Kaun banega crorepati!!

How? Using power of compounding. This is again a cliche...Everyone knows the power of compounding and how things can grow in time. The point I am going to make here is not the power of compounding but how easy it is to utilize this power without any effort when u invest in long term stocks.

Initially I used to think whats the use of dividend when the stock prices appreciation is enough to make money and the dividend payout is paltry.





Now look at this chart.

	1	2	3	4	5	6	7	8	9	10
200000	250000	312500	390625	488281.3	610351.6	762939.5	953674.3	1192093	1490116	1862645	2328306
	200000	250000	312500	390625	488281.3	610351.6	762939.5	953674.3	1192093	1490116	1862645
		200000	250000	312500	390625	488281.3	610351.6	762939.5	953674.3	1192093	1490116
			200000	250000	312500	390625	488281.3	610351.6	762939.5	953674.3	1192093
				200000	250000	312500	390625	488281.3	610351.6	762939.5	953674.3
					200000	250000	312500	390625	488281.3	610351.6	762939.5
						200000	250000	312500	390625	488281.3	610351.6
							200000	250000	312500	390625	488281.3
								200000	250000	312500	390625
									200000	250000	312500
										200000	250000
										Total	10641532

This chart shows what will be the value of your investment if you keep investing 2 lac per year with expected return of 25%.

You can increase the amount or return to achieve the goal faster.

Now to get 2 lac investible amount is not difficult. What is difficult to continuously getting high returns year on year.

Here comes the fun part... to get this kind of return you don't have to keep scratching ur head, your long term investment will come to rescue since they will keep giving u good returns.


Now googly. We have so many stocks & mutual funds which were invested long time back and now giving 100-400% dividend.

Lets say you invested in a stock for 10 rupee. after few years it has become 100 rupee and has given dividend of 50% this year.

Fow someone who is investing now will think 50% dividend is 5 rupees on 100 rupee .very less.

But someone who invested long time back is getting 50% return on his investment every year. Appriciation in the stock value is just an added advantage you can say.

Quite amazing right? according to chart we just need 25% to become crorepati..Here I have shown how your goal will be achieved automatically literally "tension free".

So now Imagine keeping your money invested for 15-20 or more years....and getting 25-50-100% percent returns on your original investment. Add that to power of compounding and you can see how easy it is to make huge many.

paisa paise ko keechega...money will work for money.......what you will do then?????

You will enjoy the beautiful things in this world god has created for you :-)

KEEP THE FAITH.

Investment Tips

Few months back I started looking at stocks which would grow with Indian consumption and growth story.

I personally don't like stock which are cyclic in nature. You have to continuously keep track of their movement. Examples would be Sugar, Oil marketing companies and ferrous and non ferrous stocks to name few.

But I must point that these stocks give huge return in small time and then they fall the similar way when the cycle turns around.

So basically to build a long term portfolio in which you keep buying and stay invested without looking back and these stocks keep growing like your baby or well watered tree. [ Leave apart the short term blips which are beyond anyones control.]

Depending on your age and time you can invest [Note I am not talking about money but time]
you can have a perfect mix in your portfolio.

Portfolio = Long term + medium term + short term stocks+ risky multi baggers
Long term stocks : These are the stocks you don't sell atleast for few years [5-10 years]. Take my words returns are mind boggling. I would tell u the importance of holding in a separate post.
Examples would be : L&T, Reliance , ICICI to name a few.

Medium term stocks :- You keep them for 1-2 years and then you know that they won't give you the kind of return they have give in the past and have stabilized. So you shed them and move on.
Examples here would be ITC, HLL [These stocks gave amazing returns when they were in expansion and growth phase. They made consumer goods available to huge population[in villages] of this country by innovative products like sachet and their topline and bottom line grew]. Now if you look at ITC it was at 180 when stock market was 800 and still at that level when stock market is 20000.

Stort term stocks :- Sugar stocks , Oil marketing companies etc....
Look at HPCL this stock moves between 200-300 range atleast 6-8 times in a year. Its movement is dependent upon government oil bonds, crude price etc...

If crude rises this stock moves down.....and viceversa...

Goverment is not rising the price of petroleum..stocks goes down and vice versa...

Government bails out by issuing oil bonds ....stock goes up...

Sugar....when sugar supply is less price rises hence the stock....farmers grow more looking at high prises and next year we have glut and price falls and hence the stock.

You can buy these stocks and sell after some months when you have got handsome returns. If you keep longer you will be back to square one.......

Multibagger :- These are currently penny stocks with good management to give huge returns.
You can invest in small amount in these . Lets say 2-3 thousand in 10 of these stocks.

Even if 6-7 fails and 3-4 really turns out to be multibagger you willbe looking at good profits.

Happy investing...

Indian Story

You would be hearing about this all the time, I mean all the time ..In newspapers, television , people keep talking about it that it has become cliche.

But that doesn't change the theme and Indian juggernaut has started to roll few year back and will continue to do so.

What does that mean? It has opened quite a lot of opportunities for people of this country to align themselves to this growth story and grow with it.

Have you missed the gravy train? You would probably think so if you were not in the current stock market boom which is already 4 years old now.


But let me tell you its never too late to start. Opportunities keep knocking what you need is commitment and discipline to sail through.

Ok...enough of fundaes.. Lets start with my first tip on sundae [:)] Can't help typing Orkut smili. Got too used to it.

I have learnt it hard way and I am twice bitten thrice shy......

--->Never do Intraday!! There are lot more avenues to make money faster and safely than Intraday.

You cannot always beat the market because u r the market.

You may make money sometime but you will lose all in 1- 2 trade all because of deep greed inside you.

If you are ready to lose 20-30K in a day, better way is to invest in options. That way you have capped u r losses and upside is huge beyond your imagination if you have placed your cards properly.

More to it in coming posts.