The Ten Commandments of Investing

1. Learn, know and Understand YOURSELF:

This is not so simple. Just too many people I know will say ‘I have to make this investment for 30 years. In 3 years they may have asked me 30 times what they should do – The NAV has gone up, The NAV has gone down, I am changing jobs etc. If YOU do not know YOURSELF even the Gods cannot help you. You’re making it tough for your advisers.

2. Be ready to invest:

All your expensive loans should have been paid off. This means other than a housing mortgage make yourself debt free.

3. Learn the absolute basics:

Debt, equity, conflict of interest, mutual fund, hidden charges, term insurance, budget, what an adviser will tell you – but you should check out at subramoney.com. ‘Do not leave home without this’

4. Find an adviser:

Research about him. Trust, but verify. Once you trust, let go.

5. Resolve conflict of adviser versus fund house versus you:

He may be inexpensive. However, inexpensive need not mean cheap. For example if you promise to invest Rs. 2 million a year every year for 10 years, I can afford to advise you for free. Pharma companies treat doctors well, do not worry. Jokes apart, understand what and why you are paying (or not paying)

6. Create a Plan:

To start your life with a good financial base, you need to understand your assets and liabilities (net worth), set priorities for your goals, create a realistic spending plan, set up an emergency fund, and put the core pieces of your investment plan in place.

7. Invest in the best fund houses and schemes:

Popular may not be the best, but then size and longevity ensure a simple Darwin theory. If it has stayed so long and collected so much money, that fund cannot be to bad, right? Keep monitoring but you cannot go too wrong. If the FM starts lagging the index, shift to the index.

8. Make copious notes on what you are doing and why:

9. Stick to your plan:

Do not get carried away by the media. If you have too high an opinion about a TV expert (or a blogger for that matter ask a few of his friends, soon you will know he/she is not worth the adulation). If in doubt read this blog. I shred most people, except those who can send a truck to kill me.

10. Live well