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    Equity PDF

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    jaymin
    The document discusses several common myths about investing in equity. It addresses the myths that equity is risky, that it is a form of gambling, that low stock prices indicate good investments, and that successful investing requires constant activity. It argues that equity can generate high long-term returns and help build wealth if the investor behaves like long-term investor rather than a gambler, conducts research before investing, and maintains a long-term perspective with appropriate risk management. Overall, the document aims to dispel myths that prevent people from taking advantage of equity as an asset class for building wealth over the long run.

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    Equity PDF

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    jaymin
    5 views21 pages
    The document discusses several common myths about investing in equity. It addresses the myths that equity is risky, that it is a form of gambling, that low stock prices indicate good investments, and that successful investing requires constant activity. It argues that equity can generate high long-term returns and help build wealth if the investor behaves like long-term investor rather than a gambler, conducts research before investing, and maintains a long-term perspective with appropriate risk management. Overall, the document aims to dispel myths that prevent people from taking advantage of equity as an asset class for building wealth over the long run.

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    The document discusses several common myths about investing in equity. It addresses the myths that equity is risky, that it is a form of gambling, that low stock prices indicate good investments, and that successful investing requires constant activity. It argues that equity can generate high long-term returns and help build wealth if the investor behaves like long-term investor rather than a gambler, conducts research before investing, and maintains a long-term perspective with appropriate risk management. Overall, the document aims to dispel myths that prevent people from taking advantage of equity as an asset class for building wealth over the long run.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    5 views21 pages

    Equity PDF

    Uploaded by

    jaymin
    The document discusses several common myths about investing in equity. It addresses the myths that equity is risky, that it is a form of gambling, that low stock prices indicate good investments, and that successful investing requires constant activity. It argues that equity can generate high long-term returns and help build wealth if the investor behaves like long-term investor rather than a gambler, conducts research before investing, and maintains a long-term perspective with appropriate risk management. Overall, the document aims to dispel myths that prevent people from taking advantage of equity as an asset class for building wealth over the long run.

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    of 21

    Personal Financial Planning (PFP)

    MBA Class of 2023

    Equity

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 1


    Myths About Equity
    There are many myths about equity as an asset
    class. Due to these myths many do not invest in
    equity

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 2


    Myth 1: Equity is Risky
    Let’s assume one does not know swimming. But he
    jumps into a turbulent sea

    Is this risky?

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 3


    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 4
    Myth 2: Equity Investment is Gambling
    Yes, there are gamblers in the stock market.

    But we need not become one such gambler

    There are also investors in the stock market

    We could be one such investor

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 5


    Investor vs. Gambler

    Buy after research Buy on tip

    Long term Short term

    Risk Management Blind Risk

    Cautious Careless

    Goal based Profit based

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 6


    Investor’s Visualisation

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 7


    Gambler’s Visualisation

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 8


    Myth 3: Low Price = Good Investment

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 9


    Myth 4: Constant Activity
    Shall we first differentiate between

    Action, and,

    Activity

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 10


    https://www.youtube.com/watch?
    v=rTC1t_vNqaY

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 11


    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 12
    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 13
    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 14
    Myth 5: Equity is Volatile
    Short, and sometimes in the medium term, yes

    Long term, NO

    First we need an understanding of Stock Market


    Index to explain the concept of volatility in the
    market

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 15


    Myth 5: Equity is Volatile

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 16


    Myth 5: Equity is Volatile

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 17


    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 18
    Bottomline
    The only avenue of investment that can:

    • handsomely beat inflation

    • give positive real post-tax ROI and

    • build wealth is

    Equity

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 19


    How much to invest in equity?
    Simple answer

    Any amount that you will not need in the next five years

    (at the least) should be invested in equity

    and

    Invest Against Financial Goals

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 20


    Age and Equity Investment
    Statement: As one gets older, the exposure to

    equity should keep reducing


    Assignment: Students to write, not exceeding 100
    words, for or against the above statement in the
    Google Doc linked below. Submission by Feb 3, 2021
    (Wednesday) 11.59 pm

    https://forms.gle/gZzbwMjdADViPZ7JA

    Tip: All knowledge for this write-up exists in these


    class notes

    SSSIHL | Puttaparthi Campus | MBA (Final Semester) | Class of 2023 21

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