Equity from an Informed Investor: 3

Equity from an Informed Investor: 3

15 % CAGR return mentioned yesterday, must have made many pounce with the query, does this figure augur well considering the risk involved, often quoted as, risk-reward equation. You are right to some extent. When you imagine the returns of the investors who shy away from the markets, this figure is not only in green but is fairly bottom level. Its said the simplest way to make money in the stock market is by not losing it.

That brings us to the question of what it takes to pip up this 15% figure. Getting moderate returns is always easier than having outsized returns. Then, What it needs to expect exceptional returns?

Being an Active investor with equity investment literacy.

 

Direct equity investment is intelligence driven, time demanding & temperament soliciting (markets are said to be 40% & 60% emotions) investment avenue.

Warren Buffet says, 'The most important quality for an investor  is temperament, not intellect...'  

To top it all, are you passionate of equity investment? In Bombay parlance it is described as 'market ka keda'. What draws a novice investor to equity is the excitement created in media & surroundings. True, it becomes difficult to define whether one is passionate in the beginning itself. Whatever the motivation that brings you to market, interest in equity investment is preferred indicator. The ability to be excited about equity, even over longer periods without being tired indicates your love & passion.     

Finally, what percentage of your asset is the financial allocation for equity investment? It is for you to decide the worthiness of time & effort.

  

Following this, there is individual's comfort zone & risk profile (dependent on equity money, financially independent, entrepreneurial risk taking ability etc) .

You need to undertake this exercise & decide whether you are comfortable with equity investment through MF or direct investment.

Having a fair idea of the qualifications needed for equity investment, we would discuss different styles of direct equity investment the next day.

Good Day,

'This and That'

PS: 

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