Investment Strategy

The most common paradox we often come across is: money does not bring happiness. Then why, since time immemorial, people from different civilizations, continents, customs and religions desire to be affluent, prosperous and wealthy? Money is not everything in the world! Definitely, there are many things, much more important than money, like our health, family and people we love and respect. Even then, money is and had been, the vital factor in all the ages to manage most of our wants, needs and desires.

People who say the money could never buy happiness are those who either don’t have the money or are those who have it but do not know how to properly utilize it. The best utilization of money is to invest. Investment is important for an opulent present and well-maintained future life, free from financial worries.

For the success of every mission, a strategy is required. To get the economic freedom and to be self-sufficient, one has to adopt prudent investment strategy. The strategy mirrors various internal and external factors such as present income, the type of work and industry, age, education, mindset, risk tolerance and so on. There are various avenues of investments: art, antiques, business, property, equity and so on.

However, historically proven, investment in equity yields higher returns provided we have judiciously planned our portfolio. Equity investment means buying shares of a specific company with the expectation of generating wealth through dividends, capital gains and appreciation in the price of shares. The role of the investor is to provide the requisite funds to the company, with the assurance of receiving a proportionate percentage of profit.

The investment strategy is associated with various risks. We should properly understand several kinds and forms of risks before investing. The most widespread risk is speculation and emotions. Speculation means investing in equities and/or derivatives on the tips from friends, relatives, guests on business channels, etc. expecting a quick windfall profit. Understand, that even the most visionary and experienced investment guru like Marc Faber acknowledges that timing the market is the most difficult task and requires lots of experience, expertise and data. Every investment decisions should be based on proper research conducted by competent analysts. Once should take their advice and ask as many questions in order to clear any doubts whatsoever.

The most successful investment strategy, adopted by Berkshire Hathaway's chairman Mr. Warren Buffett is value investing. Try to accumulate shares of companies that are available at tangible book value, are traded at lower than their book value, have low PE (price to earnings) ratio, with high dividend yields. Value stocks outperform the market in a long run, provided we do not let our emotions play any role in our investments decisions. No greedy buying, no panic selling, no speculations, not following herd mentality i.e. buying or selling because one of our acquaintances is doing so. 

We should always diversify our portfolio backed by solid research conducted by proficient professionals of a qualified fund house offering PMS services with a good track record. Never forget to periodically monitor and evaluate the returns of the portfolio. Check, if it is going steady with the market and the benchmark index and your investment goals.

Always keep in mind that our money should work as hard as we do and if the portfolio is not keeping pace with the expectation, do not shy to reshuffle the investments. Remember, at the end of the day, we are fully responsible for the profit or loss, so be shrewd and prudent. Get rich soon.