Part 6: Learn or How the heck do I ensure I reach Financial Freedom come what may?
6.2 Learn Productive Investing Behavior No.1
The immediate benefit of stopping your unproductive investing behaviours is better returns. Equally important is that it will free up your time to learn more about investing; leading to even higher returns. What are the 3 most unproductive behaviours that you must absolutely stop? How?
In the previous chapter we looked how to achieve mastery through a two-stage learning strategy. In Stage-1 what you learn and how you learn bring you to a level where you apply the fundamentals of making informed investing decisions skillfully. Essentially you become good at using the Process + System – data, information, analysis, tools and guidance and make your decisions.
This is a pretty high level of competence because you are using a robust investing method, making fewer mistakes, avoiding one that can set you back in a big way and earning good inflation-beating returns. However, if you were to ask me what would be the criteria that would assure you and me that you have cleared Stage-1 learning and ready to move to Stage-2?
I would ask if you have imbibed 3 habits that I consider essential for consistent success in Investing. Habit is the default way in which you will behave. And these are
Do you still waste your time searching for what to buy?
Do you have a filter on what investing-related content you will consume? If yes, what is it?
How frequently do you review your portfolio?
I will elaborate on each one of them and help you commit to and acquire 3 Productive Investing Habits.
Productive Habit 1: Don’t waste your time searching for what to buy. Let Mr Market know your shopping list, your reserve price and let him get...........Read More
Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.
MoneyWorks4Me method for rating and ranking mutual funds for SIP
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and
ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the
various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Performance Consistency: This is measure based on whether the fund has beaten the benchmark index consistently. For
this we compare the 3-year rolling returns of the fund with the benchmark for a minimum of 5 years and preferable 10
years. The period of rolling is one month and holding period is 3 years. Fund are color-coded Green on Performance when
the fund beats the benchmark more than 90% of the time. It is Orange if it beats 80% to 90% of the time and Red if less
than 80%. Funds with less than 5 year data are color-coded Grey.
Quality of Portfolio Holding: Moneyworks4Me has color-coded stocks as Green, Orange and Red based on whether the
company's performance has generated a ROCE above a threshold level (cost of capital) over 10 years (minimum 6 years) and
generated positive Free Cash Flow. For Banks it checks whether ROE is greater than 15% and sales has grown over previous
year. Stocks that perform consistently on these combined metrics are color-coded Green (min score 14 out of 20), Orange
(between 8 and 14) and Red (less than 8 out of 20).
Fund are color-coded Green provided the portfolio has 70% holding in Green stocks but not more than 10% in Red stocks.
Funds with more than 15% Red stocks in the portfolio are color-coded Red. The rest are Orange funds
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The
ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number
that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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