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Vishal Khandelwal

@safalniveshak

Dec 16

Know the rule of 72?

If not, you must.

Not just to become a bit more literate in basic #investing math, but also to avoid getting fooled by claims of people promising to double your money quickly.

Here's what this rule is all about.

The rule of 72 is a financial concept that is often used to estimate the time it will take for an investment to double in value.

It is based on the assumption that the value of an investment will grow at a fixed rate of return over time.

To use the rule of 72, you divide the number 72 by the expected rate of return on your investment. The result is the number of years it will take for your investment to double in value.

Read 8 tweets

Vishal Khandelwal

@safalniveshak

Oct 17

A note/reminder on when and why NOT to sell a great business you own.

Consider this. If you want to multiply your money 100x in 25 years, you want your investment to return 20% every year.

In other words, ₹1 growing at 20% per annum will turn to ₹100 after 25 years.

But if you sell this stock after 20 years (instead of holding for 5 more years), you will get just ₹40. The remaining ₹60 would come only between the 21st and 25th years.

Even if you earn 15% return per annum, your ₹1 would turn to around ₹35 in 25 years. But 50% of these returns would come only between the 21st and 25th years.

Read 12 tweets

Vishal Khandelwal

@safalniveshak

Sep 21

'Experienced' investors, with ~20 years of experience (like yours truly), here are a few qualitative things you may want to know before you continue investing your money in stocks.

Grab some green tea. 🍵

Just being in the markets for 15-20 years does not mean you've known and seen everything that is there to see in investing. Markets will continue to prepare some really tough question papers for you. Don't get caught napping.

You may have gotten one prediction right in the last 20 years. This does not make you an expert in predicting, especially the future.

So, stop predicting and seeking predictions. Just keep preparing for the rough times coming your way (and they will).

Read 13 tweets

Vishal Khandelwal

@safalniveshak

Sep 20

Young investors, here are a few qualitative things you may want to know before you start investing your money in stocks.

Grab an apple. 🍎

1. Investing is not risky for the reasons (like volatility) it is made out to be the jargon-filled analysts, fund managers, and other market experts.

It's risky if you do not understand what you are getting into and why. In fact, not investing well is a greater risk.

2. You do not read a high IQ to do well as an investor. In fact, the biggest financial crises have been caused by the highest IQ people.

What you need is good EQ (like impulse control) so as to minimise the mistakes of bad behaviour that causes investors to make big mistakes.

Read 10 tweets

Vishal Khandelwal

@safalniveshak

Sep 5

Drowned in the brilliance of Warren Buffett and Charlie Munger, it’s easy to miss the teachings of the most iconic teacher of value investing, Ben Graham.

The reason is not difficult to understand.

What Graham taught sounds so simple and commonplace that it seems like a waste of time reading his teachings.

It’s like spending ten years learning spirituality and then having somebody tell you that Ten Commandments were all that counted.

The Intelligent Investor and the rest of Graham’s teachings are based on a fundamental set of principles that he believed to be true 70+ years back, and which remain true even today. These principles are something that, no matter what the circumstances, are never to be broken.

Read 14 tweets

Vishal Khandelwal

@safalniveshak

Aug 25

A note on why I don't talk about my stocks publicly...

It was sometime in the middle of 2008 when the realization of a global financial crisis had finally settled on the Indian stock market. I was working on my job as an analyst.

One stock I had recommended to our clients at the start of the year had fallen around 30% since my recommendation. Not just the stock price, the business had started to wobble. But I closed my eyes to that because my recommendation was now public...

...and many clients would have bought it in their portfolios. To change my view after a 30% cut in stock’s price, however honest I would have been to accept my mistake, would have been a disaster.

Read 25 tweets

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