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Archives for October 2011

10 Stocks I Would Want to Leave for My Grandchildren

“A good man leaves an inheritance to his children’s children.” ~ Proverbs 13:22a, Bible

What kind of gifts would you consider giving your children and grandchildren when you retire from active work?

In the days of my grandfather, leaving the next generations with cash, gold, and property was a good idea. Of course, this is a good idea even now.

But if you ask me if there’s anything still better than these assets that I’d love to leave for my children and grandchildren*, it would be a portfolio of ‘double compounding’ stocks.
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This Diwali, Move from Darkness to Light

As a father of a daughter who’s growing up fast (well, that’s the way all daughters grow), I am often confused how to teach her about festivals so that she can make a personal connection with them.

I try to relate it to concepts that she already knows about.

From my experience, I have found that children often seem to get confused with the traditions that surround festivals such as Diwali, and miss the moral of the story.

Before taking them to the temple or having them light the candles, I think it is important to talk to them about the festival and the significance.
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3 Reasons to Buy Gold This Diwali

1. Gold is real money
Everything else is paper, which they can print as much as possible. But they can’t print gold. Also gold is the only currency that has survived more than 100 years. In a world where all returns are fake, and momentary, gold provides the only real return.

2. It’s highly liquid
Apart from the stability gold provides to your portfolio, it is traded around the globe 24 hours a day. With gold, you possess an international currency which can always be sold around the world at any time. Plus, with the coming of Gold ETFs, now you can buy and sell gold on the stock exchanges, as easily as you buy or sell your stocks.

3. Worried about the rising geopolitical tensions?
The deteriorating conditions in the Middle East, revolts in the US and Europe, the nuclear ambitions of North Korea and the growing conflict between the US and China headline the geopolitical issues, which could explode at any time. A fearful public has a tendency to gravitate towards gold. Before they do, why don’t you?

But how much?
“How much gold should I have in my portfolio?” you may ask.

Not more than 5-10% of your financial savings. See, you must definitely have this much gold in your portfolio for the reasons mentioned above. But the fact remains that in a growing economy like India, sound and solid businesses provide a greater opportunity to grow your wealth in the long term.

So, good quality stocks and mutual funds are your best route for wealth creation.

Gold, on the other hand, is an excellent way for wealth preservation.

So if you don’t have gold in your portfolio, buy now…but have a limit to how much you buy of it (and let your wife know that limit :-)).

The Art of Choosing the Right Financial Advisor

“Most security buyers obtain advice without paying for it specifically. It stands to reason, therefore, that in the majority of cases they are not entitled to and should not expect better than average results. They should be wary of all persons, whether customers’ brokers or security salesmen, who promise spectacular income or profits.” – Benjamin Graham

These words from one of the most successful investors who ever lived and one who remains the most influential investment thinker of all time, is a telling statement on the way an investor must go about identifying the right financial advisor.
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Are You Young Enough to Become a Crorepati?

A lot of people must have told you what my parents had drilled down in me during my student days.

It is that you must find a promising career that pays you a decent living so that you can live happily ever after.

But they may not have told you that in the long run, it’s not just how much money you make that will determine your future prosperity.

It’s how much of that money you put to work by saving and investing it.

You see, the best time to start investing is when you are young.
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Forbes on Warren Buffett: A Brilliant Collection of Articles on the Master

Warren Buffett, whom the world knows as the best stock market investor, wasn’t as famous in 1969. But he was already a millionaire then, and was on the verge of retiring from his investing career.

Till then, Buffett was managing his private investment firm – Buffett Partnership – and was doing pretty well for his investors.

But in May 1969, he wrote a heavy-hearted and an apologetic letter to the members of his partnership, warning them of his “intention to retire.”

Buffett complained about the “seemingly barren investment world” and the “increasingly short-term oriented” speculative market.

That environment, he said, had “generally become more negative and frustrating as time has passed.”
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What Investors ‘Really’ Want

I have a lot to say from my recent interaction with a financial advisor whose company had advised a friend’s father into making a lot of bad mutual fund investment decisions.

The last two posts (here and here) covered this topic and the next two will also do this.

One of the points of discussion I had with the financial advisor was that the bad investment decisions that my friend’s father made was of his own doing. This is what the advisor accused him of.

“Who knows who advised him such funds? Probably he himself might have chosen them,” he told me.

“Why, weren’t you his financial advisor?” I asked.
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You Don’t Need Enemies When You Have Such A Financial Advisor

“I’m looking to invest in mutual funds. Can you help me do that?” I asked the lady who picked up my phone at Bluechip Corporate Investment Centre Ltd.

Bluechip is the financial services company that had advised my friend’s father to invest in over 50% of the 192 mutual fund schemes he held in his portfolio. I had written about this in yesterday’s post.

“Yes sir,” said the lady. “There’s this gold fund that you can invest in for very good returns.”

“Can you explain me more?”

“One minute sir, let me ask my financial advisor to talk to you. He will explain you everything.”

“Aren’t you the financial advisor since you were advising me the gold fund?” I asked.
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