Investing for our Children
Amit Khanna
Negotiating complex transactions and Investing in opportunities are my passion and my work. Supporting creative talent in the field of Fine Arts, Culinary Arts and Visual Media in gaining global prominence.
Somewhere around the year 2009-10, after the Euphoria in the market had deflated each asset class and many egos, I went back to basics and started reading the words of the Oracle. I re-learnt basics from Warren’s teachings:- “cash flow”, “Moat”, “Intrinsic Value” (words previously drowned in the cacophony of optimism and greed).
?In 2011, our first daughter was born, we named her “Diya” – the light of our lives. From that day, I thought more about her future than my own. I decided to marry my learnings from the 2008 crash with the wisdom of Warren Buffet and decided to give her the gift that keeps on giving. I decided to buy her stock.
?The principles I committed to were:
1.??????The stock has to fulfil all of Warrens criteria:
2.??????I had to follow a disciplined approach to investing:
The hard part followed – which stock? I studied sectors, then companies and started preparing lists and serendipitously one weekend while Diya was having her meal; it dawned on me. The stock and the name had been staring at me every day. It had withstood the test of decades, had intrinsic value and threw out cash and dividends. If I went to sleep for a few decades, I could still imagine the company would exist and continue to do what it did best – generate cash.
Since then, I did one simple thing, on the 12th of every month (Diyas birthday), I bought a few shares of Nestlé. No matter where I was in life – geographically or financially, I never failed to buy the stock. I then replicated the same for our second daughter – “Ameera” – our princess born in 2016 and have carried on for more than 10 and 5 years now.
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What is the result? In 2011, March, the first time I bought Nestle, it was at Rs. 3,748, and today I purchased it at a lifetime high of Rs. 20,000 (an IRR of 17.4% beating both Sensex and Nifty returns). The stock also returned dividends of Rs. 1,104 / share over the last ten years (30% of the first entry cost).
This process taught me a few lessons:
Rule 1 – Be disciplined and stay true to your commitment, invest consistently (filter out the noise, use bad news to buy more, e.g. Maggi incident with Nestle)
Rule 2 – Start early. There is no such thing as too early in the world of investing. I started for my kids when they could not even turn on their sides. Do the same for everyone around you! Start Today!!
Rule 3 – Give the gift that keeps on giving – gift stocks when you are gifting to a friend or family. It is the gift that will keep on giving and will grow with age.
?#investing #warrenbuffett #investingforchildren #nestleindia #stocks #phoenixadvisers
People & Culture transformation leader
3 年Wonderful piece of advice. I guess am going to follow this myself !
Business Operations | Global Team Stewardship |
3 年Makes immense sense. Would also encourage you to look at low-cost broad-based index funds which have launched in India in recent years. AUMs are getting bigger and the fees are <0.10% pa.
Professor of Finance, Indian School of Business (ISB), Research Professor, UCLA Anderson School
3 年Amit Khanna I concur with your advice of investing in stocks for children but I do not like to pick individual stocks. I would prefer investing in diversified mutual funds with extremely low fees. The reason is simple, when you pick an individual stock, you are bearing stock specific risk for which market provides no compensating return. I am also uncomfortable with Warren Buffet's rule about picking stocks based on various characteristics - that assumes that market has not already priced in those positive things about the company. We must remember, good companies are not necessarily good buys and bad companies are not necessarily bad buys, it depends on at what price do you buy them - good companies at high prices are not good investments and similarly bad companies at low prices are. So, in short, better to invest in low cost index funds.
Chief Revenue Officer, SAP BTP
3 年This is such lovely advice Amit and so beautifully brought out.