Print Edition - 2019-02-06  |  The Collegian

How to get rich

- Saroj Wagle

Feb 6, 2019-

There is a quote by Warren Buffet: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” This quote means a lot to me when it comes to money and investment in my life. I am a big believer in God, who has given three important things for every human being, namely a physical body, intelligence and time. Let’s profoundly use them in our lives. While investing in the share market, we should use our intelligence--when to buy and when to sell our securities. Practically, one should know much about the share market while buying/selling different companies’ shares, rather than simply believing in someone’s word-of-mouth.

Needless to say, the value of any investment is a function of the price we pay for it. A few years ago, I had the chance to invest in the share market at a time when the price of shares was pretty good. Nowadays, when I look at the share market, it is increasing. On September 15, 2017, the equity market capitalisation of companies listed on the Nepal Stock Exchange (NEPSE) was $17.3 billion. Why do I say this? Because with time, things have really changed in terms of market volume, market factors, investor perceptions, listed companies and overall funds.

In the share market, fundamental analysis and technical analysis both play a significant role when it comes to buying and selling shares. On one hand, a fundamental analyst starts with financial statements. A fundamental analyst tries to determine a company’s value by looking at the corporate balance sheet, cash flow statement and income statement. Technical traders, on the other hand, believe there is no reason to analyse a company’s fundamentals because they are all accounted for in the stock’s price.Technicians believe that all the information they need about a stock can be found in its charts.

By researching and monitoring a dynamic mix of shares, mutual funds and bonds, one can create wealth with no further effort. However, Benjamin Graham writes in his book The Intelligent Investor, it takes lots of time and energy to deeply understand market environments.

No matter how defensive an investor, today’s value means that we must keep at least some of our money in the share market. Unfortunately, due to poor knowledge regarding the share market, people are not interested in investing. Hence, we should change our mindsets.

Lastly, I would like to say that let us develop a systematic investment plan when it comes to allocating small amounts periodically instead of lump sums. I would like to end this piece by saying that ‘Penny penny makes many’, remember this while investing.

Wagle is an MBA student at Charotar University of Science and Technology in Gujarat, India

Published: 06-02-2019 11:13

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