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I would invest in APPLE (long term). Well, I wished I would have invested in it already in the past …..

Hi investing is always risky- but the trick is in going against the flow ; Invest when everyone else is bearish – so you invest at low rates and get out of the market when the going is good – at high rates : thus maximizing profits… But this is easier said then done….

I very interesting way of investing I read about, goes like this : Invest 50% in secure mode (FD, Bonds etc) and the other 50% in equity – every 3 months rebalance the portfolios – gain is assured in the long term !!!

That’s an interesting idea. I agree that going against the flow should work, but everyone goes against the flow wouldn’t that create a flow in the opposite direction? For example, now would be an interesting time to invest in certain US companies since they’re terribly undervalued (although it’s risky because some companies may completely crash soon, like Nortel), but if a lot of people invested in them right now they would become overvalued.

A 50-50 split between risk and safe investments does sound smart, but in these days nothing is really safe… maybe except government bonds.

That’s the very idea ; Invest before everyone else realizes value in the stock… Once everyone else starts to go against the flow and invest – its time to get out … But unfortunately most of us are are ‘greedy’ and can never get out when the going is good! That’s why the 50-50 formula works…

As for companies going under – that’s where the research comes in, and that’s how people like Warren Buffet and Rakesh Jhunjhunwala (India) made their money. However we may not be in a position to do adequate research and therefore investment is very risky for mere mortals like us…

I generally invest only what I can afford to lose!!!

By the way please visit my community ‘architecture’ – would love to hear your comments!

To pick up the tops and bottoms consistently or in other words timing the stock market can not be done even by seasoned experts. I think for an average retail investor with reasonable appetite for risk, the best and time tested strategy will be the following (for investment in equity market) -

1. Diversify the investment in leading stocks across various Sectors.

2. Invest through a mutual fund through SIP (Systematic Investment Plan) a fixed amount every month as per your capacity.

3. In this way, your investment will get averaged out over a long term (3 years being considered a reasonable period when the returns will show a decent growth), i.e you will happen to invest some times when the market is down and on other occasions when it is up.

4. By investing through a recognised and rated mutual fund’s diversified equity scheme, you will be getting specialised investment service without yourself having to bother about selecting when to buy or sell a scrip. Moreover, even with a small amount, you can invest in good high value stocks and also spread your investment in a number of quality stocks across various sectors, thus diversifying/minimising the risk, if you invest through a mutual fund.

5. Historically, it has been established that over a long term (minimum 5 years), investment in equities generates a higher return than any other form of investment (e.g property, gold, debt funds, govt. securities, FDs etc.). This is true, at least in case of India. Hence, it is advisable to stay invested in the manner recommended above for a longer period (preferably at least 5 years).

Hope, it helps!

What I am suggesting is not ‘timing the market’. The debate is on whether to invest or not and I am for investment…

The ‘mutual funds’, ‘SIP’ and ‘Ulips’ are standard products suggested by so called ‘experts’. However these instruments don’t always work in India – with all the corruption around. Around 3% is officially taken away by the fund managers and how much unofficially is anybody’s guess…

I invested some money through mutual funds 3 years ago – in reputed funds (Tata, Reliance, ICICI) and my portfolio is presently down more than 60%

The problem lies in the fact that if you do not get out of the market at the right time – your fortunes will fluctuate with the market, and in case you need the money (for emergency etc) at the time of a recession – which is most likely to be the case – you loose out!

I totally endorse the idea of regular investment thorough. But continually taking money out of the market is also very important – and the best formula that I have discovered for that is the 50-50 method explained earlier.

Investment needs patience and discipline. I think if you follow the strategy suggested by me, you will be a winner in the long run!

What is the long run??? Most people need the money during a recession- and if it not there at the time of your need, what’s the point of being a billionaire…

I would say the long run in the context of equity investment ideally implies a period of 5 years or more. Therefore, if one enters in equity market through the route and strategy suggested by me, he should invest only as much of his surplus funds in equity as he can forget ( i mean which he would not require) for at least 5 years from his date of investment. If you are investing regularly every month thru’ a SIP, after completion of the 5 years from the date of your first SIP Instalment/amount, it would become like a continuous monthly cycle where you can redeem your funds (if u require them) every month! So, first 5 years (reckoned from first SIP installment) only requires more patience in respect of the need for redemption after which it will generate a continuous monthly return!

I agree with you in theory – you can gain by investing small amounts regularly. What I am saying is that all investment in stocks (whether SIP or one time) is subject to market fluctuations…. So if you need money during a recession it is going to be difficult to get….

My suggestion is to invest 50% in secure bonds, FD’s etc – which are recession proof.

I enjoy your debate. I agree that both systems are valid ways of investing and if you do it right they’ll benefit you financially.

Regarding the mutual funds though- isn’t half the fun of investing doing it yourself? I mean, it’s financially smarter to put small amounts of money in a diversified portfolio, sure. But then you don’t get control. I think it’ll be a lot more fun to do a bit of research and then choose a stock you really believe in, or a type of secure bond or GIC that can benefit your situation. It’s riskier, but it’s your game, and if you get anything out of it you’d really be happy about it.

Just something to think about.

Ok, here goes,

1. I am totally in favour of SIP and long term investments.

2. These strategies work very well in the long term (7-10 year periods), however are still prone to recession.

3. To minimize risk during a period of recession I have suggested a modification to the ‘regular investment (SIP)’ or ‘one time investment’ model.

4. The trick in my strategy lies in ‘rebalancing of the portfolio every 3 months’ and not in the ratio of investment between equity and bonds – which may be as per individuals risk appetite.

5. The strategy suggested requires deep thought and analysis to begin to understand. It is easy to overrule ‘offhand’.

6. I do not believe that all will agree with my strategy – this is the very beauty of the free markets – disagreement between people – One guy sells thinking a particular stock will go down – the other buys it because he thinks it will go up!

7. Finally , please allow me to quote Mr. Warren Buffet (One of the world’s most successful investors and the largest shareholder and CEO of Berkshire Hathaway. He was ranked by Forbes as the richest person in the world during the first half of 2008, with an estimated net worth of $62.0 billion). “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”