As management students we are expected to have an edge over others as we are considered all-rounder. Post graduation or MBA most of us have jobs through which we have our own disposable income. We all at some point study the various tools of investment and are very well aware of it. But we go wrong in spending first and saving from what is left. We also go majorly wrong in selecting the tools of investment as most of us follow the old traditional methods of investment like FD, RD, and Gold etc. The equity or share market is a great avenue for investment if money is invested with adequate study and caution.
Warren Buffett is the greatest investor of all time, and he has a simple solution that could help an individual turn $40 into $10 million. few years ago, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) CEO and Chairman Warren Buffett spoke about one of his favorite companies, Coca-Cola (NYSE: KO), and how after dividends, stock splits, and patient reinvestment, someone who bought just $40 worth of the company’s stock when it went public in 1919 would now have more than $5 million.
Yet in April 2012, when the board of directors proposed a stock split of the beloved soft-drink manufacturer, that figure was updated and the company noted that original $40 would now be worth $9.8 million. A little back-of-the-envelope math of the total return of Coke since May 2012 would mean that $9.8 million is now worth about $10.8 million.
The power of patience is proved here. For investing in equity an individual has to be really patient and not get affected by the highs and lows of the dynamic market. Patience pays good returns in the form of dividends.
Buffett has noted continually, it’s terribly dangerous to attempt to time the market:”With a wonderful business, you can figure out what will happen; you can’t figure out when it will happen. You don’t want to focus on when; you want to focus on what. If you’re right about what, you don’t have to worry about when”.
So often investors are told they must attempt to time the market, and begin investing when the market is on the rise, and sell when the market is falling. This type of technical analysis of watching stock movements and buying based on how the prices fluctuate but it has been proved to simply be no better than random chance. Â
Another very important thing is that individuals need to see that investing is like buying a tangible piece of a business. In Buffett’s own words, “if you’re right about the business, you’ll make a lot of money,” so don’t bother about attempting to buy stocks based on how their stock charts have looked in the past. Instead always remember that “it’s far better to buy a wonderful company at a fair price.”
Equity is risky I agree but it also is a great way to grow ones money. Invest your money wisely.
Anjani M Nautiyal
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