Investing is not daunting: Here are six simple guidelines to go by

Clarity on basic points like asset allocation could generate healthy market returns over the years

- DEVINA MEHRA

A couple of months ago, I was addressing the employees of a large, old company, and the organisers told me that some of the employees now nearing retirement age had never invested in anything other than fixed deposits, their provident fund and tax-saving schemes.

They kept thinking that they did not know enough about markets and would start once they understood a bit more, and the years just slipped past. Many now regret having done so because their retirement corpus is a lot smaller than it should have been.

This reminded me that the secret of sensible investing is that it is neither as complex nor as simple as it is made out to be. On one hand, what I love about markets is that even after tracking them professionally for well over three decades, you learn everyday. There will never come a time when you will know it all—when you can say with confidence that you know what this market or that stock will do the next day.

On the other hand, in order to make your money work hard for you, what you need to do is fairly simple, almost boring. Make sure you get the basics right and you are most of the way through. Here is a very short primer on how to go about doing that.

One, focus on what is 'good enough'—meaning aim for a reasonable return on your capital and not the very best; not 100% optimal and not something that will make you the most popular person at cocktail parties.