Secret of Value Investing

Have you heard about value investing?
Are you a value investor?
Do you know how you can be value investor?

If the answer of the above questions are NO, you must read this blog.

A value investor always looks out for different investment option available and if you are also looking for the same then you must read my previous blog - Investment Opportunities in India. 

Every investor hears about  value investing very often but few of us know how he can become one of the value investor. Below is the definition of value investing:

'It is is the philosophy of investing in a security when its share price undervalues its intrinsic worth.' 

As definition may sound very simple but to be a value investor one will need very high level of discipline, passion and determination. Below are four points which will help you to be a value investor:

1.) Systematic Investment Plan(SIP): The key to value investing is doing regular investment in share market. I am not saying to set up automatic SIP in equity but one should carefully select the share and then he should invest in it on regular interval at right price. It will increase your net worth regularly.

2.) Buying stocks which are out of favor: Value investor always looks for such stocks which are available at very less price in comparison to their intrinsic price. A value investor seeks to buy a company when it is down and out, provided the price is right. One may find many companies whose share prices are depressed, at any point of time. This could happen on behalf of several reasons like quarterly results, unexpected charges, changes in leadership, dull products, etc. A value investor evaluates the drop in price with the news that is supporting the same. If the investor's evaluation depicts that the market has overreacted (as it usually does), he or she would pick up that share and hold it out. By this you increase your chance of good returns and lower you risk.

3.) Business Owner's perspective: One must evaluate the stock from a business owner’s perspective. Imagine you already own the business (you will, if you buy the stock) as a single share of stock also represent the part of the business. So, when you own a business then you don't look for selling it in few days, week, month or even years. Your outlook for the business should be for 5-10 years. In fact you should buy the share of the companies which you never want to sell in your life. It means buy the share which you want to own for your lifetime.

4.) Controlling Emotions:  Prerequisite for performing a value investment covers some strict methods that are based on facts, figures and reasoning not on the market hypes/news. Never forget that the majority of investors lose money because they did not control their emotions. One should not sell on the news or hype basis, this is the work of traders not of value investors. Value Investor normally invest in the financial struggling companies but had enormous brand power and assets. As Warren Buffett say - 'Be greedy when others are fearful and be fearful when others are greedy'.

There are many parameters that you need to check for selecting the company like P/E value, book value, market capitalization, profits & loss statement and many more (which I would be discussing in my forthcoming articles). But to be a value investor you must inherent the above mentioned four qualities. These are very basic qualities which one should remember; though they are very tough to follow as one lives in an environment which is bombarded with lot of information, news, analyst's views etc. One must keep his faith in the companies selected.

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Happy Investing!!

Investment Opportunities In India

Talking about the Investment Scenario, there are lot of investment option by which we can generate another source of income which can make us financially stable and can prepare us for our retirement quite before the actual age of retirement. People have got a tendency of living on a pay cheque basis by spending their hard earned money on unrealistic things rather than saving and then investing for future.

Since this is my first blog i would like to throw some light on the Investment Opportunities in India based on my personal experience.
Below are 8 investment options which you can opt for. We will discuss each one of them in little detail:

1.) Stock Market: Many people around you will terrorize you for not investing in stock market, some will say you need good amount of money to invest in stock market. Some will say right now the market is on high so no one should invest. But the point is, there is no right time to invest in stock market. You have to educate yourself well enough so you can understand the basics of it. You have to make promise of not doing intra-day trading in any condition. If you want to earn good return then you have to select a company at very good price so you can maximize you profit which takes efforts to work proactively on the share. Being a regular investor in share market is the most basic and essential thing. You can even start with 1000 bucks per month in share market and after getting the confidence as per the knowledge of the market; increase this amount.

 2.) Mutual Fund: Many people don't have time to monitor the market. So, the second best option is Mutual Funds. You can do monthly investing in couple of good Equity Mutual Funds. It will save you from volatility and you can earn more than Fixed Deposits. Just select couple of good Equity Mutual Funds and start investing in them.

3.) Tax Saving Options: For getting best use of tax saving scheme u/s 80C, you can invest in Equity Linked Saving Scheme (ELSS) mutual fund. In this kind of fund you have to invest money for minimum 3 years. It is the lowest time for which you can invest in any of the tax saving options available. Even ELSS mutual fund gives you opportunity to earn better return than the other tax saving options.

4.) Secured Non Convertible Debentures (NCD): If one does not want to invest directly or indirectly in the market then he can go for the Secured NCD bonds. Many companies from time to time issue these bonds to generate money from the market. These are a type of loan given to the company for which one buys the NCD Bond; but it has been noted that many companies in the past failed to pay back the interest return to subscribers so the idea is that before getting into any of the NCD bond one must check the company's history.

5.) Bank Fixed Deposit(FD)/Recurring Deposits(RD): If you want to go for the safest bet then you can go for the FD or RD. They will give you lesser return as compared to above mentioned options but the security of your money and interest return is sure.

6.) Initial Public Offerings (IPOs): It sounds very exciting to invest in IPOs but you have to select the IPO carefully as in the bullish market many companies try to get their IPOs in the market and common men get trapped into it.

7.) Real Estate: In India people have a preference for getting their money invested in Real Estate. For investing into this one needs huge amount of money but the return from this option in 5-10 years are very good. In selection of the property you should always check few things i.e. surrounding location, owner of the property, future prospectus of the location etc.

8.) Gold In our country on every occasion we see the charm of gold among the ladies  and we heavily deal in physical gold normally. From the investment perspective one must compare the return from gold with above options available. A jewellery involves hidden costs like making charges, security charges of locker etc. One can opt to go for the gold ETF, which is easy to hold and you can sell it any time in the market which saves you from any fraud involved as well.


The points mentioned above are the ones which I have learnt in my Investment Tenure till now. I believe there is a long and long way to go with these things and to involve more and more number of people in it for making each one a Financially Educated person. Though I am not here to teach anything; I would be sharing my experiences via my blog and would eagerly wait for your response, suggestions, ideas in the comments below.

Happy Investing!!