Today i am going to point out a very important method to get rich.
You cannot get rich by other people's advice, you need to do it yourself, and you need to have the discipline in order to get rich.
All i ask from you is a little disciplined approach towards Investment. It's known as the EMI approach to investment.
Many of you must be having their Insurance Premium EMI(s) or Mutual Fund EMI(s) ranging from 3-5 years and many of them also have it for 5-10 years.
When i went through the book of Warren Buffet of Intelligent Investor i came across this method of investing an equal amount monthly. There are some conditions to it.
1) The stock fundamentals must be good.
2) It should have a steady growth
3) There should be a steady flow of dividends (very important factor after some years).
Now, let me explain to you why i also believe that the stock market will act like a voting machine at the short term and a weighting machine at the long term.
1) Never think about selling for 10 years.
2) Invest an equal amount every month, it can be also more but not less than that amount, so decide that amount you are comfortable with and start investing every month.
3) choose a date, i chose 28th of every month where after F&O expiry, there is better chance sometimes of getting a good price.
4) Never change the date, buy it in a disciplined way, in the long term you will gain!
If i had invested Rs.2500 in Reliance Industries, when i joined my college in 2002. At that time, till now, if i had been regularly investing my money then i would have got a great fortune! Copy this table in excel and see for yourself that how stock market is like a weighting machine! The more the quantity the better you are in long term.
Note: The reliance shares got 1:1 bonus in Nov 2009. So, Cum Qty of Shares gets doubled.
Note: Copy the below table in excel
| Date | Inv Amount | Qty | Close | Amt | Cum Cost | Cum Qty | Value | Profit | Profit % |
| 4/20/2010 | 2500 | 2 | 1068 | 2136 | 227710.73 | 681 | 727308 | 499597.27 | 219.3999685 |
| 3/29/2010 | 2500 | 2 | 1094.3 | 2188.6 | 225574.73 | 679 | 743029.7 | 517454.97 | 229.3940327 |
| 2/26/2010 | 2500 | 3 | 979.3 | 2937.9 | 223386.13 | 677 | 662986.1 | 439599.97 | 196.7892859 |
| 1/19/2010 | 2500 | 2 | 1085.9 | 2171.8 | 220448.23 | 674 | 731896.6 | 511448.37 | 232.0038451 |
| 12/29/2009 | 2500 | 2 | 1080 | 2160 | 218276.43 | 672 | 725760 | 507483.57 | 232.4958173 |
| 11/30/2009 | 2500 | 2 | 1058 | 2116 | 216116.43 | 670 | 708860 | 492743.57 | 227.9991253 |
| 10/28/2009 | 2500 | 1 | 2036.2 | 2036.2 | 214000.43 | 334 | 680090.8 | 466090.37 | 217.7988007 |
| 9/29/2009 | 2500 | 1 | 2154.52 | 2154.52 | 211964.23 | 333 | 717455.16 | 505490.93 | 238.4793557 |
| 8/28/2009 | 2500 | 1 | 2055.61 | 2055.61 | 209809.71 | 332 | 682462.52 | 472652.81 | 225.2768997 |
| 7/28/2009 | 2500 | 1 | 1891.01 | 1891.01 | 207754.1 | 331 | 625924.31 | 418170.21 | 201.2813273 |
| 6/29/2009 | 2500 | 1 | 2065.55 | 2065.55 | 205863.09 | 330 | 681631.5 | 475768.41 | 231.1091367 |
| 5/28/2009 | 2500 | 1 | 2196.76 | 2196.76 | 203797.54 | 329 | 722734.04 | 518936.5 | 254.6333484 |
| 4/28/2009 | 2500 | 1 | 1724.61 | 1724.61 | 201600.78 | 328 | 565672.08 | 364071.3 | 180.5902239 |
| 3/30/2009 | 2500 | 2 | 1525.71 | 3051.42 | 199876.17 | 327 | 498907.17 | 299031 | 149.6081299 |
| 2/27/2009 | 2500 | 2 | 1247.98 | 2495.96 | 196824.75 | 325 | 405593.5 | 208768.75 | 106.0683425 |
| 1/28/2009 | 2500 | 2 | 1278.3 | 2556.6 | 194328.79 | 323 | 412890.9 | 218562.11 | 112.4702675 |
| 12/29/2008 | 2500 | 2 | 1242.46 | 2484.92 | 191772.19 | 321 | 398829.66 | 207057.47 | 107.9705405 |
| 11/28/2008 | 2500 | 2 | 1128.2 | 2256.4 | 189287.27 | 319 | 359895.8 | 170608.53 | 90.13206752 |
| 10/28/2008 | 2500 | 2 | 1148.38 | 2296.76 | 187030.87 | 317 | 364036.46 | 177005.59 | 94.63977257 |
| 9/29/2008 | 2500 | 1 | 1932.36 | 1932.36 | 184734.11 | 315 | 608693.4 | 423959.29 | 229.4970268 |
| 8/28/2008 | 2500 | 1 | 2072.51 | 2072.51 | 182801.75 | 314 | 650768.14 | 467966.39 | 255.9966685 |
| 7/28/2008 | 2500 | 1 | 2164.21 | 2164.21 | 180729.24 | 313 | 677397.73 | 496668.49 | 274.8135775 |
| 6/30/2008 | 2500 | 1 | 2070.52 | 2070.52 | 178565.03 | 312 | 646002.24 | 467437.21 | 261.7742175 |
| 5/28/2008 | 2500 | 1 | 2501.48 | 2501.48 | 176494.51 | 311 | 777960.28 | 601465.77 | 340.7844074 |
| 4/28/2008 | 2500 | 1 | 2562.04 | 2562.04 | 173993.03 | 310 | 794232.4 | 620239.37 | 356.4736875 |
| 3/28/2008 | 2500 | 1 | 2319.69 | 2319.69 | 171430.99 | 309 | 716784.21 | 545353.22 | 318.1182235 |
| 2/28/2008 | 2500 | 1 | 2512.58 | 2512.58 | 169111.3 | 308 | 773874.64 | 604763.34 | 357.6126137 |
| 1/28/2008 | 2500 | 1 | 2539.29 | 2539.29 | 166598.72 | 307 | 779562.03 | 612963.31 | 367.9279829 |
| 12/28/2007 | 2500 | 1 | 2873.64 | 2873.64 | 164059.43 | 306 | 879333.84 | 715274.41 | 435.9849416 |
| 11/28/2007 | 2500 | 1 | 2750.98 | 2750.98 | 161185.79 | 305 | 839048.9 | 677863.11 | 420.547686 |
| 10/26/2007 | 2500 | 1 | 2666.75 | 2666.75 | 158434.81 | 304 | 810692 | 652257.19 | 411.6880564 |
| 9/28/2007 | 2500 | 1 | 2272.2 | 2272.2 | 155768.06 | 303 | 688476.6 | 532708.54 | 341.9882998 |
| 8/28/2007 | 2500 | 1 | 1864.65 | 1864.65 | 153495.86 | 302 | 563124.3 | 409628.44 | 266.8661161 |
| 7/30/2007 | 2500 | 1 | 1828.79 | 1828.79 | 151631.21 | 301 | 550465.79 | 398834.58 | 263.029346 |
| 6/28/2007 | 2500 | 1 | 1673.74 | 1673.74 | 149802.42 | 300 | 502122 | 352319.58 | 235.1895116 |
| 5/28/2007 | 2500 | 1 | 1705.29 | 1705.29 | 148128.68 | 299 | 509881.71 | 361753.03 | 244.2153876 |
| 4/30/2007 | 2500 | 2 | 1544.2 | 3088.4 | 146423.39 | 298 | 460171.6 | 313748.21 | 214.2746524 |
| 3/28/2007 | 2500 | 2 | 1335.43 | 2670.86 | 143334.99 | 296 | 395287.28 | 251952.29 | 175.7786358 |
| 2/28/2007 | 2500 | 2 | 1331.83 | 2663.66 | 140664.13 | 294 | 391558.02 | 250893.89 | 178.3638018 |
| 1/29/2007 | 2500 | 2 | 1361.18 | 2722.36 | 138000.47 | 292 | 397464.56 | 259464.09 | 188.0168162 |
| 12/28/2006 | 2500 | 2 | 1255.22 | 2510.44 | 135278.11 | 290 | 364013.8 | 228735.69 | 169.0855158 |
| 11/28/2006 | 2500 | 2 | 1231.59 | 2463.18 | 132767.67 | 288 | 354697.92 | 221930.25 | 167.1568462 |
| 10/27/2006 | 2500 | 2 | 1204.02 | 2408.04 | 130304.49 | 286 | 344349.72 | 214045.23 | 164.2654294 |
| 9/28/2006 | 2500 | 2 | 1150.15 | 2300.3 | 127896.45 | 284 | 326642.6 | 198746.15 | 155.3961427 |
| 8/28/2006 | 2500 | 2 | 1104.95 | 2209.9 | 125596.15 | 282 | 311595.9 | 185999.75 | 148.0935124 |
| 7/28/2006 | 2500 | 3 | 964.09 | 2892.27 | 123386.25 | 280 | 269945.2 | 146558.95 | 118.7806178 |
| 6/28/2006 | 2500 | 3 | 985.65 | 2956.95 | 120493.98 | 277 | 273025.05 | 152531.07 | 126.588125 |
| 5/29/2006 | 2500 | 3 | 931.48 | 2794.44 | 117537.03 | 274 | 255225.52 | 137688.49 | 117.1447756 |
| 4/28/2006 | 2500 | 3 | 972.41 | 2917.23 | 114742.59 | 271 | 263523.11 | 148780.52 | 129.6645997 |
| 3/28/2006 | 2500 | 3 | 770.61 | 2311.83 | 111825.36 | 268 | 206523.48 | 94698.12 | 84.68393931 |
| 2/28/2006 | 2500 | 4 | 690.71 | 2762.84 | 109513.53 | 265 | 183038.15 | 73524.62 | 67.13747607 |
| 1/30/2006 | 2500 | 4 | 692.85 | 2771.4 | 106750.69 | 261 | 180833.85 | 74083.16 | 69.39829616 |
| 12/28/2005 | 2500 | 3 | 850.17 | 2550.51 | 103979.29 | 257 | 218493.69 | 114514.4 | 110.1319311 |
| 11/28/2005 | 2500 | 3 | 826.2 | 2478.6 | 101428.78 | 254 | 209854.8 | 108426.02 | 106.8986731 |
| 10/28/2005 | 2500 | 3 | 722.62 | 2167.86 | 98950.18 | 251 | 181377.62 | 82427.44 | 83.30196064 |
| 9/28/2005 | 2500 | 3 | 779.96 | 2339.88 | 96782.32 | 248 | 193430.08 | 96647.76 | 99.86096634 |
| 8/30/2005 | 2500 | 4 | 689.49 | 2757.96 | 94442.44 | 245 | 168925.05 | 74482.61 | 78.86561381 |
| 7/28/2005 | 2500 | 4 | 680.96 | 2723.84 | 91684.48 | 241 | 164111.36 | 72426.88 | 78.99579078 |
| 6/28/2005 | 2500 | 4 | 613.44 | 2453.76 | 88960.64 | 237 | 145385.28 | 56424.64 | 63.42652211 |
| 5/30/2005 | 2500 | 5 | 513.32 | 2566.6 | 86506.88 | 233 | 119603.56 | 33096.68 | 38.25901477 |
| 4/28/2005 | 2500 | 5 | 522.61 | 2613.05 | 83940.28 | 228 | 119155.08 | 35214.8 | 41.95220697 |
| 3/28/2005 | 2500 | 5 | 543.99 | 2719.95 | 81327.23 | 223 | 121309.77 | 39982.54 | 49.16254986 |
| 2/28/2005 | 2500 | 5 | 534.52 | 2672.6 | 78607.28 | 218 | 116525.36 | 37918.08 | 48.23736427 |
| 1/28/2005 | 2500 | 5 | 501.85 | 2509.25 | 75934.68 | 213 | 106894.05 | 30959.37 | 40.77105481 |
| 12/28/2004 | 2500 | 5 | 496.76 | 2483.8 | 73425.43 | 208 | 103326.08 | 29900.65 | 40.72247176 |
| 11/29/2004 | 2500 | 5 | 489.89 | 2449.45 | 70941.63 | 203 | 99447.67 | 28506.04 | 40.18238656 |
| 10/28/2004 | 2500 | 5 | 517.56 | 2587.8 | 68492.18 | 198 | 102476.88 | 33984.7 | 49.61836519 |
| 9/28/2004 | 2500 | 5 | 476.91 | 2384.55 | 65904.38 | 193 | 92043.63 | 26139.25 | 39.66238663 |
| 8/30/2004 | 2500 | 6 | 448.95 | 2693.7 | 63519.83 | 188 | 84402.6 | 20882.77 | 32.87598534 |
| 7/28/2004 | 2500 | 6 | 452.5 | 2715 | 60826.13 | 182 | 82355 | 21528.87 | 35.39411434 |
| 6/28/2004 | 2500 | 6 | 424.45 | 2546.7 | 58111.13 | 176 | 74703.2 | 16592.07 | 28.55231003 |
| 5/28/2004 | 2500 | 6 | 415.8 | 2494.8 | 55564.43 | 170 | 70686 | 15121.57 | 27.21447876 |
| 4/28/2004 | 2500 | 5 | 513.26 | 2566.3 | 53069.63 | 164 | 84174.64 | 31105.01 | 58.61169562 |
| 3/29/2004 | 2500 | 5 | 502.25 | 2511.25 | 50503.33 | 159 | 79857.75 | 29354.42 | 58.12373164 |
| 2/27/2004 | 2500 | 5 | 526.85 | 2634.25 | 47992.08 | 154 | 81134.9 | 33142.82 | 69.05893639 |
| 1/28/2004 | 2500 | 5 | 546.79 | 2733.95 | 45357.83 | 149 | 81471.71 | 36113.88 | 79.61994655 |
| 12/29/2003 | 2500 | 5 | 510.27 | 2551.35 | 42623.88 | 144 | 73478.88 | 30855 | 72.38899884 |
| 11/28/2003 | 2500 | 5 | 462.59 | 2312.95 | 40072.53 | 139 | 64300.01 | 24227.48 | 60.45907259 |
| 10/28/2003 | 2500 | 6 | 440.99 | 2645.94 | 37759.58 | 134 | 59092.66 | 21333.08 | 56.49713265 |
| 9/29/2003 | 2500 | 6 | 412.49 | 2474.94 | 35113.64 | 128 | 52798.72 | 17685.08 | 50.36527116 |
| 8/28/2003 | 2500 | 7 | 373.93 | 2617.51 | 32638.7 | 122 | 45619.46 | 12980.76 | 39.77106931 |
| 7/28/2003 | 2500 | 8 | 327.87 | 2622.96 | 30021.19 | 115 | 37705.05 | 7683.86 | 25.59478821 |
| 6/30/2003 | 2500 | 8 | 308.59 | 2468.72 | 27398.23 | 107 | 33019.13 | 5620.9 | 20.51555885 |
| 5/28/2003 | 2500 | 9 | 273.54 | 2461.86 | 24929.51 | 99 | 27080.46 | 2150.95 | 8.628127869 |
| 4/28/2003 | 2500 | 10 | 253.82 | 2538.2 | 22467.65 | 90 | 22843.8 | 376.15 | 1.674184884 |
| 3/28/2003 | 2500 | 9 | 266.18 | 2395.62 | 19929.45 | 80 | 21294.4 | 1364.95 | 6.848909528 |
| 2/28/2003 | 2500 | 9 | 274.85 | 2473.65 | 17533.83 | 71 | 19514.35 | 1980.52 | 11.29542148 |
| 1/28/2003 | 2500 | 10 | 259.84 | 2598.4 | 15060.18 | 62 | 16110.08 | 1049.9 | 6.97136422 |
| 12/30/2002 | 2500 | 9 | 277.42 | 2496.78 | 12461.78 | 52 | 14425.84 | 1964.06 | 15.76066982 |
| 11/28/2002 | 2500 | 9 | 271.17 | 2440.53 | 9965 | 43 | 11660.31 | 1695.31 | 17.01264425 |
| 10/28/2002 | 2500 | 12 | 204.96 | 2459.52 | 7524.47 | 34 | 6968.64 | -555.83 | -7.386965461 |
| 9/30/2002 | 2500 | 11 | 235.87 | 2594.57 | 5064.95 | 22 | 5189.14 | 124.19 | 2.45194918 |
| 8/28/2002 | 2500 | 11 | 224.58 | 2470.38 | 2470.38 | 11 | 2470.38 | 0 | 0 |
Note: Copy the above table in excel
As you can see that there was a profit booking opportunity when sensex was at 21k, and at that time the reliance shares were quoting at 2800+. But still the investor would have been better off not to sell it and continue buying because after a reduction there might again be another rise in prices as seen from Oct 2008 to April 2010. My point in staying with the game, is just that we cannot time the markets so, we need to do what we do best and that is to sit tight.
Further with addition to profits, there would have been dividends also.
| Dividends | period | stocks | value |
| 5 | Mar-03 | 71 | 355 |
| 5.25 | Mar-04 | 154 | 808.5 |
| 7.5 | Mar-05 | 218 | 1635 |
| 10 | Mar-06 | 265 | 2650 |
| 11 | Mar-07 | 294 | 3234 |
| 13 | Mar-08 | 308 | 4004 |
| 13 | Oct-09 | 333 | 4329 |
| 681 | 17015.5 |
I would have earned 17k+ dividends by now...
What i really did....
I never invested like this, though i always had the idea that i should do it with atleast a very small amount like Rs.2500 or so, instead i tried my hands at F&O, and betting and short sales,etc. And never earned that much but got to learn a lot.
I also believe that all these fund managers are lucchas and chors(thieves), at 21k sensex they told you to stick for the long term, on tv they also told people that to invest for the long term when sensex was at 21k and they were telling about India's growth story, and at that time, they were selling their stocks with profits.
They also told people to stay away from the markets, and when the markets jumped they called it as "Dead Cat Bounce" or maybe a "Short term rally" but they were all liars to the core, they had the details but they kept on fooling the common people so that they can buy on lows and they can sell on highs. Atleast at that time, in Oct 2008, the foreign investors like Warren Buffet and Marc Faber told the truth to the people. That they should look for good investments and Warren Buffet was truthful about it and made a call to his fellow value investors to go on investing when sensex was at 7-10k.
In this long term approach my profit would have been a whopping Rs.499597 + Rs.170157 which means i would have earned a profit of around 226% just by doing nothing but just investing an equal amount every month. I mean i never even wanted in this period to look at the stock screen, etc... and i just needed to work where i was working and continued to invest an equal amount every month! If i get a call from Mutual Fund people (who also have their Fund Management charges, entry load, exit load,etc), i will say sorry,all these i dont want it, i just need to invest an equal amount every month on a specific date. That's it!
It's time to start an EMI for stocks! So, that some retirement planning can be done.
