23 Feb

What to Look For While Investing in Stocks?

By Kaleem Mushtaq

This article is for those who have made up their mind to invest some money in the stock market directly. They do not prefer mutual funds. They are going to be in the market for the long haul and are not going to speculate. They are looking for a method to identify good businesses and become their partners. What they expect from this undertaking is to preserve their capital, be able to beat inflation effectively, and also compound their wealth at a decent rate. In due course of time, when their portfolio has grown to become big enough, they might have an option to live off the dividend income during their retired life.

22 Feb

Why Speculation is Not a Good Idea?

By Kaleem Mushtaq

When we think of making money in different markets by deploying cash we already have, mainly, there are two styles or approaches that come to our mind. One is to either start a new business or buy ownership in a running business and be a partner in the profit and loss that the business incurs during its operation. The other is to time your entry into and exit from the markets in a way that the difference of the buying and selling prices is your profit or loss. The former is an investment while the latter can be termed as speculation.

21 Feb

How Cognitive and Emotional Biases Affect Investing?

By Kaleem Mushtaq

Due to a host of factors, the human mind does not always think rationally. Although there is a lot of room for emotions in many human affairs, there are certain areas where rational thinking is crucially needed. For example, you can’t afford to be emotional while investing.

Our evolutionary biology is at work when we behave emotionally where the situation demands us to act rationally. The advent of markets, especially the stock market, is a very recent development when viewed in the backdrop of human evolution. In fact, if the entire human history is plotted on a scale of 24 hours, the stock markets came into being only a few seconds before midnight!

19 Feb

10 Powerful Personal Finance Quotes

By Kaleem Mushtaq

Quotes can be interesting as well as powerful. However, in order to make them attractive, they might have an element of exaggeration in them which can be ignored. Good quotes can condense the wisdom into a small piece of text, which is easy to remember and can influence our behavior positively.

It may be pertinent to try to understand a particular subject through some powerful quotes. With this in mind, I am going to include here a list of quotes that are full of financial wisdom. These can provide some very useful lessons in personal finance.

18 Feb

Mutual Funds or Direct Equity?

By Kaleem Mushtaq

If and when you decide to invest whatever percentage of your capital in equities (shares or stocks), you have a fairly wide variety of options to choose from. However, in this blog post, I will focus on public equities and will compare the two possible approaches i.e. direct investment in equities or through mutual funds. Both are viable options with their advantages and limitations. The purpose of this discussion is to see what suits whom.

16 Feb

How to Design Your Portfolio?

By Kaleem Mushtaq

Your ability to design a portfolio that best suits your financial needs has a central importance in personal finance. While smart capital allocation is the process or the framework, portfolio is the product or the outcome.

The process of designing your portfolio is also a balancing act where you accommodate different variables and reconcile various divergences. However, the central theme of capital allocation and portfolio construction should be to outline some realistic and achievable financial goals first and then have a simple and workable plan to achieve those with the available resources in a given timeframe.

15 Feb

How to Construct a House for Free? (Pay Cost of Land Only)

By Kaleem Mushtaq

In this article, I am going to discuss a plan of how you can finance the construction cost of a medium-size house, provided you already own the land on which you are going to construct it. This is a long-term undertaking and its success hinges on how skillfully you can leverage the power of equities (stocks or shares). Let’s, first of all, list down the pre-requisites, some basic assumptions, and then we can go on to the execution part.

14 Feb

How to Raise Our Kids to Financial Awareness?

By Kaleem Mushtaq

Raising our children to become civilized adults and useful members of society is one of the most important responsibilities of parents. All of us want and try to give the best possible education to our children. A good education must ensure all-round grooming of children. The existing education system lays a lot of emphasis on some areas while leaving the others unaddressed. One such neglected area is personal finance. That is why some very brilliant professionals, who are a product of this education system, are found struggling when it comes to money matters.

12 Feb

Whether to Rent or Own a House. How to Decide?

By Kaleem Mushtaq

In personal financial planning, one of the most important decisions to make is whether to rent or own a house. If you decide to own a house, the second question is when or at what stage of your life or financial journey? Since constructing or buying a house, in a majority of cases, is going to be the biggest expense to be incurred, it merits a lot of deliberation and forethought. This single decision holds the potential to substantially alter the course of your financial life, for better or for worse.

11 Feb

A Suggested Investment Framework

By Kaleem Mushtaq

Investing is committing your money to a business operation now, with the expectation to take out more money later. It has three core principles. The first and the most important is to protect the investment capital (the principal). Secondly, no investment is possible without thorough research which has many dimensions and takes time. Lastly, you have to be content with an adequate return. There should be a way of determining how much is adequate. This succinct framework of investing was propounded by Benjamin Graham in his book: The Intelligent Investor.