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Guided Tour: Novice Investors (0-2 yrs. experience)
INTRODUCTION: Welcome to the community of equity investors. We are assuming either you have no experience at all and scared to get down in the battle of stock market or you have a bit of negative experience and there is fear of stock market. Stock market returns are un-comparable with any other mode of investment if we see the result across decades. We have other articles on this web site which compares the results. In this article we would like to share inform that NIFTY has returned 12% compound interest during 1993-2013 and around 20% compound interest during 2003 -2013 (see Why SAFE for details). NIFTY is index of Indian stock market which represents average price of India's top 50 stocks. The top 50 companies in NIFTY are slow moving stock due to their own size. Medium size companies have mostly shown greater growth rate than large companies. EXPECTED RETURNS: We have analyzed two kinds of investment modes. 1. Spot: Just buy and sleep 2. APS: Buy and Sell according to our signals (Average holding period is 9 to 18 months) Under our guideline of investments, the following two charts show typical returns gained by two types of investors. Basis of this data is sample generated by various users on our Portfolio Builder application. Total time period in sample is 5 years(1st April, 2008 - 28th March, 2013)
Yearly compounding interest earned by percentage of spot investors
Yearly compounding interest earned by percentage of APS investors
OUR GUIDELINES According to our equity investment philosophy there are three major pillars of success. 1. Select liquid stocks 2. Create diversification across multiple stocks and sectors. 3. Buy only when going up and sell out if going down. For detail explanations of above please read our investment framework SMART. Spot investors under our guidelines follow first two rules while APS investors follow the third rule also. We have provided Portfolio Builder tool to create a portfolio which will automatically follow the first two rules. In order to follow the third rule, investor will have to do periodic review (unlike first two rules which are one time affair). Thanks to our APS product which reviews the portfolio on behalf of investors periodically (weekly) and sends them color coded report which they can interpret in few seconds and decide the actions. VALIDATION: We strongly recommend visitors of our website to try out our Portfolio Builder feature. We have shared and analyzed the data through this tool in a very transparent way. One can use this tool several times and validate the data which we have shared in section "EXPECTED RETURN". HOW TO USE OUR SERVICE: Step 1: Create Login (No charges involved) Step 2: Create portfolio. Portfolio may be created in two ways. If you do not have any exposure to equity market and you are just inspired by us to try this then Portfolio Builder is the tool which will help you to do the same. In case you already have some exposure then do the entry in our portfolio system. Try out "What IF..." feature associated with portfolio. This will give you information about sector wise exposure you have taken. On basis of your budget and number of stocks, create a session at portfolio builder and match the recommendations per sector basis. If you are within the recommended guideline then your portfolio is ready else try to make your portfolio compliant with the guideline. Step 3: Activate your portfolio (Look for "Activate" Button). Step 4: Wait for weekend (Friday or last trading day of the week) report Step 5: If some actions are required then execute on Monday (or next trading day) morning.
Step 6: Go back to Step 4
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