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If you have been reading my blog posts regularly, will remember that I saw one of my mutual fund investments suddenly after 15-16 years and the Rs2000/- I had invested had over the years become close to Rs90000/-.
After this I became a regular at trying to identify various mutual fund schemes and slowly building SIPs (Systematic Investment Plans – where monthly a small amount of money directly gets withdrawn from the bank and invested in the respective schemes). Even today this is an important piece of education for me.
This was a very good mechanism because it brought about a lot of financial discipline into my life and I slowly started accumulating wealth. The good thing was that in 2013 when this dawned on me, the Indian equity markets were at a very low level and subsequent to that there was a rally over the next 5 years which helped me gain a lot in terms of reaching my goals.
Around 2014-15 I read the Tony Robbins book Money Master the Game. While this book is focused towards the US economy and the shares and financial markets in the US, there were some nuggets of wisdom in a few areas which stuck with me. One of the items was how even a 1-1.5% reduction in interest over a long period of time can make a very large difference in the compounding machine.
In India the mutual fund industry is quite regulated by SEBI and the total expense ratios of schemes are quite well controlled. Inspite of that the MF schemes can be charging upto 3 odd percent as their fees. This got me thinking how far I can be from my goals because my compounding machine has this leakage of about 3%. ( I even had a whole blog post related to how small differences in interest rates over long time periods can have massive impact on your wealth)
But I did not know, how to pick stocks myself. So how could I invest in equity. That’s when I started scouting for books on investing. These were the books I wrote about over the last few posts. However most books were US based stock market related and I could not relate to the Indian markets.
While searching for some simple inputs I came across people talking about the letters written to the shareholders of Berkshire Hathway by Warren Buffet. I would recommend anyone anywhere, if they want to learn about basics of investing in simple terms then this is one of the best sources and is free of cost. These letters are available on the Berskshire website and tabulated so you can search for them by the year they were published.
Inspite of these letters being written so well, I was a novice and was not able to relate to a lot of concepts with respect to the Indian companies, because American companies have different kinds of share holding patterns.
Accidentally I happened to chance upon the Wealth Creation studies created by Raamdeo Aggarwal Jt. Managing Director of Motilal Oswal. These were similar to the Berkshire Hathway reports in that they came out each year but were better because they were talking about Indian companies and the Indian stock markets. And to top it, they were also free.
I devoured on these reports and now am a big fan of Mr. Raamdeo Aggarwal who authors these reports. Recently they have released the 23rd wealth creation study.
Most channels also get Mr. Aggarwal to discuss on the stock markets on a regular basis. On YouTube you will see episodes of ETNow or CNBC TV18 where he is featured on a regular basis. However last year the channel Bloomberg Quint ran a 4 part series with him on investing. This is the best 4 hours you can spend on learning investing from one of the stalwarts of investing.
There is another person whom I admire from seeing his interviews on television. he is Riddham Desai of Morgan Stanley India. You can also see his interviews on either ETNow and CNBC TV18 or on Bloomberg Quint.
Between Riddham and Raamdeo the difference is the fact that one can distill the macro perspectives of the Indian economy so simply and present while the other can focus so well on the micros amazingly.
Have a look at these reports and videos and you will get a great input on how to evaluate stocks.
However stock picking is a tough call and if you don’t want to put in the hard work, then Mutual Funds and ETFs are the best route for you to take.
Till next time….