My Investment Risk Profile

Attempting to determine our own investment risk profile is very subjective aspect. This is because of personal bias creeping into our analysis, natural tendency to be perennial optimistic, and biasing due to business media projections. I believe that risk profiling is very much individualistic (i.e. one individual or one family). Every individual will have a unique risk definition. Now it is possible that qualitatively, the risk profile could be classified in similar groups. However, quantitatively it would be different for each individual. Continue reading rest of this article…

Dividends are Necessary for Me to Buy a Stock

The way I define dividend-based companies are one that consistently pay dividends and/or consistently grow dividends. There are multiple schools of thoughts on how companies should use income generated with primary business activity (i.e. selling a product and/or services). Should the company pay back certain amount profits to shareholders or invest back into the business for further growth? To me, it depends upon the company, its business plans and objectives. Whether I prefer it or not depends upon what are my investment objectives. Continue reading rest of this article…

Income Portfolio: Guiding Principles and Framework

In the earlier post I discussed about the goals that I have for my dividend portfolio. In order to achieve that goal, I have come up with few guiding principles and framework that I follow and strictly abide by. While I have been dabbling with investing for sometime now, I always had certain criteria at the back of my mind. I never had it formalized and documented resulting in lack of investing discipline. In this post I am presenting (and hence formalizing) the guiding principles and framework that I use to construct and sustain my income portfolio. I came up with these rules after quite a bit of reading on personal finance and understanding the implications on my financial goals. These are the rules that I use for managing my income portfolio. Continue reading rest of this article…

Income Portfolio Investment Goals

If I do not know where to go, how can I start the journey? This seems to be a very simple question we face day-in and day-out. But when it comes to investment plans, in general, most of the individuals fall short in identifying the defined final destination. In this post, I am discussing what is my vision and what would I like to achieve from my income portfolio. Continue reading rest of this article…

Various Participants in Financial Industry

What do I think about Financial Advisors/Planners/Brokers, mutual funds, portfolio managers, etc?

My primary source of income is my engineering career and as everybody else, I work hard to earn it. So why not work hard to use my hard earned money to invest it the way I want, the way I like, and not get biased by somebody else. I know what is important to me and what has relevance to me. I fail to understand how can an outside advisor tell me what is good for me. The whole investment industry works on fees and commissions, and hence the likelihood of swaying away from your own investment goals is very high. Additionally, the historic data seems to suggest that majority of the mutual funds (or portfolio managers) are not able to beat the general market indexes. So why should I pay fees, commissions, loads, etc. for this under performance. Why I shouldn’t just buy the low cost index fund? I read an article sometime back (forget to bookmark it) that one investor had significant reduction in value of its mutual fund holdings, but had to pay short term capital gains tax. While devil is in the details, but I thought that was little contradictory to me. To me, if one charges a fee for the service, I expect some level of quality behind that service. Perhaps financial advisory/planning/brokerage is the only industry, which does not stand behind its product (or service). Would you buy anything when the service provider or seller tells you upfront, that he cannot stand by it or held accountable because of such and such risks? Sorry, I don’t buy such products.  Continue reading rest of this article…



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