“The investor’s chief problem – even his worst enemy – is likely to be himself”, said Benjamin Graham, decades ago. Has anything changed since then? Nothing. Here is proof.
#1 Rakesh Garg bought a health insurance policy for himself (52 age), wife (50) and son (20) as a single floater policy. The premium is a whopping Rs. 85,000 per year for a coverage of Rs. 10 lakhs.
While the policy was in the free look-in period, a close friend advised him that he is better off taking a separate policy for his son and save a lot of premium. Why? Because insurance companies determine premium based on the eldest person in the floater group. He did not listen.
#2 Prashant Jain, was sure that the Jet Airways crisis is temporary (this was 2018). As the shares hit bottom after another, he continued buying. And then came the DHFL news. He bought that too. “Crisis presents an opportunity”, was his motto. Talk of conviction.
He is now looking at a deep red dump.
#3 Invesco India Contra Fund, Kotak Standard Multicap, HDFC Mid cap Opportunities, etc. are some of the funds that were lapped up by investors for their 5 star ratings. The same investors are now dumping them and moving to other funds.
What’s wrong with the fund? “They aren’t as hot as before.”
#4 Midcap and small cap fund investors are looking at a tiny single digit return even after 2 years of investment. The funds were showing returns in 30s. But now?
“I could have made more money by putting money in a Bank FD”, lamented an investor.
When told to be patient – “I can be patient, but for how long?” That’s the irony of it.
#5 Tejas is looking for an advisor for 2 years. After all the discussions with various advisors, he still not sure about taking the step. He is invested in Bank FDs knowing fairly well that his money needs to do better.
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I hope you can notice what is happening in the cases above. Every day, you will find a few investors going through the same events or dilemma. In fact, I could just repeat the same words with change of names.
Who has to take responsibility? You, the investor’s worst enemy.
As human beings, we hope to see magic happening to us, a life turning event that will take away all our problems and put us in the path of success and glory.
We conveniently seem to forget that a far easier and doable way is to take daily small steps, which are more likely to put us in that path.
- Understand why do we need anything in our portfolio
- Putting a plan in place and reviewing it periodically
- Diversify investments
- Invest regularly (even if you have to begin small)
- Avoid unproductive debt / loans
- Prepare our minds with useful reading and practice patience
- Know what you will NOT do (It’s far more important to avoid wrong than get to do something right)
- Know what decisions you want to make and what you want to outsource
These simple steps can help you stop being your own worst enemy.
If you can’t seem to do that, then taking help need not be a second thought.
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