In his investment classic ‘The Intelligent Investor’, Benjamin Graham makes distinction between two type of investors; the “enterprising” and the “defensive”. Enterprising investor devotes time and effort required for the selection of stocks, bonds and mutual funds that can generate higher than average market return. Defensive investor on the other hand lacks time or knowledge […]
Flaw in advising aggressive equity allocation to all young investors
It is conventional wisdom among financial advisers that young investors should have aggressive equity allocation of 70-90% since they have longer time horizon. A long-time horizon gives young investors much needed staying power which is essential for equity investing. While time horizon is an important factor in making asset allocation decisions and the rationale behind […]
Bad sequence of return
Much is said and written about the risk of inflation and how equity allocation in the portfolio can help protect and increase purchasing power of money. More and more investors are waking up to the necessity of having equity in their portfolios. Equity Mutual funds are increasingly becoming preferred choice of investment for retail investors. […]
When advisers look stupid for doing the right thing
Equity is an unpredictable asset class that doesn’t give the returns you want, when you want. It is also terribly difficult to predict equity returns in the short term. Therefore, when time horizon of the investment is less than 5 years, many advisers recommend investors to keep majority of their money parked in debt and […]
Why future is unpredictable
The world of finance is like an ocean. You can never know everything that is there in it to know. You try to read and learn about it through books, blogs, articles and videos. But more you know, more you realize how little you know about it. There is an immensely complex system out there […]