How to build additional sources of Income

Updated – 16.04.2015

What is diversity of your income sources ?

A typical salaried employee’s graph would look like below

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Highly concentrated with income from salary. If you are able to increase your salary 20% year after year, don’t read any further you have cracked the code, see you later. If not continue reading

Cicra 2010

Still in college, one of our most revered professor, seeded the idea of diversifying our income sources. He stated

Diversity will not only provide extra stability and improve your life style it will also enable keep the inquisitor in us alive beyond your college days.

I decided I would aspire to have at least 2% of my income incrementally from sources other than salary after first two years at job till my 7th year. Hence reaching a healthy ratio of 90-10

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Circa 2012

I was amazed by the concept, however was not sure how can we add additional income, given that most of jobs demand at least 60 hours a week or more. Spending additional time looking for a weekend job was not a viable option. I had to rely on other means. My chosen areas of bring diversity to … Read the rest

Challenge your thoughts

Invest differently, challenge your thoughts

Weekly digest – Invest differently, challenge your thoughts

Today’s first article talks about investing beyond stock markets, there are usual suspects like real estate, art and bullion. However what you will find interesting is that people invest in wine, peer to peer lending. To top it off the last option talks about investing in yourself

Something that I try to remind my clients is that they are their own best assets. You can always do something to improve your skills, your efficiency, your education, your time management, or your prestige within your field.

read the all “9 Ways to Invest without putting money into the Stock Market” here

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Drake Baer answers , “What can we do today to help out our future selves in 2019?”

Good habits go a long way to improve our well being. Drake has put forward very easy to pick up habits like Learning to work with shame and doubt , recoding every activity with a date among others. See how many of them you can pick here

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Weekly Digest

A lot of isotretinoin consumers have accounted these side effects above the years. viagra online sample If your ovulation does not occur regularly, then maybe you … Read the rest

Be Smarter

Starting this weekend, We will put up a weekly digest that comes out on Saturdays which is full of interesting reads from all over the world covering value investing, productivity, economics and marketing. Hope you enjoy and contribute to this initiative.

First up is 19 websites that will make you smarter, Maggie Zhang from Business insider provides the list of websites that will make you smarter in your everyday life, While the list has some of my perennial favorites like Luminosity and TED, I was mightily impressed with likes of power searching with google, loads of tricks and tips  to search better. Go check out the whole list here

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Resume creation is one of most important and tedious tasks while hunting jobs right? Nancy Young in Honkiat.com is presenting 10 online tools to create impressive resumes, here you have options to create your resume from LinkedIn, create an info graphic of your resume or even build resume from many written ready made examples. Thanks to Nancy your resume writing will become less tedious, check out all 10 tools here

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The secret to creative thinking, intelligence and scientific intelligence is revealed this week by one of my favorite … Read the rest

Learn top down Investing

Top down investing is one of the methods used by investors to identify opportunities. What is top down analysis – read this investopedia link to familiarize yourselves with this approach , In short the diagram below depicts the approach

Top Down investing

Putting top down analysis in practice –  Download this excel , it has all active securities that currently trade on BSE. Now lets see how to use this sheet to do top down analysis

Step 1 – Identify the economy which is growing fast – In this case we stick to India as we intend to invest in Indian stock markets

Step 2 – Identify sectors that are growing fast in economy, now this is little tricky, We have to be aware what is happening around us,  you need to read articles like this and reports like this to know what sectors / industries are doing well

Step 3 – Once you have identified sectors, pick sector whose business is easy for you understand and one which you can explain to a school boy.

Sexual act is a very simple and enjoyable act which has turned out to such a complicated one and in some males, there are juvenile structural deformities … Read the rest

How to select stocks like Peter Lynch ?

Peter Lynch  deserves a place in the hall of fame with his average returns of 25+% per year during his 13 years tenure at Fidelity Magellan Fund.  In one phrase his investment style can be summed as “buy what you know” Although it is very difficult to quantify his philosophy as a rule of thumb, however after reading his classic best selling book ” One up on wall street”  reader do get an insight into his stock selection method. Putting together 5 key tenets below

1. High growth – Earnings drive prices, companies growing fast have to be bought to make inflation beating long term returns on invested capital. Lynch always liked high growth companies however he was wary of very high growth companies as their could be earnings manipulation, he avoided companies growing at 40%+

2.  Price earnings growth – The price/earnings to growth (PEG) ratio is used to determine a stock’s value while taking the company’s earnings growth into account, and is considered to provide a more complete picture than the P/E ratio. Lynch considered stocks quoting at PEG < 1 as attractive, they fitted well in his theory of growth available at reasonable prices (GARP)

3. Low … Read the rest

5 things I like about moneycontrol portfolio manager

Moneycontrol is one of my favorite personal finance website, it has greats tools to analyze stocks, however in this post I want to discuss one of the most important features of website – moneycontrol portfolio manager.

Here are five things that I use moneycontrol portfolio manager for

1. First and foremost ability to create a watch list – As an investor you will keep getting ideas here and here, the best way to store them is to add it to your watch list.

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2.  Keeping a tab on the Management view of my investments – As a practice, I like to read what management of the company has to say about it’s present or future. Portfolio manager is a great place to read about all your investments at one place.

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3. Brokerage recommendations – Although broker recommendations have to be taken with a pinch of salt, I like this section as many a times you will find one brokerage recommending to buy while other recommending to sell, you get diversity of opinion and kicks in tangential thought process. This also helps you to cross check your hypothesis on investments

Shilajit is certainly one among the overnight cheap viagra top listed … Read the rest

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Trend Investing

NaMO

 

Even though there are still few hours remaining for coronation of Narendra Modi as India’s next prime minister, the stocks markets have behaved as if India is already transformed. This is the idiosyncrasy of markets they run so high on sentiments. The ground realities haven’t changed much since Manmohan Singh left office, so the exuberance on stock markets for an outsider is very tempting.

Am I the one who has missed the boat ?

Can I still enter markets at this level ?

Where should I put my money – on the stock that has risen 50% in last one month or Something which is still to be played out ?

If these are the questions haunting you – Read on

 First getting the facts right – Stock market is on song and every Suresh, Naresh and Pranesh is making money in stocks in 2014. The benchmark indices have risen almost 8% in last one month with some stocks like BHEL up astonishingly 45% in this period . These are maniac times and it is very exciting to be a stock trader these days. But what about an outsider has he really missed boat ?

My answer is NO, … Read the rest

How much would you allocate to bonds ?

This is my third and final post on debt series, to read previous ones click here and here

In this last post on Debt investments, I would cover allocation or in Simple words – How much of the portfolio should be in invested in debt instruments

Situation 1 – I know I need to double my portfolio in 6 years after paying taxes so that I can meet my personal needs

Here you know the target return on investment, i.e. 12% pre-tax on a compounded basis to double your portfolios in 6 years. Now first one has to understand on an average historical basis  how much debt and equity has returned. In India if look at last ten years data

Debt has given approximately 9% pre-tax return that equates to post tax return of 7.2% ( Assuming you pay 20% income tax)

Equity has given approximately 14% post tax return

Based on above one has to invest 70% in equity and 30% in debt to achieve their goal of attaining 12% pre-tax compounding return

But should you get obsessed with past performance? Understand past is not a guarantee of future performance, however one has to start somewhere and the best … Read the rest

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Download an excel for debt investors

This is part 2 of debt investment series, to read part 1 click here

Today we give you  Bond Analysis  excel to play with and find out what suits you, Quickly understand what these columns mean

Category – Defines what kind of instrument – NCD , Zero Coupon bond , Infra bonds etc

Exc = Exchange they are listed on

Issuer Name , NCD Name  = Self Explanatory

Credit rating = As provided by rating agencies when the instrument was issued

Coupon rate = rate of interest

Coupon frequency = How often interest is paid

Maturity date = When they will return you principal

Face value = Self Explanatory

LTP = Last trading price as on 24.03.2014

YTM = is the internal rate of return (IRR, overall interest rate) earned by an investor who buys the bond today at the market price, assuming that the bond will be held until maturity

Maturity amount = How much you will receive at the end of maturity, often equal to face value

Next coupon due = When are you getting next interest payment

Now, this excel can be easily used to find whatever kind of investment you are looking for, lets look at … Read the rest

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Investing in bonds & debt instruments

One of my most popular post has been on parking short term cash from last year. I have always believed that any successful investor should invest a portion of his portfolio in debt.

I will be writing on debt in three parts to do justice to this asset class. Today’s post is part -1

When investing in debt securities you are effectively lending money to businesses or governments or banks. Returns typically comprise interest and changes in the market value of the security.

Today we are going to cover

a) What is the risk of investing in debt instruments

b) What feasible options are available to retail investors to invest in debt instruments

There are few risks which we should be aware of

1. Loss of entire capital – Also know as credit risk or default risk. In unfortunate circumstances if the businesses or governments or banks are unable to return what you have lent them. To guard against this most of the debt instruments are rated by independent agencies,an investor should carefully understand what each ratings account for.

2. Loss on account of reduction in price of security – IFprice of the debt instrument goes  down, you may face … Read the rest