News That Matters

Kavan Choksi Speaks About The “Safety Margins” For Investments in The Stock Market

There is a widespread belief that successful investment decisions require a person to have a high IQ. However, this is not true. One must have a logical mind to make the right judgments and not be emotional when it comes to making the best investment choices for wealth building. 

Kavan Choksi- sound investments need a safety margin

Kavan Choksi is an investor, founder, and wealth and business management consultant at KC Consulting. He has helped many business owners revitalize their companies with his sound knowledge of economics and finance. 

According to him, when it comes to the deployment of capital, he advises potential investors to consider their margins of safety as this is the most critical factor for them to consider. Investors want to make profits from the current environment; however, equity markets are facing fears as the rates of interest are rising. Currently, sell-offs have taken place in everything, right from technology to cryptocurrencies. Investors are experiencing more pain, as expectations for returns are being re-calibrated. 

Poor investment choices 

Several investors tend to succumb to poor investment choices because of the manic-depressive attitude in the market when an investor falls prey to any group’s belief in flipping. In this respect, the worst enemies of any investor are themselves, as they are unable to remove themselves from the emotional roller coaster rides in the market. The result is they succumb to its negative influences. 

Simple rules to remember for capital allocation 

He advises there are some simple rules for one to remember when it comes to making profitable investments in the market. The first rule is you should never put your money in any firm that is not doing well. Thanks to the advent of technology, potential investors can locate winning companies and choose them wisely. 

The second rule is that every investment should give you a profit, and this is a dividend yield in the stock market. It is like the real estate market as the product is generated like the cash flow that an investor accrues from rents. 

Businesses across the year 

When there is a fall in the dividend, and the rental yields, assets in the market become overvalued, and they emit warning signs. The third rule for investments that he speaks about is the safety margin needed when the conditions in the economy deteriorate. Assets and companies that exhibit endurance in the generation of cash outperform expectations in the long term. As an investor, business, and finance expert, Kavan Choksi states that they should understand these three principles to avoid being symbolic pawns in the stock market game. 

When it comes to investing in stocks, he recommends that financial education about the trends, news, and updates in the market is essential. Thanks to the Internet, investors are able to get a plethora of credible resources to help them understand the current conditions of the financial markets and the best asset classes to choose from. In case one does not want to examine credible resources online, it is prudent to always consult an experienced financial consultant for advice before investing in the stock market.