Easy ways to make money

We regularly hear from people how they brought a stock and held on to it and today the value is so high. Well that is true for many stocks. If that was so easy, I think all of us would have been millionaires by now. Yes, in equities, holding for a long period helps generate high returns. But then not all stock will continue to give good returns for years together. Way back there was a stock called Century Mills or till recently there was Satyam, both of these were giving good returns, now where are they? Therefore if someone says buy a stock which is on the Sensex and hold on to it for life and it will give you good returns does not make sense. As both these stocks were part of the Sensex, today they are not. So is the strategy that as soon as it is removed from the Sensex sell it good? Well by the time it is removed from the sensex, that particular stock would have already lost steam.

So what should one do? One of the things would be to review the stocks you have in your portfolio on a regular basis. Daily is also regular, but at least once a year would be good enough. While reviewing if you notice that a particular stock is losing steam, get rid of it and look for some other stock which would be a good bet to replace in your portfolio. I keep telling people that the sensex has given an average ten year return of 16%, if a person had kept investing systematically. But then as I told you earlier, the sensex stock have always kept changing. So you too should keep changing the stocks in your portfolio, you would like to have such return. The easiest way to do it is invest in a mutual fund, where the fund manager would do the managing for a small fee.

Since making money in the stock market over long period of time is easy, but it needs some discipline in investing, for a fund manager, he is governed by rules, so he will follow the rules, set for the fund. This helps in disciplined investing. You keep hearing that many people made money by investing in midcap or small cap stocks, but for lay investors, it will be too much of research, stick to sensex or nifty stock and stick to them, this way the chances of losses will also be limited. Remember money is there to be made by investing and letting it appreciate, but regular review is a must. Write down your rules of investing and follow them. You might make some bad decisions, but if the rules are followed, the percentage of good decisions will always be more than the bad decisions. Isn’t this the best way to make money? Make the rules and follow them and watch your money grow.