The Smart Investor
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The main objective is to teach about investing step by step and behavioral psychology in making decisions & investments. Each week an article will be posted to enhance our clients knowledge in the world of investments. There are so many myths went it comes to investing in market like you should be a professional qualification like charted accountant, IQ should be high, need top b-school degrees from IIM, ISB etc. If you are not the one I mentioned, people will ask you to seek the help of investment adviser, financial planner etc. The truth is above doesn’t going to help you much! Surprised !!! Then you can ask me how to become a good investor right? That’s a good start to become one! To become a good investor you need to be an observer, independent thinker, learning machine, convictions in the investment you made. Yes! That’s it.
So simple isn’t it?
I have a good friend Shakti who is interested in investing from the age of 20. He is not a school or college topper. Just an average student with bit of sensible thinking. At the time of college, I am his roomie. We were staying in a hostel with more than 500+ students accommodated. I have the habit of brushing twice a day. He asked me few questions…
Shakti: Why do you brush twice a day? Vignesh: It’s good for teeth and to prevent dental ache, bad odour. Shakti: Which toothpaste do you use? How long? Vignesh: I use Colgate. As far as I know , me & my family uses Colgate toothpaste. I am astonished! Why does he ask these lame questions? Without further delay, he asked the near buy shopkeepers on the sale of Colgate toothpaste and results were very positive. He saw many of the hostlite using Colgate toothpaste.So he borrowed Rs 10000 from his parents & another Rs 5000 which he saved and invested in Colgate shares at 2010, when the price of Colgate was Rs 350 per share . Now the Rs 15000 investment he made on Colgate shares is multi folded in the span of 7 years and its worth now above 1100 per share, without including the dividends which he re-invested in it & the bonus which is issued in 2015. Now the Rs. 15,000 is worth more than Rs 90,000 without adding dividends. Colgate Palmolive is generous dividend payer.
I asked him few months back, what made him to invest in Colgate?
Shakti: His answer is I understand the business. Vignesh , I observed you & your family is a consumer of colgate for 15+ years and there are so many individuals, family like you in India. Moreover,we are not going to stop brushing in our life hopefully. So these made me to invest in Colgate and I’m going to held the share for more time. I was awestruck by his answer and his answer made me to realise investing is not rocket science, its easy, a bit of observation, independent thinking and convictions. Why Convictions? It is needed to hold on to our believe when we made the investment in the begin at a particular share or company.Business have thick and thin times. Finally,My good friend Shakti is not a professional Charted accountant, not from top b-schools. Just a graduate with bit of observation,convictions,independent thinker.More Importantly, he understands the business & operations of Colgate.
I hope this article help you to become a good investor. See you in the next article! Till then happy learning.
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