Consider your circumstances well before investing in stocks

Investing in stocks is a good option when you’re approaching retirement. The amount of money that you should invest depends on several factors. In other words, there is no specific answer to this question. As per experts, retirement portfolios are never complete without stocks. It is important that you adjust your portfolio with time so as to make it ready for your retirement. The idea is to save money as well as to ensure financial security during the retirement years.

Forget rules and believe in circumstances

You’re very likely to come across various opinions when it comes to preparing your retirement portfolio. One way, as most of the financial advisers put it, is to subtract your age from 100. The result you get is the percentage that you should invest in stocks while preparing your retirement portfolio. For example, a 50 years old person should invest 50 percent in stocks. Remember, this is no hard and fast rule. The increase in life expectancies suggests that people should be inclined towards investing more in stocks irrespective of their ages. The more you invest in stocks, the better the security you get in the years to come. 

Equities have started to play important roles in a portfolio. Higher investment in equities is going to help you meet the financial challenges that you’re likely to face during those long retirement years.

Allocate your assets well

You have to do the right asset allocation if you want better returns from your portfolio. Now, doing the right asset allocation involves diversifying your investments across various asset categories. This will reduce the portfolio risk and ensure higher returns at the same time. You have to start well with allocating assets in order to give the right shape to your portfolio. Some academic studies reveal that investment in stocks is responsible for almost 90 percent of the returns. 

The appropriate asset allocation largely depends on the circumstances. There are factors like time horizon and risk tolerance that have major roles to play in this. You’ll also have to take your personal goals into account. 

Don’t invest more than you can afford to lose

Sometimes, it is right to take the professional approach. If you have invested in retirement funds of major companies, you’ll see your glide path (shifting mix of equities, bonds, and other holdings) change as you age and approach retirement.

There is no point in having your mind set on a particular rule when you’re thinking of investment. Take your age, net worth and risk tolerance into account while investing. Make sure you’re not investing any more than you can afford to lose. It is always better to keep your investments within limits. Being overly cautious about investing money is going to help you control your investments and make a proper retirement portfolio. It is always better if you get in touch with a good financial advisor if you’re unsure about your investments. This way you can count on the investments you make and ensure a better future for yourself.

Can we learn something about the stock market from this interview?

Can we learn something from his Interview and expect same growth from the Nepalese Stock Market as he expected from Indian Market ?

Invest in stock market; expect good returns over 3-5 years: Rakesh Jhunjhunwala

Investor Rakesh Jhunjhunwala does not believe investing in gold is a good idea in the long term. But he thinks it's time to invest in the stock market. In an exclusive chat with Bollywood actor Chitrangada Singh on ET NOW, he says investors will get very good returns over the next three to five years. Edited excerpts:

Chitrangada Singh: I just want to start with asking you something that I have no idea about: what is one tip that you would like to give to all the women who are wanting to now invest?

Rakesh Jhunjhunwala: I think, women also know and understand. But the problem is that tips are hazardous for health and you cannot make money. Stock investing, like cooking, cannot be taught, it has to be learned.

CS: So, have to waste some money and burn your fingers and...?

RJ: Something which cannot be taught has to be learned... My mother can teach me to cook everything. But finally, what my mother makes is much better than what the cook can make.

CS: But you know the recipe book. So, let's open up a page...

RJ: The quest to learn is a journey. I have learned much, but much is still unlearned. So, despite people saying that I am a guru or I know everything, one thing I can tell you (is) the market is like women, always commanding, always mysterious, always volatile, always exciting, and it is not a joke.

In my 25-30 years of experience in the market, just as you cannot have a good relationship with a woman by bullying her, you cannot have a good relationship with the market by trying to bully it or say that you are the king. The king is the market.

CS: Are we going through a recession? As much as everything tells us we have such fantastic investments coming in, FDI is growing and everything is happening, but I really think when I feel around me, I think there is a recession which nobody is talking about?

RJ: I think, there is a slowdown, there is a recession, no doubt about it. There is a recession in Bollywood — I do not think so. Films are getting more expensive by the day. They are making more money by the day. So, there is a slowdown in the country. But I think, it is temporary and it will reverse itself.

CS: Yes, properties are dropping a little.   

RJ: So, you invest in property?

CS: Yes, some.

RJ: Feel very safe about it?

CS: Sort of, because I think that at least it is on ground and it is there, instead of papers in your locker...

RJ: But I think those lockers and papers are far easier and far profitable to deal than property. I just have to pay 3 lakh custody charges a year.

CS: So, about stocks... what is the one thing that has really worked for you, the one thing that you followed?

RJ: That is grace.

CS: Now that is not a mantra, I am asking for a mantra. Of course, it is God's grace.

RJ: I do not think there is one thing which has worked, what has worked is differentiated thinking, courage of my conviction. I entered the stock market with .`5,000. I am what I am by the grace of God and the blessing of my parents. But nobody ever gives me any money to invest.

CS: Taking chances?

RJ: Life is a risk, life is a gambling, life is ultimate call and life is risk. Today, suppose I travel by car from here to Bandra, there could always be accidents. But if I say how many people have been killed earlier or have met with accidents, you assess risk and once you assess risk, then you take a decision based on it. I do not think, it is a risk. Also, you must realise that success can be temporary and transient.

CS: Okay, you just got lucky and, of course, you took chances.

RJ: Yes, I got lucky and I would not say I took chances. I took conscious chances.

CS: What is the one sector that you would say you can, sort of, predict...

RJ: See, I invest in all kinds of sectors. I invest in a pharma company, in a hotel, in a jewellery company, in a watch company, you know all kinds of investments. Finally, we invest out of ignorance. We cannot be perfect. The founding basis of the legs of all businesses has comment traits.

CS: Retail I believe...

RJ: Yes, I have an investment in retail companies too. I have investment in all kinds of companies. I have investment in a gambling company and I have investment in a company which makes ethanol plant.

CS: So, what is that one sector which is making maximum money, right now?

RJ: See, the market is always popular. It may not be always profitable to do what is popular.

CS: Which sector would be the most safe for a good bet?

RJ:: At the moment, the export sector. Companies which are exporting. Many financial companies are also going at very cheap valuations. I think, it is the time to invest in the market. You will get very good returns over the next three to five years. CS: What about gold? Should we be investing in gold?   
CS: What about gold?

RJ: Ask my wife, I do not buy gold.

CS: You would not ever invest in gold?

RJ: I do not invest in gold.

CS: So that is...you are saying that it is not probably such a good idea to invest in gold.

RJ: Yes, over the next one year, it could be good. But over a 4-5-year horizon, I am not so bullish.

CS: Okay, it just goes up and keeps coming down, just keeps doing that, great.

RJ: Where have you invested in?

CS: Gold, that is why I was like... gold and some property. I have invested a little bit in stocks and, of course, mutual funds.

RJ: Made money?

CS: Not much, not in the market. But the property has always given good returns.

RJ: I do not know why people do not make money in markets.

CS: I guess, we have bad advisors.

RJ: You must have invested in 2006-07.

CS: Yes, well, you know it has been over the past seven-eight years, but they always keep talking about long term, long term, and the long term never seems to end.

RJ:And how long is long term?

CS: I have no idea. I have no idea how long is long term.

RJ: So you do not want to direct a film?

CS: I would love to, some day. Yes, I would love to.

RJ: Who is your favourite director?

CS: Favourite, there are a few that I would really like to work with. Farhan is a very good director and Zoya Akhtar is a fabulous director. There are so many — Raju and Vishal. 

RJ: Raju Hirani?

CS: Yes, Raju Hirani.

RJ: Gem of a man.

CS: Yes, he is a fabulous person. He is such a great human being. Yes, these people and that is about it.

RJ: I also produced a film called English Vinglish.

CS: Oh, I loved that film. I am so glad that somebody like you is producing a film... it is a very good film.

RJ: What is your ultimate ambition in life?

CS: I should be asking you that question, how much more do you want to earn?

RJ:: They say the hunt is better than the kill. I come from a middle class background and I do not lose our middle class roots... I want to give as much as possible to charity. I am supporting some charities now, but I want to do far bigger. I want to work, because I want to die with my shoes ...on to enjoy what I do and I do what I enjoy.

source:http://articles.economictimes.indiatimes.com/keyword/stock-market