The one thing which will have a huge following even after 3 or 4 decades is “How to succeed in Investing”.
Investing — When I say investing it implies to equity alone, not debt. There are truckloads of stock tips, recommendations, and trading strategies on all social media platforms to help you succeed in investing.
Stock tips/ trading: People claim their strategies have 90 percent accuracy, buy at 400 and sell at 600 in 2 months, 50 percent profit in just 2 months.
As humans, we are inclined to show off our successes, and victories rather than failures, or mistakes. Social media platforms like Youtube, Instagram are filled with success stories of investing, skyrocket returns in a short span of time.
What about the bad results? failures? Lessons learned from it. See! Silence & mute cover bad results, and failures in investing. Everyone makes mistakes, I do a lot. Let us be real. Success & failure is a part of investing.
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Investing is very simple, why make it complicated? Our brains are wired in such a way to perceive complicated things, and strategies as an intelligent way to succeed. Though the simple strategies are a foolproof way to succeed in investing. we might tend to ignore it.
Let me lay the simple strategies to succeed in investing.
Start Early
It is the first and foremost important step to achieving wealth creation. I have done major mistakes on my part. I believe you won’t imitate me in this, I don’t want you to!
Mistake 1: I secured my employment at the age of 25 making 45,000 INR as a fresher which is a comfortable salary to live as a single in Bangalore. I was an adherent follower of “YOLO” which keeps me away from saving even 5 percent of my salary.
I never kept track of where my money goes, and never cared about investing/saving at that point. After some painful experiences of paying debt, I gave some thought to saving.
Mistake 2: After doing a bit of research on which scheme gives great returns I come across investing in equity funds. Though I have come to a good discovery, hesitated to act on it.
I always thought you need big capital to invest though the minimum capital requirement is 500 Rs. I was illusioned by a big amount, a big paycheck can create a life-changing impact. So due to my mindset, I deferred my payment in the mutual fund for almost 2 years.
(“If I got a chance to go back, I would have slapped myself” for not taking any action and being hibernated like a polar bear!)
Finally, after coming across sensible investors’ blogs like safal Nivehak, started my investing journey in mutual funds.
No matter how young you are, how less your paycheck is start off investing with 500, at least 100 regularly. It will do magic in long run.
Social media influencers invest 50000 Rs, lakhs, live investing 10 lakhs. Don’t compare it with yours. It takes off Joy in investing! It took a while for me, to shrug off those clutches of social media influences on me.
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Index invest
Another factor to succeed in investing is index investing. I am a great fan of it. Thanks to Jack Bogle!
Index fund consists of major corporates in a country. It’s a mix of leading companies in financial services, consumer staples, technology, utility companies, etc. It is a safe heaven for retail investors when you don’t have time to study and pick individual stocks.
It also saves you from the constant puzzles of choosing the ever-changing five-star rated fund.
Also, it gives you peace of mind & proper sleep. Why? A company with weaker market capitalization will be replaced by a new emerging company. Even when a blue-chip company like xerox fails at some point in time. In an index, it will be replaced by another emerging strong company.
An investor doesn’t need to peek into his laptop or brokerage app constantly while investing in an index fund.
All active funds managed by fund managers are trying to beat the index fund. But in the long run, even in emerging markets like India, 82 percent of large-cap funds underperformed the index after 5 years.
The Expense ratio of active funds on an average is in the range of 0.80 percent. But the passively managed index fund expense ratio is less than 0.30 percent.
To beat the index return, an actively managed fund needs to produce more returns to cover its expense ratio.
There is a whole world of advantages when you stick to index funds. There is no need for you to listen to me, but you can give your ears to legendary Warren Buffett about the Index fund.
An index fund is simple but the crowd needs novelty, and complex strategies. which one are you?
If you are disciplined in making regular contributions, stick to this boring index fund over 15 years, 20-year period time. You can be significantly well off!
Thanks for reading. Happy investing!
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