Q. What inspired you to start sharing content about investments and wealth-building?
As an immigrant, I have always been driven by the ambition to achieve great success, and I firmly believe that investing is the common person's path to building a sustainable and dependable future. After moving abroad, I found "The Intelligent Investor" book lying outside my building, and it was a life-changing moment for me.This book completely transformed my perspective on money and taught me how to create wealth without trading my hours for a paycheck. "The Intelligent Investor" laid the foundation of knowledge I have today and kept me inspired for long-term wealth-building.
I noticed a significant gap in the market—while social media is saturated with entertainment content, very few creators were focusing on true value investing. This realization motivated me to become a finance content creator and share my insights and learnings online.
Q. What are the most common mistakes beginners make when investing in stocks?
One of the most common mistakes beginners make is diving into stock buying without proper due diligence. Equities are inherently risky and require careful analysis, which many individuals lack the time or resources for. For most people, a more prudent approach is to invest in ETFs or mutual funds that cover the broad stock market.
Q. What are the most common mistakes beginners make when investing in stocks?
One of the most common mistakes beginners make is diving into stock buying without proper due diligence. Equities are inherently risky and require careful analysis, which many individuals lack the time or resources for. For most people, a more prudent approach is to invest in ETFs or mutual funds that cover the broad stock market.
Other frequent mistakes include putting too much capital into a single stock, focusing solely on potential gains while ignoring potential losses, and neglecting risk management strategies like portfolio diversification, stop-loss orders, and tax-loss harvesting. Always remember to ask yourself not just how much you can earn, but also how much you can afford to lose.
Q. What are your top three golden rules for building long-term wealth?
1. Keep it Simple: Use a low-cost fund as the backbone of your portfolio. This fund should grow incrementally with your age and always represent more than 60% of your stock portfolio. For instance, an S&P 500 ETF like VOO from Vanguard can be a solid choice.
2. Start Small: Avoid going too big on new investments. Keep new investments to less than 0.3% of your portfolio value and only average up as they prove their worth.
3. Maintain Cash Reserves: Always keep 10% to 20% of your portfolio in cash. Stock markets are highly fluctuating, and a great opportunity to buy your favorite stock at a discount could arise at any time.
Q. What are some underrated investment opportunities people often overlook?
While many people chase the glamour of the technology sector, essential industries like energy, natural resources, railroads, and insurance companies are often overlooked. These grounded essentials offer numerous opportunities, with some investments available at 50% to 80% discounts from their intrinsic value. Investing in these sectors can provide solid long-term returns.
Q. What are your favorite resources (books, websites, tools) for staying updated on market trends?
"The Dhandho Investor" by Mohnish Pabrai, "Security Analysis" by Benjamin Graham, "The Little Book of Common Sense Investing" by John C. Bogle, and "A Random Walk Down Wall Street" by Burton G. Malkiel.
Websites:Investopedia, Bloomberg, and Yahoo Finance.
Q. What are your top three golden rules for building long-term wealth?
1. Keep it Simple: Use a low-cost fund as the backbone of your portfolio. This fund should grow incrementally with your age and always represent more than 60% of your stock portfolio. For instance, an S&P 500 ETF like VOO from Vanguard can be a solid choice.
2. Start Small: Avoid going too big on new investments. Keep new investments to less than 0.3% of your portfolio value and only average up as they prove their worth.
3. Maintain Cash Reserves: Always keep 10% to 20% of your portfolio in cash. Stock markets are highly fluctuating, and a great opportunity to buy your favorite stock at a discount could arise at any time.
Q. What are some underrated investment opportunities people often overlook?
While many people chase the glamour of the technology sector, essential industries like energy, natural resources, railroads, and insurance companies are often overlooked. These grounded essentials offer numerous opportunities, with some investments available at 50% to 80% discounts from their intrinsic value. Investing in these sectors can provide solid long-term returns.
Q. What are your favorite resources (books, websites, tools) for staying updated on market trends?
Some of my favorite resources include:
Books: "The Intelligent Investor" by Benjamin Graham, "Common Stocks and Uncommon Profits" by Philip Fisher,
Books: "The Intelligent Investor" by Benjamin Graham, "Common Stocks and Uncommon Profits" by Philip Fisher,
"The Dhandho Investor" by Mohnish Pabrai, "Security Analysis" by Benjamin Graham, "The Little Book of Common Sense Investing" by John C. Bogle, and "A Random Walk Down Wall Street" by Burton G. Malkiel.
Websites:Investopedia, Bloomberg, and Yahoo Finance.
Tools: Financial news apps, stock market analysis platforms like Morningstar, and portfolio management tools like Personal Capital.
Q. What’s one investment strategy you swear by, and why?
The two ETF portfolio strategy has been a true breakthrough in the investment world. This strategy involves buying two simple ETFs: one all-equity ETF like HEQT or VTI and another fixed-income ETF like BND. A split of 70/30 or 80/20 can yield outstanding returns when compounded over 15 to 30 years. This straightforward strategy can beat most money managers without incurring high fees.
It requires minimal professional training and only needs rebalancing once a year. According to my research, this strategy can generate returns between 8% to 12% with near certainty of growth over a period of 10+ years, providing a decent cushion for emergencies or job loss. I highly recommend this strategy to both beginners and professionals.
BIO
Rahul Arora is a finance content creator passionate about investments and wealth-building. As an immigrant, he discovered The Intelligent Investor, which transformed his perspective on money. He educates people on value investing, common mistakes, and long-term strategies. His expertise includes ETF investing, overlooked sectors, and financial tools. With a practical approach, he simplifies investing, helping others achieve financial independence through disciplined and informed decisions.
Interviewed By Shivani
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