What are Good Books for Analysis of Financial Statements?

Dear Mr.Abhishek Rout

I have not had the occasion to read a specific book on financial statement analysis. I will recommend two books in the context of investing, both of which are classics and master pieces.

1. Security Analysis: 
   

This is a book written by Benjamin Graham and David L Dodd. Graham is my Guru Warren Buffett’s Guru. It is a bulky book, but a classic that will take you a long way in life

2. The Intelligent Investor:

This is again by Benjamin Graham. This is the ‘Bhagavat Gita’ for investors.

Though both the books are not addressed directly about financial statement analysis, both cover the subject more than adequately.

Happy Reading!

Thank you,

With Best Regards,

Anand

Please Note: This is almost a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.

Can Partnership Firms Invest in Mutual Funds?

Dear Friend!

A very valuable question.

The answer to the question, "Can Partnership Firms Invest in Mutual Funds?" is an emphatic Yes. A partnership firm can invest in mutual funds, by opening a mutual fund account, as it opens and operates a bank account. 

The partnership deed, the contractual instrument that brings the firm into existence, shall expressly permit such investment. The mutual fund(s) will usually demand a certified copy of the partnership deed to ensure that such investments are permitted. The deed should also mention which partner(s) are authorised to apply for make investments in mutual funds.

With respect to questions like how to invest in mutual fund, what type of mutual fund to choose, whether it is a single lump-sum or sip investment, for how long to make and keep the investment intact, fund management costs, etcetera, the firm may seek financial advice from an honest and competent person. The firm better beware that advisors are known to be good at earning fat fees for themselves rather than earn a return for the investor.

Even though a partnership firm can make investments, one should understand that a partnership firm is not a separate legal entity like a company incorporated under the company law. Therefore, the partners are technically joint owners. As long as the firm continues to exist it will hold all assets and liabilities. In the event of dissolution of the partnership firm, the assets and liabilities are either liquidated or distributed among partners, in which case the mutual fund investments may get transferred to one or more partners or sold off.

Suggested Further Reading:

• Types of Mutual Funds
• How to Choose the Right Mutual Fund to Invest?
• How Frequent Changes to Mutual Fund Portfolio Affect Investor Interest?

In conclusion, the answer to the question, "Can Partnership Firms Invest in Mutual Funds?" is a definite yes. Partnership firms can make and hold mutual fund as well as all other types of assets as well as investments.

Thank you,

With Best Regards,

Anand

How Will My Lifestyle Affect My Children?

Dear Ms.Vibha Verma

Thank you for asking a very valuable question, that has a deep impact both on your life, lives of your immediate family, including your children.

Leading a simple lifestyle, even when you can easily afford a luxurious one, is very important in all respects - financially, philosophically, spiritually and in common sense.

Since I believe in ‘Value Investing’ I will approach your question from the financial management/ investing angle.

Leading a simple lifestyle makes immense common sense. It will leave a lot of cash in your hands, which you can invest to generate ‘Passive Incomes’, which in-turn will lead you to ‘Financial Freedom’ and ultimately to riches and wealth.

By leading a simple lifestyle even when we can afford luxury is teaching a highly valuable lesson to our children, for which they will be thankful to us, the parents, latter in their lives. The urge to splurge is the modern and ubiquitous malady and controlling the ‘Urge to Splurge’ is the remedy.

Comfortable lifestyles is fleeting. Suddenly calamity may strike and cripple a family from maintaining a luxurious lifestyle. I have experienced such a situation myself, when suddenly one day from a rich and powerful stature I was dragged on to the streets without a penny in hand and a family to take care of. From a rich and influential person with powerful friends I became worse than a blade of grass - that is how life can play tricks. Children who are pampered with comforts will be unable face situations like this and that day will curse their parents.

In conclusion, parents have to lead by example living simple lifestyles, which will inculcate the same good habit in the children, for which they will ultimately be thankful to the parents, even though during childhood them may resent the frugal living. Pampering children with goodies and comforts is not right way of showing true love - rather it is spoiling them for which we shall be solely responsible. On the other hand we will be doing immense good to them by leading a simple lifestyle ourselves.

I thank you once again for the valuable question.

With Best Regards

Anand

Please Note: This is almost a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.