Investor’s Act, Invest & Create Wealth! New India Is Ready. But are You? Download full video

02 Jan 2020 by Harsh Ashar
How People Look At Things

This happened to my friend Hardik. He has this ritual – Every morning he would have a cup of coffee with his wife near the window of the living room area of the house. One day his wife told him, “Can you see the lady hanging clothes in the balcony in the opposite building?”

She continued, “I observe her daily. She doesn’t clean clothes properly. See, there are still stains.”

My friend just smiled and said, “Ok.”

For the next few days, Hardik’s wife told the same thing to my friend until one day.

“Finally that lady learned the art of washing it right. Now see, the clothes look neatly washed.”

Hardik replied - “Dear, it’s not that she learned how to wash it right. In fact, yesterday evening, when you were out, I got our windows cleaned,” he smiled subtly.  My friend’s wife was stunned.

However, my friend’s wife is not alone. Many investors also knowingly or unknowingly commit the same mistake when exposed to the world of stock market.

Research suggests that investor’s success in just 10% dependent on their intelligence/research and 90% on the emotional decisions they take. However, many investors blame everything else (except for their decisions) for the losses incurred in the stock market.

Here are 4 ways to start thinking differently, change perspective, inculcate new habits and unlock new opportunities:

Look at the positive side:

Equities have always delivered superior returns when compared to other classes. However, still, many investors don’t succeed while investing in equities. Due to this negative experience, they tend to perceive equities as wealth destructors instead of wealth creators. But if you look at the other way – the average earning life of people is approx. 35 years if you consider from age 25-60. Consider the investments such as bonds, gold, fixed deposits, real estate etc.; they have delivered returns between 5-8%, whereas Nifty delivered 13-15% returns on an average. Even if you consider 12% annually for equities and 6% for FD’s, here is how your principal would look like if you invested Rs. 100.

The returns delivered by Nifty is approximately 7 times of returns delivered by Nifty. Even if you consider the worst case scenario, it would be at least 4 times more than that of FD’s. Not many investors are able to calculate the opportunity lost by avoiding equities from their portfolio. When you understand there’s more to the tip of the iceberg, that moment shall transform your perspective (obviously, for good).

Take control of yourself: Let’s face it. It is easy to target someone, some situation outside ourselves. For examples, it is easy to say, “I didn’t make money, and my friend made because he was luckier.” However, if you introspect on the decisions you took, that would help you clear the uncertainty and take a path of improvement and positive view. Click here to know more.

Avoid the word ‘should’: When you start thinking in terms of “should,” it can lead to a big disappointment. For example: I should earn at least 15% in three months. We tend to look at things with our limited perspective, but the picture of how things ‘should’ be is the primary reason behind most of our sufferings. So the next time you invest, keep this in mind!

Consider the bigger picture: One can widen the lens to the bigger picture. In case of investing, it can be looking at how the Indian economy shall mushroom in the next few years, the sectors that are bound to grow during this time and holding up your investments within this larger picture. Read more here

As the beautiful poem goes:

“A glass half-filled

Or a glass half spilled,

Is just a difference of perspective

As satisfaction is gained,

By categorizing them

Into positive and negative.    

But there’s also an angle

Which must be seen

That that glass can be refilled

Upto the level brim.”

Do remember this the next time when you hit a buy or sell button.

Free Research Reports

Get Free Fundamental Research Reports Worth 10,000 (The above two fundamental stocks are to demonstrate the depth of research conducted at R&R. This should not be considered as Free Trial of our services.)