http://www.rwcdr.co.uk/Docs/18.10_RWC_Equity_Income_Investor_Letter_Q3_2018
Thoughts and Reflections on Thirty Years in Fund Management: So you want to be a value investor…
A must read for individual investors
3 Likes
For those who want to throw up a career to increase small alpha.
2 Likes
It is a good guide - investing as career is not for every one -
But all this depends on market efficiency . India as market is slowly becoming more efficient and high alpha from investments may not be possible in future … esp with forums like valupickr getting in more smart & informed investors . All inefficiencies will be quickly spotted and corrected
The only way to get alpha is not give your portfolio in open - and subject it to discussion . One may give out his/her investment process ( mistakes and success ) , asset allocation , discuss industries & business - but discussing and defending stocks presence in one’s portfolio can create many bias - both on buy and sell side …
3 Likes
Markets gets brutalized… every one gives up on them. then there is serene peace after the panic frenzied selling. It stabilizes and than it roars and soars… The cycle were 3 to 5 years and generally sync with global growth and recession. But the financial world is getting more opaque and future more uncertain because of global protectionism… Domestic economy is still shielded but still Indian growth to be propelled higher depends on Global story. So Market is evenly poised waiting for the direction… The new age cycles are shorter but good companies will still grow as the demand grows.
Not everyone is capable or interested in analysing stocks, some are made for it and some simply cannot do it
If you are good at it and want to accept funds from people who don’t want to invest themselves then you are definitely creating value in the society
Sometimes you have to prove that you can create value to yourself and others before you accept funds from others and others trust you with their funds
Even if your initial intention is to trade just for yourself, most of the time you see a natural progression to fund management
1 Like
This is a good time to decide if one wants to become a full time investor. Last 1 year return may be negative for most folks. There is no easy money. How can you manage expenses with dividend income? If you feel comfortable now, you would be much better when things are okay.
It is a marathon…and only few survive. Full time is only if you have an investible fund of over 5 crores and fully understand markets and companies…track macros like hawk.
For a middle class household, 5 crores may be good enough for their expense and lifestyle. For someone who spends much higher, 5 crores may be not so good to ensure similar lifestyle. After several years of thought process, I can see expenses to determine our wealth and financial independence. If we can keep assets secure and still manage expenses, even 1 crore could be good enough.
2 Likes
Having 5 cr, put 4 CR in Secured FD and generate 8% return by minimizing tax complaince. 32 lakh will be interest, monthly 2.6 Lakhs. Use 1 Cr for equity portfolio. Invest the surplus amount remaining from meeting expenses. This is best stretegy. Make sure all liablities are nil.
1 Like
If you want to devote your time and energy in managing 1 crore portfolio…and generate say 15 lakh a year compounded still you will be unable to justify full time involvement. My personal view are one should jump into markets when they are at low point but full time only if you have generated a sustainable amount which gives you satisfaction and value for your effort
It will be different for everyone. annual average take home after tax deduction for a salaried person is close to 30 Lakh with 15-20 years of experience. This is fixed income you can generate which will nit affect your lifestyle. 1 Cr is a good sum if you want to prove your skills in stock market as full time invester.
1 Like
What is the source of this data? There is a wide range of salaried worker.
Check this link: IAS Salary 2023 - Salary of an IAS Officer | How much IAS Officer earns?
If someone is a govt employees, top ranked (IAS) and senior most (Cabinet Secretary) earn max ~25 L before taxes. After taxes would be lower.
Just today because of Kraft Heinz earnings…Warren Buffet portfolio took a hit…oh ya investing is really tough…
I have different take on this …
Considering the same Salaried person with 30 lacs salary with 10 % -12 % increment every year –
For him to live on same lifestyle he needs to get atleast 30 lacs dividend that grows at 10% -12% every year . Interest income will be flat and hence will lose value over time .
So assuming 2% is dividend he needs to have 15 cr as equity portfolio and he can have 1 cr odd as Fixed income in his PF to take care of additional needs to invest when market is down …
And this is only possible if have good saving rate @ early part of your career …
Pl refer to my earlier post in this thread , I have enclosed a working sheet … it tell you how that can happen
Can anyone suggest for a person like me, who’s earning 20k every month. Is it wise to invest in stocks. Atleast by the way of SIP (5k a month).
I feel even middle class families should lead a better Life.
4 Likes
if you can afford to invest 5k…why not ?
I think you will get better suggestion here if you can mention the amount available for investing after spending for all your obligations - emi’s, monthly expenses, insurances etc
Yup, friend, why not? Equity investing is for middle class only. This is one field where you can prove your metal if your confidence is high to succeed and you have will to do something. I know one of guy who worked at engineer level in airtel, joined from Infosys, he got 100 stocks of infosys and never sold it, value of stock was 10 lakh in 2003. His annual salary was close to 2.5 lakhs. Read books, understand market, business, invest and keep investing in good business at bargain prices. That will make you rich and relieve from job also if you get a jackpot.
3 Likes
Invest for long term horizon in good companies generates 15% return…That is empirical historical data over last 30 years. Only fact you need to remember is these are surplus fund and you touch it after minimum of10 years.
1 Like
I thank each and everyone for the valuable suggestions😊. As of now I am reading “One up on the wall street” book and trying to gain some knowledge. I have also opened a demat account and yet to start investing with surplus of 60k.
I am a 12th class pass out guy and finding it difficult to understand the ratios and fundamentals of the company.
I am planning to invest once I gain some knowledge and guts to put 
in a good company.
1 Like
In life there are three stages of investing esp for middle class …
Stage 1) In teens and 20s one should focus on INVESTING IN SELF : Learning as much about world as possible by taking various jobs , assignments, taking courses and travelling across different geographies . I personally started working at L&T at age of 17 years . I used to get Rs 500 as stipend then … so what you earn today is not important . If you invest in self you can multiply what you can earn by factor >1000X within 10 years . Another great thing of investing in self in early age is compounding effect is enormous + Govt cannot TAX your knowledge . So put most of your saving in educating and gaining skills - Forget Equity investment
Stage 2) In 30s - If you have invested in yourself in 20s by 30s your income will grow exponentially and your can have huge saving surplus . INVEST in building PASSIVE INCOME - Here your saving rate needs to be > 60% , In my case if went > 80 % as income expanded dramatically from late 20s to mid 30s …
Stage 3 ) In 40s and above - Invest in improving Family Relations & Health : Assuming you have done well in stage 1 and 2 you can safely retire in 40s you can get more quality time to travel , to do things you wanted to do , focus on exercise etc …
CAVEAT : In stage 1 it is not that you should not do exercise or invest , but the focus should be on what is most important ie Invest in SELF …
19 Likes