How often have you followed investing principles to the hilt only to fall short of expected returns? How many times have you imbibed investing logic to rue over its failure?
While rules decidedly set you on the road to success, it's foolhardy to snub your own rationality. Often, our hard-earned money fails to multiply at the rate we want because of the knowledge base we have built over the years and our blinkered approach to investing.
Sometimes, adopting a different approach to the norm can be more profitable. Here are some strategies that are contrarian to the ones popularly espoused. These can work for you, but keep in mind that just as with other strategies, these too require study and due diligence.
Concentrate on your portfolio: Most readers think of portfolio diversification as a wealth creation technique. Actually, it's a risk reduction tool utilised to preserve wealth.
This doesn't diminish its importance. In fact, diversification is essential. However, some of the largest fortunes in the world have been created by 'focused' investing. Azim Premji, Ratan Tata and Bill Gates have all increased wealth by concentrating their funds, not by diversifying them.
So, if your portfolio is doing well, it's a good reason to buy more stocks of the companies that you own. Suppose you had bought 100 shares of Tata Power in 1995, the consistent performance of the company can be an incentive to add more of the same.
Ignore some rules: Most finance students have been taught the '100 minus age' thumb rule to calculate the amount that should be invested in equities. However, aggressive investors often ignore it. They usually have a set percentage of debt amount in their portfolios.
"Ignore the '100 minus age' rule to know how much to put in equity. Instead, earmark a certain percentage for debt and then invest heavily in equities"