How can Investors Capture the Benefits of the Economic Prosperity of a Nation?

None other than businesses and corporations invariably capture the benefits of the economic prosperity of a nation.

Why?

Because economic growth comes from more incomes in the hands of population, who in-turn armed with more income, demand more goods and services, which businesses come forward to produce and render.

If an investor wants to capture this growth, what shall he do?

Naturally, he must invest in the shares and stocks of these companies!

Will property and gold capture the full economic growth of a country?

Yes, to some extent indirectly, but corporations directly capture maximum growth, directly.

In conclusion, the right way to derive investment benefits out of the economic prosperity of a country, especially a great and stable nation like India, is through prudent long term investments directly in the shares of good listed companies after learning investing or indirectly through ‘Index Mutual funds’ or ‘Exchange Traded Funds (ETFs)’.

If you buy things you do not need, soon you will have to sell things you need

Besides being one of the world’s richest persons, Warren Buffett is also one of the greatest teachers. He leads a simple life and advises others to do the same. He says, “If you buy things you do not need, soon you will have to sell things you need”. How true and what golden words of wisdom!

My Teenage Foolish Advice to Buy Things You Do Not Need

I also used to debate a lot on matters of science, economics and politics. In youthful rashness often stupidly I used to lead the debates into heated arguments. I still vividly remember the fiery disagreement I had with my eldest brother one day. In the quarrel, I vehemently contended that during times of high inflation it was better to blow the money instead of saving. When I reflect on it today what a stupid and absurd argument it was.

Of course, I was not completely wrong; it was useless to save when the return was lower than inflation.  But the solution I suggested of blowing away the money was not right.  Splurging on unwanted things simply because inflation was high cannot be justified. We should explore alternate avenues. of investment that yield returns greater than inflation; history proves that prudent investment in shares, or index mutual funds, coupled with patiently lying invested for a few decades, will certainly yield spectacular results.

Practising Austerity Not Difficult

It is not very difficult to practice austerity once you realize how compounding can produce spectacular results from tint investments. Even the few dollars you spend on a pizza can buy you a couple of stocks of a wonderful company. If the cost of a pizza can produce remarkable results, imagine what the cost of an expensive holiday can do?

Sadly, We Don't Heed the Advice

Unfortunately, we realise simple but solemn truths only late in life, by this time it might already be too late. And the realisation useless. Advertisers are marketers are ever trying to make spend on unwanted luxuries.

Recently I saw a tempting advertisement for a luxury, one-way flight ticket costing US$ 38,000 from New York to Mumbai. They provide you with a residence,  comprising a bedroom, lounge and a shower room.

There are many such alluring offers, urging us to splurge.

Conclusion

Sadly, every day I see young and bright youth blowing away their handsome salaries on unwanted luxuries like expensive clothes, mobile phones, holidays and automobiles as if there is no tomorrow.
If only we could heed Buffett’s advice, lead simple lives and invest judiciously, we can not merely achieve financial freedom but can accumulate inexhaustible wealth.

If you don’t and continue in wayward ways and buy things you do not need soon you may have to sell things you need.

With Enough Insider Information and a Million Dollars, You Can Go Broke in a Year

What you require for fruitful investment results is not insider information, nor a large initial corpus, is the clear message of the title, which is one of the many golden quotations of Warren Buffett.

Many believe, that in order to make riches on the stock market, one needs to have access to insider information or prior information of significant happenings in a company’s affairs.  Yes it is true that many have made large sums in this way, out of short-term fluctuations in the share price.  A number of people have gone to jail too, as it is a crime to use such privileged information for personal gain.  Recent confinement of “Rajat Gupta”, a renowned banker of Indian origin, in the United States is a perfect example.

The second important facet about insider information is, that it is useless for successful, long-term investment.  It is useful only for speculating, which is not investing at all, and this blog is meant only for long-term investors and clearly not meant for speculators.

Buffett is also trying to warn common investors about the inherent dangers associated with the approach, as only a select few, who work on the boards of listed companies or top level advisors will have access to such key and sensitive information and what percolates down to the layman is mostly junk in the form of Tips from brokers, which is a sure way to losses.

Having read this article, I hope you would have certainly realized veracity of the quote “with enough insider information and a million dollars, you can go broke in a year”.