In the last chapter we learned about standard deviation, probability distribution has its roots in SD, if you have not read that article, please do so. Probability Distribution: If an event has a definite number of outcomes, and if we repeat the tests for a long duration, the outcomes will be spread in a unique…
In the last few chapters, we discussed diversification & how it is getting measured. If you have not read those chapters, please do so. In the current chapter, we will discuss the standard deviation. The definition is the amount of dispersion of the measured instrument from its mean, but to explain it in detail we…
In the last Chapter, we learned the need for diversification, if you have not read it yet, please do so. In this Chapter, we will learn a bit about the technical aspects surrounding diversification. Mutual Funds are inherently the best diversification financial instrument ever invented. MFs pool money from the public and then invest in…
We discussed the concept of diversification in the last chapter. If you have not read it, please do so. The current chapter will look at why we need diversification in life. Diversification has its roots in uncertainty, a layman cannot predict the future, so the next best thing is to spread his wealth in multiple…
Diversification means holding multiple assets at the same time so that you do not lose heavily when few of those assets lose value. If you look at human history, you will quickly agree that “Diversification” is not something that we do naturally. A carpenter used to be a carpenter, but he does not diversify into…
FIRE — Financially Independent, Retire Early! was a movement started in the 90s after the authors Vicki Robin and Joe Dominguez popularized it in their book — “Your Money or Your Life”. The concept is to save/invest 70% of your earnings, meet the consumption demands with the 30%, and then retire rich in 7 to 10 years. It may…
Last week we discussed how important an insurance product is. We also discussed why term insurance is much better than an endowment plan, money-back scheme, or a Unit Linked Insurance Plan (ULIP). One of the reasons is that we are a better investor via the MF route. If you have not read that chapter yet,…
Scheme Information Document is a mandatory “to read” document issued by the AMCs, but the one least read. Usually, people do not like to read but prefer to listen. Things will work out well if you invest through a mutual fund distributor as he is entitled to explain the SID to you. If you are…
Studying abroad in Germany, the UK, the US, Australia, or New Zealand is a familiar thing. Most students dream of pursuing their higher education at a famous international university, but their dreams are cut short when they hear about the required funds. Due to the devaluation of the rupee against the major developed currencies, the…
Everyone talks about risk but has yet to learn what it really means. Risk can be an actual loss or a perception that you could lose. Usually, the feeling that you could lose in the future is much more powerful than the actual loss. Fear drives us crazy and makes us do irrational things. If…
