A few years ago I switched off the television. I had found that TV is a big impediment to learning. It simply fills your head with ‘urgent’ things which are not important at all. Imagine on a day of the RBI/FED meet there is so much noise about the meet and asking a million people ‘what do you think will happen’ . Exactly a day later or a week later that whole ‘important event’ is forgotten and is removed from your head. Did it help you at all in the investment journey? No.

Did reading articles which said “top 20 funds of 2016″ help you in your ‘learning about investments” project? the answer is no.

What helps you is clear – books. Classic books on investing, behavioural finance, math, strategy, investment history, human behavior, philosophy and psychology.

So having set aside the media I set about what are the best things to do?

1. Stop having fixed ideas: Open your mind and throw out old ideas. ‘Tatas’ are a good group, Ambanis will make money for you, MnCs are good, Fmcg will earn you money……….please keep checking each of this against FACTS – over 3 years, 5years, 2 years. All these ideas go for a toss. Avoid mass thinking – AIFW – is a place where you can find 34000 people having one view. Confirmation bias is easy. Stay away unless you are going there for humor. Most websites refuse to think out of the box. If you want to hear that Equity is risky, and is best avoided for people above 60,….etc. Subramoney.com is a terrible place to search for. Remember the whole MF industry has this old habit of pushing you to equity telling you a lot of half truths. So be ready to hear that Real estate is good, debt is good, equity is good..and do not succumb to confirmatory bias. Be open minded about new ideas. Many small groups are amazingly good about corporate governance – and many big corporates are not. When you see corruption among employees, or by the promoters do not say “I will not invest” see how much they leave on the table for you AFTER they have eaten. Far more practical than saying “i will not invest in a corrput company” – you cannot make a portfolio.
2. As you age involve a younger family member: Son, daughter, niece…rather than brother, sister, friend. Younger people are likely to learn fast and will know how you are managing your portfolio. They will understand why you are in which asset class and will be able to help your spouse to manage better when you are not there. No text book tells you this.
3. Strong Emotions are dangerous: If in your young age you were short of cash, you will today keep too much money for ’emergency funds’ – unnecessary but this is the bias hurting you. If you have never invested in equities do a STP of Rs. 5000 per month for 6 years…do not invest Rs. 30L and worry all night. Read about biases, and conquer them – partially if not fully.
4. Do not try to become a master at everything: You will learn a lot about investing if you spend 30 years investing. You will learn that real wealth is created in equities. However, that is a full time effort. Hence Mutual funds. However Mutual funds (especially) equity funds will also give you VARIATION/STANDARD DEVIATION, be aware of that while you invest. Hence SIP.  Do not over analyze – analyzing does not make you money, investing does.

As you age keep revisiting all that you learnt and see what you are implementing. I feel at times that I should stop reading or even learning and just review my implementation skills. For example if I learn socialising makes sense…I should take off every Sat/Sun to meet friends, relatives, etc.  There is no point in watching a YouTube video saying ‘sugar’ is bad – and continuing to eat sugar. So as you age keep reviewing your learning and implementation. If you learnt a particular way of investing (or whatever) go and implement it – and have a mechanism of checking whether it is working for you. If a simple idea works well for you, GO AND IMPLEMENT it bigger. For example I stopped looking at Corporate Governance – because there are companies for whom I cannot get that close. NO point in looking at CG in managements you know. Judge by the nos. in the balance sheet, not by vague ‘feelings’ etc.