If there are a few basic investment lessons, and you must know, these are the ones:

1. The earlier you start the better, but TODAY is surely better than Tomorrow.

2. Your total return depends on how much return you get on each portion of your portfolio. So if 10% of your money is in equity, it hardly matters whether you get 10%, 12% or -12% on your EQUITY portfolio. The overall impact of this is, 10% – that is all.

3. Compounding worked for your grandfather, father and it will work for you. Do not spend 20 EARNING years wondering whether compounding will work. It does. Inflation is NEGATIVE COMPOUNDING, and that works too.

4. Compounding makes you rich, but compounding takes time. Sigh. No easy road to Wealth, immaterial of the forex trading, commodity trading, real estate ads that you see in the media. Remember today media means ‘paid media’ – so even the articles are biased. The current flavor is ‘why real estate is far superior to equities’…..so true!!

5. Your equity returns is the sum of dividend yields (say 3%), future growth (say 10% including inflation), and a future change in the price earning ratio. The first figure is known, the second figure is estimated and the third figure is what people spend their life times guessing. Do not do that. Nobody, nobody, really nobody has been able to say ‘how the public perception of value will change’. Take it as it goes, that is all.

6. Compound interest is better than Simple Interest, BUT in investing simple ideas are far superior. If you believe that the Indian Real estate story is correct, cement is a better buy than DLF. Kajaria Ceramics is better than cement. THESE ARE JUST EXAMPLES, I have no idea of the valuation of these shares.

7. Stock market returns are Volatile. I have said this a billion times in my blog. Also the equity returns are SUPERIOR to other asset classes BECAUSE of volatility. However at the first signs of the markets jump up or fall down people start asking ‘what is happening in the market’. Hey nothing is happening – that is how the market behaves!!

8. The market is full of experts, charlatans, rocket scientists, astrologers, chartists – all of them are interested in managing your Money for a fee. If you do not know how your financial expert is being compensated, YOU are paying a much higher price than what you think.

9. The sheer audacity and incompetence – apart from lack of training of course is amazing. Such people can call themselves by any title – containing the words = finance, financial, wealth, charter, certified, registered, adviser, agent, consultant…..The Indian Contract Act, 1887 calls them by their Christian name: Agent.