Money is an integral part of anyone’s life, it is always said that “wealth creates more wealth” and this principle revolves around the proper investment of money to achieve higher returns, one should try to gain knowledge from the experiences of other people, this could be done through reading books or BOOK SUMMARY RELATED TO INVESTMENT.
But, there are a lot of different people and a lot of financial advice in our surroundings and its difficult to differentiate between right and wrong.
What’s in it for you
- THE INTELLIGENT INVESTOR
- TYPES OF INVESTORS
- VARIOUS STRATEGIES FOR DIFFERENT INVESTORS
- THINK AND GROW RICH
- FREQUENTLY ASKED QUESTIONS (FAQ)
The Internet is a great source for information regarding any topic from any nook of the world, but if you long for proper deep historical knowledge and experiences of a person then you should go for reading books.
“Reading makes you live thousands of lives before you die …… The person who does not read only one.”
There are various big personalities who have shared their life experiences in a few hundred pages. Reading these books helps you to know how they were different from other common people, their lifestyles, struggles, their mistakes which give you learning to not repeat those mistakes again, As it is said by Chanakya
“ Life is very small to make mistakes, you should learn from others mistakes”
FEW BOOK SUMMARY RELATED TO INVESTMENT TO BE READ BY YOU TO BE A GOOD INVESTOR ARE AS FOLLOWS →
1> The Intelligent Investor By Benjamin Graham.
2> Think And Grow By Napoleon Hill
THE INTELLIGENT INVESTOR
Benjamin Graham was a professor and economist. He is called a “father of value investing”. He was the professor of the world’s most successful investor Warren Buffet. Warren says that this book has changed his life.
This book summary related to investment starts with a myth of people regarding the stock market which is ‘Fair investing does not mean keeping funds in the market for a long time will definitely give profit’.Then he mentions about 3 special qualities in a good investor which are as follows
- Thorough analysis
- Safety of principal
- Adequate returns (at least more than safe options)
IF ANY INVESTOR DOES NOT HOLD THESE THREE QUALITIES THEN HE/SHE IS GAMBLING.
After this, he shares a few concepts like →
#Mr. Market in this BOOK SUMMARY RELATED TO INVESTMENT
By this Sir, Benjamin tells us to Buy shares at the time when the prices have dropped whereas to sell when there are increased prices of all the stock in the market
#Margin of safety in this BOOK SUMMARY RELATED TO INVESTMENT
Sir, Benjamin teaches to buy stocks at a price less than its fair price.
Eg. The fair price of a stock is Rs.100,
Then you should buy this stock at a price less than the fair price that could be Rs. 50, 70, 85, 90, 95.
Now Sir Benjamin tells us about TYPES OF INVESTORS.
TYPES OF INVESTORS
According to Sir Benjamin graham, there are 3 types of investors →
1> DEFENSIVE INVESTORS
These are those investors who take
a)Limited risk Make
b)Limited investment Do
These investors take a decision in a hurry and they fear to bear the loss.
These are those investors who take comparatively
a) More risky comparatively
b) More research
These investors have PATIENCE and TRUST ON OWNSELF.
These investors win in the long run.
These are a mixture of both defensives as well as enterprise investors.
They do investment on outer sources of information and always make below-average profits.
VARIOUS STRATEGIES FOR DIFFERENT INVESTORS
FOR DEFENSIVE INVESTORS
- Invest in companies that have a minimum net worth of $500 million.
- This company should have a 2:1 Current ratio.
- The company should have Long-term borrowing < Net current asset.
- This company should make 10 years of regular profits.
- EPS of this company should increase ⅓ in the last 10 years.
- The company should have Maximum 1.5 times B.V of the share
Earning per share X15
This is a suitable price to buy such a share.
- No. of shares to be bought
Minimum 10 — Maximum 30 shares.
FOR ENTERPRISE INVESTORS
- The current ratio of such a company should be 1.5 isto 1
- The debt should not be more than 1.1 times the current asset.
- Companies should give regular dividends.
- There should be no loss for 5 years.
- The stock price should be 1.2 times less than fixed assets.
The investor should buy about 20 shares of such companies.
- One should trade in stock below their net current asset value
- You should avoid trading in those companies which are not profitable from 2 years
One should buy a maximum of 30 shares of this company.
FOR SITUATIONAL INVESTORS
- Whenever you get to know that a company is going to be bought by some other company, you should buy the shares of such a company.
- If you get to know that any subsidiary company is getting listed in the stock market, then you should buy the shares of the parent company or original company.
2 -4 such stocks should be bought.
- One should buy the shares of companies whose share value has fallen due to temporary misconceptions.
THINK AND GROW RICH
The author of this book Napoleon Hill was a journalist and writer, he, fortunately, got an opportunity to take an interview with the richest person of that time Andrew Carnaige, during the interview he had put forward a serious offer in front of Hill.
He said “ I know most of the people are going to fail in the process of trying everything on their way to success.” he further added “ principles of success are universal for everybody, these people should learn from the experiences of people who have already achieved success rather than wasting their own time.”
For this Carnegie told Hill to write a book which has the sum of all the experiences and habits of rich people all over the world, he proposed to hill that he will arrange his meetings with various the rich people of this world but Carnegie would just give the cost of traveling to Hill.
Napoleon accepted this offer and for the next 20 years he interviewed more than 500 rich people and wrote this book called ‘Think and grow rich’.
There are various important things in this book summary related to investment, but some of the most important are →
1)BURNING DESIRE →
The author here tells us to have a burning desire for what we want in our life, and we should follow our desire passionately
The author here gives an example of two people→
Both the people saw a Ferrari on the road and the 1st person said “I wish i could have had this Ferrari” on the other hand, 2nd person said “ I like this Ferrari and one day I will buy this car”
Both the statements have a huge difference and it is more likely that the 2nd person will buy this Ferrari as It is a fact that ‘The more strong are your desires, more are the chances for you to win’.
You can use this principle given in this BOOK SUMMARY RELATED TO INVESTMENT to earn money by following these 6 steps
i> FIX THE AMOUNT Of MONEY YOU WANT →
You should fix the amount of money that you want to earn , otherwise, you will never be able to become rich. As you would be like a lone ship in the water with no aim and your chances of drowning are very high.
ii> DETERMINE EXACTLY WHAT YOU INTEND TO GIVE IN RETURN FOR THE MONEY YOU DESIRE
You should always know that for achieving something you have to sacrifice some other thing, this is the principle of this world. You should have a clear image that if you want a certain thing what all can be sacrificed by you.
Eg. How many hours will you work?
How many hours of sleep can you sacrifice?
iii> ESTABLISH A DATE WHEN YOU INTEND TO POSSESS THE MONEY YOU DESIRE
You should always have a definite date when you would possess the money you want.
iv> CREATE A DEFINITE PLAN
Just create a definite plan, whatever you can make and you are well suitable with and immediately start taking steps.
v> WRITE DOWN EVERYTHING
You should write the explanation of the above points, this gives you a direct start
vi> READ IT DAILY
You should read all these steps daily for a quick recapitulation of your dream and this would get into your subconscious mind.
The author here says that one should have specialized knowledge in 1 field rather than a limited knowledge of 100’s of different fields.
He even tells that most of the people fill their minds with useless facts and figures which would not benefit them in the long run as it can be obtained with just one click.
Hence he says only specialized knowledge will help you in making money.
A man can achieve anything and everything which he can imagine. As nobody had ever imagined a 150 years ago that one can talk to your friend and family sitting a million km apart with just 1 click. You can move from 1 country to another within less than 2 hrs by just sitting in a metal box.
This shows that a man can do whatever he/she imagines or wishes to do….
One can achieve anything through persistence, as it is always said practice and mistakes makes a man perfect. And if you are persistent in your work you will definitely achieve your goals.
so, These were the summary of the two most important BOOK SUMMARY RELATED TO INVESTMENT.
ALSO READ MY BLOG – DETAILED EXPLANATION ABOUT MUTUAL FUNDS
One should try to gain knowledge from the experiences of other people, this could be done through reading books or BOOK SUMMARY RELATED TO INVESTMENT.
Here I have discussed the summary of two books which are as follows
THE INTELLIGENT INVESTOR
Benjamin Graham was a professor and economist. He is called a “father of value investing”.
This book summary related to investment starts with a myth of people regarding the stock market which is ‘Fair investing does not mean keeping funds in the market for a long time will definitely give profit’.
There are 3 types of investors according to sir Benjamin graham –
1> Defensive investors
2> Enterprise investors
3> Hybrid investors
And various strategies are shared by him for different types of investors.
THINK AND GROW RICH
The Author of this book Napoleon Hill was a journalist and writer, he, fortunately, got an opportunity to take an interview with the richest person of that time.
He interviewed more than 500 rich people and wrote this book called ‘Think and grow rich’.
Some important points discussed in this book are-
1> Burning desire
2> Specialized knowledge
ALSO READ – THE POWER OF COMPOUNDING
FREQUENTLY ASKED QUESTIONS (FAQ)
1> The intelligent investors.
2> Think and grow rich
3> Rich dad poor dad
4> The common stocks and uncommon profits
5> The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
Develop Your Career and Expertise. Mint Images/Getty Images. …
Save Diligently and Invest for Growth. Sean Russell/Getty Images. …
Create Intellectual Property. …
Build a Business. …
Invest in Real Estate. …
Hire a Financial Adviser. …
Make Smart Investments. …
Create a Financial Plan.
Good investors know the inherent risk in investing. They understand their plans and analyze their expected returns. Being risk averse is a quality shaped by experience, knowledge and confidence over the above mentioned key characteristics.
You can get rich with stocks, you just need to take the risk.
Investing Only in Intangible Assets
Instead, UHNWIs understand the value of physical assets, and they allocate their money accordingly. Ultra-wealthy individuals invest in such assets as private and commercial real estate, land, gold, and even artwork