When Iam asked them the following questions..I am convinced that people have been watching a ticker channel….

• should I do direct investing or through a mutual fund?
• How much debt is too much debt (watched late night / early morning Suzie Orman repeat)
• Should I invest through an index fund or a managed fund?
• Do I need a financial adviser?
• Is Indexing also ‘active investing, because I heard that Index Etfs trade a lot?
• Does my annual re allocation amount to market timing?
• Is market timing a crime?
• Is withdrawing in retirement a market timing action?

I actually do not know the answers to these questions. Honestly I do not know the answers even if I have used some of these questions myself in my writing in the past. People have heard questions / suggestions – on television. They have picked up some sound bytes about investing. They do not really know the context in which it was said. They do not know the background in which these statements were made. They do not even know why these statements were being made.

So if you are a new investor who has no great intentions of spending too much time in your investing process, investing in an index fund is a good idea. Picking a good stock by reading www.morningstar.com or www.valueresearchonline.com surely makes sense. Once you build your own portfolio, which includes an index fund, your questions will change. Most of the questions are based on some over simplifications. Not every 80 year old needs to have 80% in debt. He could have 55% in debt or 1% in debt or….as per his risk/return/ requirement profile. However, it is nice to know the thumb rules.

You will find that as your corpus grows your ability to learn also grows and you will be able to create your own portfolio. Let us look at “trading is not as good as investing” . When you trade you do not care what the company is doing, where it is located, etc. However when you look at an investing portfolio, this is the basic first step!

When you start investing for the long run, you realize that there was nothing wrong with the sound byte, but the questions that YOU framed in your mind ARE (WERE) Wrong. The questions should have been:

• is my portfolio too diversified?
• am i building a portfolio which will help me towards my goal?
• is there a way to reduce my costs?
• am I learning enough before I put my money into the idea that I am chasing?
• do i have enough interest in the investing process or am I better off indexing?

see how the questions turn from asking about the process to asking about the relevance of the actions…