Aaditya Chhajed, CA, CFA

I recently read the book- The Psychology of Money by Morgan Housel, Timeless Lessons on Wealth, Greed, and Happiness ;  the most intriguing investing book I have ever read. Top 20 learnings from this book as follows: Financial success is not hard science. It’s a soft skill, where how you behave is more important than what you know. If you are short of time jump directly to points 19 and 20. 1. No One’s Crazy Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works. Spreadsheets can model the historic frequency of big stock market declines. But they can’t model the feeling of coming home, looking at your kids, and wondering if you’ve made a mistake that will impact their lives. The economists wrote: “Our findings suggest that individual investors’ willingness to bear risk depends on personal history.” The New York Times wrote in 1955 about the growing desire, but continued inability, to retire: “...

I recently read the book- The Education of a Value Investor by Guy Spier.   This book is about Guy Spier’s journey from that dark place toward the Nirvana where he now lives. This blog post includes  my top learnings from the book.  8 Rules developed by Guy Spier to be followed while investing: 2.        1. Stop Checking the Stock Price o    As Buffett has said, when we invest in a business, we should be willing to own it even if the stock market were to close the next day and not reopen for five years. o    We also know from behavioral finance research by Daniel Kahneman and Amos Tversky that investors feel the pain of loss twice as acutely as the pleasure of gain. o    The Rule: Check stock prices as infrequently as possible. 3.        2. If Someone Tries to Sell You Something, Don’t Buy It o    As Charlie Munger has joked, “All I want to know is where I...

There are multiple investment options for Co-operative Banks and Societies. As per RBI Master Circular on Investments by Primary (Urban) Co-operative Bank and the recent amendment to the Indian Trust Act in 2017, Co-operative Societies can invest in many financial instruments. Traditionally, the funds which are in excess of the loans given are invested in fixed deposits of other co-operative banks or nationalized banks. The interest rate received on those excess funds barely matches the interest cost that the bank pays to depositors.   After the recent amendment to the Indian Trust Act in 2017, co-operative societies can invest in specified mutual funds. For simplicity, I have divided the deposits with a time horizon of 5+ years and less than 5 years.  1. Deposits with 5+ years time horizon Only deposits with 5+ years' time horizon should be invested in equity. Purely from the perspective of value addition; co-operative societies should invest some part (e.g. 10%) of depo...

Zooming Out: You should zoom out and see the big picture. If you're too close to the situation, you'll get entangled in things that don't really matter. And, they really shouldn't matter. Go too close and you'll get caught up with the noise at the signal.   While this is true for many aspects of life, let's discuss in the context of business and investing.  When you zoom out, you'll ask questions like;  Am I even in the right business? Does it even make sense to be in this business? Where is this business headed in 5, 10, 20 years from now? What need does this business serve? Will this need even be there 5, 10, 20 years from now? For example, an auto ancillary manufacturer, let's say a gearbox manufacturer may be very profitable right now; but if electric vehicles disrupt the internal combustion engine; will there be a need for gearboxes ten years from now?   And even if the need is there, how likely is it that my business will still be relevant fulfilli...

Investing anything time, effort, or money sacrifices short-term rewards for a long-term payoff.  Whether you are HNI or not, be it any type of investment, sometimes investors lose sight as to why they’re investing.  Goals-based investing offers a useful structure to map out concrete investment goals, prioritize them, build portfolios to meet them, measure progress against them, and make adjustments (if necessary) to stay on track. The benefits of setting goals extend to investing by improving investor behavior and increase the likelihood of financial success. What is goals-based investing? Goals-based investing is a framework to translate financial goals into  forecast future expenditures and  allocate money to separate portfolios  designed to meet those specific goals. An investment without a goal is like a traveler without a destination. SMART framework help establish clear goals. Prioritize goals based on necessity and time horizon: High-priority goals are th...