Finance

What Warren Buffet says on Investing …..

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source::: yahoo finance….

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The teachings of Warren Buffet

By P V Subramanyam | Yahoo! Finance
What Warren Buffet says about basic investing, spending, savings are so true. Most of us know it, however too many of us do not live it.
If it does make a change in your life, thank HIM (I mean God) because this is common sense. WB said it once, I am just reproducing it.
1. On Earning:
Do not depend on a single income. Invest and create a second/ third source of income:
This means when you are young your first task should be saving and investing. By creating a second source of income you are quickly reducing your dependence on your job. This could help you to set out on your own one day. The quicker you can do it, the better.
2. On Spending:
If you buy things that you do not need, you may soon have to sell things you need:
It kind of summarizes Gen X’s reaction towards ‘luxuries’. As a part of Gen X we were perhaps criticised for some of our expenses, so it could be a generational thing even for WB. However, having goals and knowing where you are going, and not spending just to ‘show off’ are important lessons for all generations.
3. On Savings:
Do not spend what is left after spending, instead spend after you save/invest:
Also called ‘Pay Yourself First’. If you realise that investing in a pension plan or for your kid’s education is just helping you to save more later on. It is not a sacrifice, it is just postponing consumption. So understand, invest and then spend.
4. On taking Risk:
Never test the depth of the river with both your feet:
If you are doing something, do small. If you are a first gen investor, do not be carried away by equity lovers like me and put all your money in equity. Do a SIP with a small amount, and test the waters. Do a SIP of Rs. X (which could be 10% of your take home pay) for 5 years and then step up. And for heavens sake understand risk of inflation, and the concept of real returns

5. On Investing:
Do not put all eggs in one basket:
Immaterial of who you are and how much you understand, create a portfolio. A full range lunch plate is always better than just one item. So create a portfolio with bonds, bond funds, PPF, NSC, equity, mutual funds, and on the risk side medical and term insurance.
6. On Expectation:
Honesty is expensive, do not expect it from cheap people:
Not everybody is honest, nor does everybody want to be honest. Honest advisers are difficult to find especially in Health and Wealth, be careful.
The author P V Subramanyam is a Chartered Accountant by qualification and a financial trainer by profession. Writing being a passion he also regularly pens his thought in his blog Subramoney.com

Neo Economics…. Save Less and Spend More !!!!!

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Source:::: unknown … interesting read …
Amazing and True indeed !!

Natarajan

> Economics
> Amazing but bizarre logic indeed…
> This is a crazy world!!!! Interesting article written by an Indian Economist
>
> Japanese save a lot. They do not spend much. Also, Japan exports far
> more than it imports. Has an annual trade surplus of over 100
> billions. Yet Japanese economy is considered weak, even collapsing.
>
> Americans spend, save little. Also US imports more than it exports.
> Has an annual trade deficit of over $400 billion. Yet, the American
> economy is considered strong and trusted to get stronger.
>
> But where from do Americans get money to spend? They borrow from
> Japan, China and even India. Virtually others save for the US to spend.
> Global savings are mostly invested in US, in dollars.
>
> India itself keeps its foreign currency assets of over $50 billions in
> US securities. China has sunk over $160 billion in US securities.
> Japan’s stakes in US securities is in trillions.
>
> Result:
>
> The US has taken over $5 trillion from the world. So, as the world
> saves for the US – Its The Americans who spend freely. Today, to keep
> the US consumption going, that is for the US economy to work, other
> countries have to remit $180 billion every quarter, which is $2
> billion a day, to the US!
>
> A Chinese economist asked a neat question. Who has invested more, US
> in China, or China in US? The US has invested in China less than half
> of what China has invested in US.
>
> The same is the case with India. We have invested in US over $50
> billion. But the US has invested less than $20 billion in India.
>
> Why the world is after US?
>
> The secret lies in the American spending, that they hardly save. In
> fact they use their credit cards to spend their future income. That
> the US spends is what makes it attractive to export to the US. So US
> imports more than what it exports year after year.
> The result:
>
> The world is dependent on US consumption for its growth. By its
> deepening culture of consumption, the US has habituated the world to
> feed on US consumption. But as the US needs money to finance its
> consumption, the world provides the money.
>
> It’s like a shopkeeper providing the money to a customer so that the
> customer keeps buying from the shop. If the customer will not buy, the
> shop won’t have business, unless the shopkeeper funds him. The US is
> like the lucky customer. And the world is like the helpless shopkeeper
> financier.
>
> Who is America’s biggest shopkeeper financier? Japan of course. Yet
> it’s Japan which is regarded as weak!!!
> Modern economists complain that Japanese do not spend,
> so they do not grow. To force the Japanese to spend,
> the Japanese government exerted itself, reduced the savings
> rates, even charged the savers. Even then the Japanese did not spend
> (habits don’t change, even with taxes, do they?). Their traditional
> postal savings alone is over $1.2 trillions, about three times the
> Indian GDP. Thus, savings, far from being the
> strength of Japan, has become its pain.
>
> Hence, what is the lesson?
>
> That is, a nation cannot grow unless the people spend, not save.
> Not just spend, but borrow and spend.
>
> Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told
> Manmohan Singh that Indians wastefully save. Ask them to spend, on
> imported cars and, seriously, even on cosmetics! This will put India
> on a growth curve. This is one of the reason for MNC’s coming down to
> India, seeing the consumer spending.
>
> ‘Saving is sin, and spending is virtue.’
>
> But before you follow this Neo Economics, get some fools to save so
> that you can borrow from them and spend !!!
>
> It is very simple to be happy, but very difficult to be simple.

SIX MONEY MYTHS…..

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SOURCE:::::SILICON INDIA NET

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Money is the most loved possession. You want money and hence you work hard to earn it. And if you have a huge bank balance, then what do you do with it? Either you save or spend. Something which you often do is spending it over things which you feel are benefiting you. If you feel that all your decisions are always right then just compare them with the 6 money myths which will show whether you make financial mistakes or not, as reported by Allison Kade from Learrvest.com.

Falling for Flash “Sale” Sites

The word “sale” always brings a happy smile on your face. It makes you feel that you can buy a very costly thing at a very affordable price. You also think these sale offer are best for people who are price conscious. For example if a shoe of 1200 is available at 950 then you will be attracted to buy it. What if the offer is for limited period then will you wait? No not exactly and you will make an immediate purchase as you think waiting would be a waste of time and opportunity. This is where you actually go wrong because here you spend money then you intend to.

Buying Cheap Stuff

Goods which are less costly will always have more number of buyers. It will not be very surprising if you find yourself being one of them. Before you buy something then don’t only consider its price but also its quality especially when you intend to use it for a longer period. You can use this easy rule of thumb to calculate the cost per use. For example, compare buying a pair of shoe of 200, which can wear maximum for 40 days, this will cost you 5 per wear. Now consider buying a pair of shoe of 600 which you can easily wear for nearly 200 days, this will cost you 3 per wear.

Choosing Junk Food

Are you a junk food lover? Even if you say no but then your poor health condition provides a good evidence of the truth. Fast food easily attracts you because it’s cheaper and tastier than plain healthy food products. Fast foods have always remained the main cause of obesity. Choosing Samosa, chats, golgappa, vada pav……may make you spend little, but in the long run can cause serious health issues like diabetes and heart disease. Always remember an ounce spend in prevention is better than a pound spend in cure. Your health is of major concerns so don’t exploit it over short term gains if not in future to correct your health conditions you will be spending lakhs.

Hanging Onto Your Retirement Payments

Even if you feel your retirement is a far off tale, but are you prepared for it. Don’t think if you put in your money in some retirement plan then you are making anadditional expenditure that’s why you can keep forgoing it. It is advisable to start on with early saving as say, if you start investing with a smaller amount of 2,000 a month at 20, you will accumulate 1.26 crore by the time you are 60 (at 10 percent rate of interest). If, on the other hand, you start saving the same amount at 30, you will be able to pile up only 65 lakh.

Skipping Insurance

Insurance is not a negative term and stop running away, it’s not meant to harm you. It doesn’t matter how many times you have said no to the insurance agents and have skipped the insurance policy. All that matters is you and your financial security, and you can protect both by signing in for some insurance policy, as by choosing a health insurance or car insurance policy will safeguard of sudden and bigger expenditure which you will be find difficult to arrange from monthly salaries whensome unpleasant situations arises unexpectedly.

Forgoing Lawyer Fees

It’s very important to keep your legal documents up-to-date. When you are alive you don’t think of your death and preparing a will never occurs in your mind. Forgoing lawyer’s fee today may help you save some money but later when you will pass away then your children and other dependents will have to spend thousands together in court fees.

WARREN BUFFET”S BRILLIANT INVESTMENT INSIGHTS…….

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SOURCE:::::SILICON INDIA SITE ON FINANCE ….

Natarajan
Warren Buffet or ‘The Sage of Omaha’ is one of the richest men in the world. He is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth. Buffett’s speeches are known for mixing business discussions with humor.

 

Each year, Buffett presides over Berkshire Hathaway’s annual shareholder meeting in the Qwest Center in Omaha. Berkshire’s annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media.

 

His words reflect his attitude and mind-set towards money which made him eminent in the world. Here are few brilliant and inspirational investment insights from the legendary Buffet which will make you reorganize your mind-set towards the way you handle your money.

 

“Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1”

 
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”

 

“Never invest in a business you cannot understand.”

“Chains of habits are too light to be felt until they are too heavy to be broken.”

“Enjoy your work and work for whom you admire.”

“A great investment opportunity occurs when a marvelous business encounters a one-time huge, but solvable problem.”

“I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that.”

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

“The business schools reward complex behavior more than simple behavior, but simple behavior is more effective.”

“Anything can happen in stock markets and you ought to conduct your affairs so that if the most extraordinary events happen, that you’re still around to play the next day.”

“I don’t measure my life by the money I’ve made. Other people might, but certainly don’t.”

“If at first you do succeed, quit trying on investing.”

“Turnarounds seldom turn.”

“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”

“Always invest for the long term.”

“Price is what you pay. Value is what you get.”

“Buy a business, don’t rent stocks.”

“Risk comes from not knowing what you’re doing.”

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

“The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable.”

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

“Our favorite holding period is forever.”

“I really like my life. I’ve arranged my life so that I can do what I want.”

“I buy expensive suits. They just look cheap on me.”

“I am a better investor because I am a businessman and a better businessman because I am an investor.”

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.

“I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”

“Time is the friend of the wonderful company, the enemy of the mediocre.”

“The Stock Market is designed to transfer money from the Active to the Patient.”

“We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely.”

“Risk can be greatly reduced by concentrating on only a few holdings.”

“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”

“In the business world, the rearview mirror is always clearer than the windshield.”

 

“The investor of today does not profit from yesterday’s growth.”

“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”

“In a commodity business, it’s very hard to be smarter than your dumbest competitor.”

“Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid.”

“A hyperactive stock market is the pickpocket of enterprise.”

“Valuing a business is part art and part science.”

“Chains of habits are too light to be felt until they are too heavy to be broken.”

“In a commodity business, it’s very hard to be smarter than your dumbest competitor.”

“A hyperactive stock market is the pickpocket of enterprise.”

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

“Valuing a business is part art and part science.”