An advice no investor should miss!
In this issue:
» RBI continues with its interest raising spree
» No government wants you to know this indicator
» Economic 'growth shocks' will continue, says Stephen Roach
» US$ 5,000 an ounce gold only a matter of time
» ...and more!
------- FREE Newsletter -------Straight from the Hip - A Weekly E-Letter
"This weekly stock market column written by me has run for over 19 years on various platforms. I invite you to subscribe today for a fresh and thought-provoking perspective." - J Mulraj
Available exclusively to readers of Equitymaster. Sign-up Now! It's Free!
---------------------------------------
00:00 | ![]() | |
If you too have got sucked into this circle and are finding no way of coming out, we have a small suggestion for you. Try changing your attitude towards savings and it may make a world of a difference few years down the line. Yes, you've heard it right. Most of us do not set aside any money at all because we believe it is too small to make any meaningful difference. But that's a completely wrong attitude to have. You see, as humans we are quite innumerate. Our math skills absolutely pale in comparison to say our communication skills. As a result of this, we fail to appreciate the enormous power of sustained compound growth. Thus, even if we save a very small portion of our income on a regular basis, the total accumulated wealth over a long term period can be enormous.
Please bear in mind that the important thing is not how much you save. But what matters is whether you save anything at all. So, if you haven't done it already, we suggest you start doing it right away. As soon as you get your income, save a small part of it and then focus on living off the balance amount. We assure you that if invested wisely, there is hardly anything that can stop you from becoming rich few years down the line. Do remember that this is the first and foremost step in becoming a successful investor. Everything else like picking attractive stocks and bonds only come later.
Do you think saving a small amount right now makes a big difference few years down the line? Share your comments with us or post your views on our Facebook page.
01:21 | Chart of the day | |
![]() |
01:49 | ![]() | |
The increase in the price of commodities globally was cited as the 'key risk factor' troubling the RBI. A slowdown in the pace of global growth is a worrying factor. Uncertainty about the resolution of the Euro debt crisis is also a cause of concern.
Post the RBI's aggressive stance in its previous monetary policy review, 47 banks raised their base rates by 1.5-3% during July 2010-May 2011. Thus, credit growth may see a further moderation, hurting India's GDP growth prospects.
02:22 | ![]() | |
What does MPD mean? In economic parlance it relates to the change in the level of all debt- government, corporate, consumer, etc- in an economy to the change in its gross domestic product. In simple terms, MPD shows the relation between debt taken and income created out of it.
To show you how good an indicator it is, let us take the case of the US economy. Back in 1957, US$ 1.86 of debt generated US$ 1 of net national income. Pretty neat! But look at what happened by 2006. It required US$ 4.6 of debt to create the same US$ 1 of national income. What this means is that the additional US$ 2.74 of debt failed to produce any income for the US economy. This situation is only getting worse. As more and more debt gets added with a corresponding decline in productivity, the US seems to be headed towards a very major breakdown.
As an investor, you can use this same metric to evaluate a company's productivity as well. If you find a company piling up debt without showing a corresponding rise in income, then there is enough reason to worry about it.
03:19 | ![]() | |
Short term numbers like advance tax can mislead investors by offering a myopic view of the business cycle. To top that they could even misrepresent facts as the company could have an extraordinary expense or income that quarter. Further for most sectors, growth in the first quarter of the fiscal is slower and picks up in the latter half. Hence investing based on advance tax numbers is the surest way of picking the wrong stocks, most often at the wrong prices.
03:48 | ![]() | |
04:13 | ![]() | |
04:49 | ![]() | |
04:56 | Today's investing mantra |
Today's Premium Edition.
Recent Articles
- All Good Things Come to an End... April 8, 2020
- Why your favourite e-letter won't reach you every week day.
- A Safe Stock to Lockdown Now April 2, 2020
- The market crashc has made strong, established brands attractive. Here's a stock to make the most of this opportunity...
- One Stock that is All Charged Up for the Post Coronavirus Rebound April 1, 2020
- A stock with strong moat is currently trading near 5-year lows.
- Sorry Warren Buffett, I'm Following This Man Instead of You in 2020 March 30, 2020
- This man warned of an impending market correction while everyone else was celebrating the renewed optimism in early 2020...
Equitymaster requests your view! Post a comment on "An advice no investor should miss!". Click here!
9 Responses to "An advice no investor should miss!"
lmsharma
Jun 16, 2011this is true only if you beat the inflation rate;otherwise moneys go to bankers!
Rajni Mohan
Jun 16, 2011Small drops of water can fill a pot.It depends upon us when we want it full. Small saving can help us start a small idea which can become big.
rusbom
Jun 16, 2011Thriftiness is good, no doubt. But accumulation of "things" is a bigger problem that needs to be attended by each individual personally in his mind. So long as you have uncontrolled desires for more and more thing and you simply accumulate things (whether u have money or not is not the question), Every One of us should consume Lesser and Lesser as we evolve, then only can we be happy and save our earth too. When there are NO desires for more and more, you will have greater savings and financial independence and no loans or mortgages!!!
GOUTAM
Jun 16, 2011YES IT MAKES A BIG DIFFERENCE IF YOU SAVE A SMALL PORTION OF YOUR INCOME SYSTEMATICALY AND REGULARLY. AT THE FAG END OF YOUR LIFE YOU WILL BE PROUD OF YOUR REGULAR SMALL INVESTMENT
PRATIK SHAH
Jun 16, 2011MARGINAL PRODUCTIVITY OF DEBT GOOD TO JUDGE FINANCIAL HEALTH ? NOW I WOULD LIKE TO KNOW FROM YOU WHETHER NAREGA PROGRAM HELP OUR COUNTRY TO BUILD ANY NEW ASSETS OR ITS JUST FUTILE EXERCISE BY GOVERNMENT BECAUSE RIGHT NOW ANY PART OF THE COUNTRY EVERY ONE FACING LABOR SHORTAGE AND SLOW DOWN IN ECONOMY AND AT THE SAME TIME INFLATION IS NOT COOLING DOWN BECAUSE GOVERNMENT SPENDING DOES NOT RESULT IN TO ANY PRODUCTIVE PURPOSE ON THE CONTRARY DIG THE PIT AND FEEL THE PIT ! PLEASE LET ME INFORM WHETHER AM I RIGHT OR WRONG ?
Sthithapragnja
Jun 16, 2011Eq.Master Team,
Humble Kudos from an ordinary AAM AADMI !!
I am prompted to oberve in all humility fortitied with abundant ignorance to cite the old adage ""LITTLE DROPS OF WATER MAKE THE MIGHTY OCEAN ". There is also a wonderful supplementary to this adage " IF YOU WORK TILL YOUR BONES CREAK, YOU CAN EAT TILL YOUR TEETH START CREAKING "
Furher I had recently read someqhere a very meaningful advice " Many people spend and thereafter ,if anything is left, they save. But there still are a few wise
people who first save and thereafter spend the remainder
for their necesities: Further there are also gradations thus : Necessities, Comfort and then luxuries!
With the efflux of time, former luxuries become necessities !!(For example Transistor Radio, Colour televisions and even the Cellphones are fine examples of "HAS BEEN " (Luxuries!!) becoming present day necessitities isn't it ??
I hasten to conclude !!
vikas
Jun 16, 2011yes you have rightly said that a penny save regular,changes the life after some years. THIS IS A VREY GOOD ADVIE
PADMANABHAN.S.
Jun 18, 2011Lets not forget the grand old man of investing Warren Buffet, he believed in the power of compounding and spent money only if necessary and lets now forget even today he lives in the same apartment which he bought years ago even though he could today afford to live in a villa by the exotic sea side resort.
yes regular savings with intelligent investment will go a long way in raising your bar and standard of living.
Can anybody forget INFOSYS ... an amount of Rs.10,500 invested in INFOSYS in late eighties would have fetched the investor a few crore rupees.