Some Principles of Investing, and of Risk Management

Aditya Rana’s timeless gems on the principles of Investing could well be read as the Principles of Risk Management for these times; some of them are:

- Start saving early and regularly - but it is never too late to start.

- The simple strategy of indexing has outperformed the vast majority of equity and bond funds

- Diversify - across securities, asset classes, markets and time, and across time

- Rebalance your portfolio periodically and in a disciplined manner

- Avoid major mistakes

- Avoid following the herd and getting caught up in periodic moods of overconfidence or discouragement

- Minimize your investment costs

- Avoid “exotics” like venture capital, private equity and hedge funds as only the best performers in each category achieve great results and are closed to most individual investors.

- Make your asset allocation decisions, based on your particular financial situation (in terms of assets, income and savings), your age, your emotional strengths (to withstand market volatility) and your knowledge of and interest in investing.

- “Everything should be made as simple as possible-but no simpler” in the words of Albert Einstein and this maxim applies to the investment world as well.

Read more in his blog update.....http://j-risknotes.blogspot.com/p/adityas-blog.html