Lessons From The Debt Fund Fall

Published: July 23, 2013 at 8:46 am

Last Updated on

  • Rule number minus one: Invest with a goal and time frame. Rule number zero: Never forget rule number minus one. What WB said can wait.
  • There can be no free lunch: It goes against the rules of the universe. Returns may not be mathematically correlated to risk. However, there is no denying that ‘good returns’ implies risk. Simple commonsense.
  • Horses for courses. If you want ‘good returns’ you need to train for a marathon not for a sprint.
  • Ignore noise: Do not waste time reading every available analysis on why bonds crashed. The fundamental principles of sound investing will never change. Once you know what those are, the rest is just BS. The reasons for the crash are completely irrelevant if you get the basics right.
  • Never forget the tortoise and hare story:
    • Why did the hare run fast? Because it had not idea how the finish line looks and wanted to get there asap.
    • Why did the tortoise go slow? Two reasons
      • It had a good idea of how the finish line looks and knew how to pace itself.
      • It had a shell. Every time there is panic and unnecessary noise, it will withdraw into its shell.
  • Read the fine print. When an investment document says, “MF investments are subject to market risks” it actually means it! No one cares if you didn’t read it. No on cares about your interpretation of it.
  • Understand the gravity of a statement. When someone says, ‘liquid funds have the lowest risk among all debt funds’ it does not mean they have zero risk. Every investment vehicle has a purpose. If you don’t know what that it is, kick yourself in the butt.
  • Blame no one but yourself. Do not be shocked that you have lost money in a debt fund. Be shocked at your investment choices and thought process. Don’t the join the chorus of popular financial literacy magazines and blame AMCs, regulators and financial planner. Your loss is only your loss.

Let me conclude by misquoting George Santayana:

“Those who forget history are condemned to repeat it”

twain

Join our 1500+ Facebook Group on Portfolio Management! Losing sleep over the market crash? Don't! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free! Did you miss out on the lockdown discount? You can still avail it! Follow instructions in the above link!
Do share if you found this useful
Join our 1500+ Facebook Group on Portfolio Management! Losing sleep over the market crash? Don't! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free! Did you miss out on the lockdown discount? You can still avail it! Follow instructions in the above link!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!)

About the Author

Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com

About freefincal & its content policy

Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News
Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication.Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)

Connect with us on social media

Our Publications


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingThis book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
  

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new

This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when traveling, how traveling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download) 

Free Apps for your Android Phone

Comment Policy

Your thoughts are the driving force behind our work. We welcome criticism and differing opinions.Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

8 Comments

Comments are closed.