad speculations, we as an Investor turn on our Panic mode and again let the emotions rule our judgement resulting into selling of the stock when it is undervalued.
  3. Trying to Time the Market – The common mistake every Investor make is trying hard to time the Market and failing to do so (which almost everybody do). Rather a good Investment strategy is to invest consistently for the long terms and be patient about your Investments. Remember nobody can accurately time the Market, not even Warren Buffet.
  4. Sunk Cost Fallacy Tendency to Invest in the fallen stock in order to recover the money invested. For example – I bought xyz corp share for INR 100 and the price fell to INR 50 in few weeks, without rethinking my strategy, doing research/analysis, I kept on buying more and more shares in order to average out the cost to be able to reap the benefits of future rise, But the future rise may never come.
  5. Failing to Diversify – One mistake every investor should avoid in long run is to invest only in a single sector or a very few stocks. One should diversify his/her portfolio in order to reduce the risk by investing in multiple sector so that if there is a Crisis or the Investment value goes down across one sector the other is there to back it up, hedging against the risk.

Greed, Fear, lack of Patience and often the lack of Understanding of the Investment is something we all should avoid as an Investor. A Investment should be done with all due diligence and rationality. Emotions, get rich quick schemes and lack of understanding is not good for any Investment. It is something I learnt the hard way, I too have committed to a few of the above mistakes. One thing you should always remember in the long run Market always tend to go up and hence by all means one should avoid emotions rule the decision making process. And if you are new to Investment, it is always a better idea to start with some sort of Index fund in order to lower the risk from Market fluctuations.

Bonus Content – One good Investment Strategy to follow during crisis like Covid is to be a Nibbler i.e. to keep buying small bites of a great company slowly as its share price fall, given it has enough cash reserve to survive the pandemic.

That’s all folks. Until next time, stay healthy, stay happy and keep Investing!

And if you are new to Investment you can consider opening a Demat Account at a brokerage firm like Zerodha.