Invest your Lumpsum and Monthly Savings in One

Portfolio of Stocks, Mutual and Index Funds

1.Why a Portfolio of Stocks + Mutual + Index Funds?

Key benefits:

Stocks

  • Higher control over portfolio
  • Can allocate more to a few stocks where investor/advisor has conviction
  • Decisions not impacted by external factors as in a MF eg large inflows, redemption pressure, fund manager exit etc.
Key benefits:

Mutual Funds

  • Mutual funds typically hold 50 stocks in a portfolio thus less risky
  • Investor can benefit from multiple investment strategies and themes
  • Actively managed by Fund Manager
Key benefits:

Index Funds

  • Diversification -Passively follows index composition
  • Easy way to grow with the market
  • No fund manager related risk

2. How to build your Stocks' Portfolio successfully?

  1. Invest only in safe companies
  2. Invest only when the Upside Potential is higher than FD/8%
  3. Hold for as long as the company performs and let compounding do its work. Sell only if company performance has dropped or it has governance issues or prices rise so high that the upside potential is very low.

3. How to invest in Mutual and Index Funds successfully?

  1. Invest in 3 to 4 funds that have different investing styles eg Value, Quality, Momentum and Small Caps.
  2. Invest lumpsum when the Upside Potential is higher than 8%
  3. Between two similar style funds choose the one with a higher quality portfolio and consistent performance.
  4. Hold for as long as the Upside Potential is above FD interest rates.
While the above advice is simple to understand, implementing is not easy unless you have a
framework and data that proves these answers. MoneyWorks4me PRO is designed to
enable retail investors take sensible investing decisions for Stocks, Mutual funds and Index funds.
Actions you need to take before investing:
Classic Segregation Direct-investment
Take life insurance-term plan for 20X your annual salary and health insurance for 5-25 lacs.
Classic Segregation Direct-investment
Allocate (100-your age) % of your investable surplus to equity. The rest put in FD with SBI/HDFC/ICICI
Classic Segregation Direct-investment
Don't chase very high returns. Returns of twice the SBI-FD rate eg 12-13% is healthy
Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323
Research Analyst - INH000000719

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