In this article, I’ll try to use the method proposed by Mr. Aswath Damodaran to calculate the Equity Risk Premium of an Index. I’ll use the S&P BSE 500 index for our calculations. We can apply the same method of calculation to the equity risk premium (ERP) of individual stocks. But before proceeding further, allow…
The purpose of this article is to highlight the necessity of keeping the investment portfolio well diversified. We’ll see in this blog post how investment diversification is not only about buying different types of assets, it is more about keeping a balanced portfolio. For quick answers on the diversification strategy, check the FAQs Introduction What…
Why I’m blogging about this topic? Recently I met a person who was inclined to explore stocks but wanted to practice only defensive investing. He was a regular investor in mutual funds. He would explore direct shares purchase, but only with safe stocks. I know, a lot of people have similar mindsets. How risk-averse people…
Estimate risk profile before starting to invest. It is essential to figure out the right investment strategy for an individual. A person who is risk averse shall not end up buying a high-risk investment. Similarly, a person with a high-risk profile will find debt-based plans unsatisfying. Practically speaking, the majority of individuals fall between the…
When it comes to the use of jargon, probably the world of equity investment will be among its heavy users. Two commonly used words of this field are Alpha and Beta. The term beta is in use for a long time. But the trend of alpha is more recent. What are alpha and beta? Alpha…
Like long-term investing is a strategy to invest money, ‘rupee cost averaging’ is also an investment strategy to invest money by taking lesser risks. It enables people to eliminate the need to time the market. In rupee cost averaging the investor does not utilize all the funds to buy an asset at a single moment…
If we can invest risk free and earn high returns, wouldn’t it be an ideal scenario? Sure it will be, but how to do it? This is what we will discuss in this article. But allow me to first confess a thing. This blog post is not about the “traditional” write-up on risk free investment…
Direct equity investment can be very rewarding. Simultaneously this is also true that risk of loss in direct equity is high. People who can balance risk and return while dealing with direct equity are the winners. But how can one balance the risk and reward? The risk associated with direct equity comes from complexity of information Its not so…
