MORE MONEY IS LOST OUTSIDE THE MARKET RATHER INSIDE THE MARKET. I believe making money is quite simple in equity markets, difficult part is to lose money. Surprisingly most of the “investors” lose money successfully.
To make money in equities, the theory is quite simple, select a set of good funds, invest systematically, review periodically and stay invested. For e.g. A large cap fund like Aditya Birla Frontline Equity has given a return of 16% CAGR over last 10 years or a mid cap fund like HDFC Mid Cap which has given a return of 23% CAGR during the same period. This covers all the ups and downs of last 10 years including events like the Lehman Crisis. The idea was simple. “Keep investing”.
The tough part here is to lose money. For that you have to track your SIP returns on a daily basis, read the market outlook, listen to experts on CNBC and redeem your money or stop your SIP because some experts believe that markets may correct more. If one tries to time the market, then one will never be able to enter the markets again. One generally wants to be invested in the best fund , which apparently keeps on changing every year. The list goes on and works as a perfect recipe to lose money. Always remember “MORE MONEY IS LOST OUTSIDE THE MARKET RATHER INSIDE THE MARKET”.
Volatility is investors best friend. It’s like that friend who gives us right advice but somehow, we never like them. Scams, elections, rate cuts, rate hikes, high inflation, low inflation, etc. will come and go as short-term positives and negatives. They can disturb the momentum for a short period of time but over a long period these events don’t even matter. If someone expects markets to deliver only positive returns then, equity is definitely not the right choice.
What matters is “PATIENCE”. I had mentioned in one of my earlier posts also that investments are like kids. Just like one doesn’t measure their kid’s height and weight daily, similarly one should not look at the performance of the funds daily.
The stock market is a device for transferring money from impatience to the patient Warren Buffett
busyinvestor 