Contrary to general belief, the process of studying and learning does not end when you graduate out of college. It is a continuous process. If you stop learning, you will fail to adapt to the changing environment. You know what happens to stagnant pool of water? Same way, in true sense, long term portfolio or building a long term process, you need to adapt. As you learn more, you need to make changes. During the early phase of TIPBlog, I presented different investment buckets that I use or planned to use.
To refresh, these buckets are not asset allocation. How can that be? A true asset allocation should not have co-relation or may have very low co-relation. The ones that I show on this post, are all co-related and hence, not asset allocation. All are equities! When we talk about asset allocation, what it means is savings, FDs, bonds, equities, gold, etc. They are investment vehicles that are likely to provide true asset allocation benefits. Out of all these, I only focus on writing about equities on TIPBlog. Continue reading rest of this article…
TIP Guy
9 April 2010
index
I have discussed why I use index-based investing for my portfolio and what index investing strategy I have adopted. In a nutshell, there are two reasons, viz., (1) It gives me a benchmark and floor to which I should compare my whole portfolio; and (2) I believe it tracks Indian economy. I presented my investing approach, which is different than SIP. The only reason I do not prefer SIP is because I do not want to mechanically buy at historically high prices. After posting those articles, I had a very good email conversation with Sachin, one of the readers of this blog. This conversation centered on investing approach. If I presented the conversation “as is”, then it would have very long and perhaps little confusing. Therefore, I am summarizing the gist of the conversation in two questions.
- Can we use dividend yield of the NIFTY index (instead of PE or PB)? e.g. DY > 2.1% invest 100%, DY >1.7 invest 80% and >1.2 invest 40%.
- My thoughts on split the monthly amount equally, one part to be invested as per relative PE, and second part as per absolute DY.
Continue reading rest of this article…
