Diamonds In The Dust
Module Units
- 1. Introduction
- 2. Four Myths About Investing In India
- 3. How CAPM Has Hurt A Generation Of Indian Investors?
- 4. Crushing Risk Is The Key To Generating Higher Returns In India
- 5. The Consistent Compounding Formula
- 6. The ABC Of Indian Stocks
- 7. Key Takeaways Till Now
- 8. What To Buy: Accounting Quality
- 9. Marcellus’s 3-Level Check To Detect Accounting Frauds
- 10. Accounting Quality: Spotting the Naughty Lenders
- 11. What To Buy: Great Franchises
- 12. Sources Of Competitive Advantages
- 13. How To Identify Dominant Firms In India?
- 14. What To Buy: Masters Of Capital Allocation
- 15. When To Buy?
- 16. Preparing An Investment Plan
- 17. Conclusion
Preparing An Investment Plan
Financial planning is essential for an investor to ascertain their financial objectives and allocate savings across various types of investment instruments.
An investor’s first allocation of savings should relate to the quantum of funds required in the near term/for emergency purposes —also called rainy-day money. Since capital preservation is the only objective of this allocation, this investment should be in instruments such as tax-free government bonds.
The equity allocation of an investor, regardless of whether it is in small caps or large caps, should be in a portfolio which has been thoroughly researched for:
a) clean accounts;
b) prudent and efficient capital allocation with strong free cash generation; and
c) massive barriers to entry against competition.
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