Do it yourself

One of the most popular concept of invetsing is the "power of compounding". Almost every prominent investor and financial author has emphasized on this concept. The principal of compounding, insofar as financial investments are concerned, works on the basis of three key factors (a) regular investment; (b) staying invested for long period; and (c) rate of compunding. To take full advantage of the power of compounding, it is therefore essential to: (i)     Invest regularly; (ii)    Reinvest the return on investment; and (iii)   Try investing at the maximum possible rate of return, without of course compromising the safety requirements. Does this imply that the concept of compunding is relevant only for investors who could "buy and hold" an investment for sufficiently long period of time? This question is more pertinent to answer is whether the concept of compounding is relevant for stock traders also; especially when currently the markets are be...

Continuing from yesterday (see De-institutionalization of household savings ) It is important to note that investors moving away from passive investing to active investing is not an India specific phenomenon; rather it is a global shift. For example, there is massive outflow of funds from equity mutual funds in US, while benchmark indices have been scaling new highs. This outflow of funds has coincided with the tremendous rise in "Robinhood" investors - people buying and selling stocks directly on discount brokerage platforms. As Sanjay Satapahty, a fund manager at Ampersand Capital, highlights "Trend of ETF was a megatrend over last decade and the reversal can have huge implications." ( see here ) In past five months we have seen some glimpses of the likely implications for the market, should the shift from passive investing to active investing sustains over a longer period. Since the market bottom in March 2020, the small cap...