The current level of the Nifty is around 11,350 while 5 years back, it was around 6,500 levels. Markets have been appreciating steadily, and irrespective of that, investors think that markets should be blamed.
Look at this: The stock market grew at a CAGR of 13.5% for the last two years. Irrespective of the upward trend in the stock market, an average investor only earns between 1-2% after considering the inflation. Research studies have shown that if you’re an average investor, you’re more likely to lose than gain by investing in the stock market.
What’s more surprising is that irrespective of this upward trajectory in the stock market, I tend to hear these statements a lot while having a conversation with the investors.
“Harsh, the stock market is all gamble. Tell me why I should invest.”
“It is all about luck.”
“Stock market is the best way to lose your money.”
Do you really think the market is the problem? Then why investors fail in the market? And when they fail, why they are fearful of entering the markets again?
We all have moments of darkness in our life, but should it stop us from progressing further in life?
Stock markets are no different. There will be moments of ups and downs but only those who remain patiently invested are highly rewarded. And failures are important to succeed since mistakes make us smarter.
Here are the top 3 reasons why failures are essential to succeed in the stock market...
Failures inspires us to do things in a better way.
Some people take failure personally and give up easily. This encourages stagnation in life.
Thomas Alva Edison is a well-known inventor famous for his optimism. While inventing the light bulb, he tried over a 1000 times and failed when his assistant told him that all their efforts were wasted and it was of no use trying further. Edison replied "I have not failed. I've just found 1,000 ways that won't work".
He then went on to do more and more experiments and finally succeeded in inventing the light bulb.
Instead of blaming luck or stock market for loss, one should take steps to do things in a better way. If your investments are not on the same track as your financial goals, it is best to seek professional expertise.
It shows you where to improve
Failure teaches us a very important lesson. It shows where you have to improve.
Different investors follow different styles of investing, which works best for them. If you have been following a particular style of investing, but not getting the desired results it is best to change your strategy.
Failure is an opportunity
Many investors fear market corrections or crashes. Instead of looking at market corrections as a time to exit, you should consider it as an opportunity of a lifetime to create wealth. Because market corrections are the best times to buy quality stocks at good discount prices.
The below table will give you a realistic picture of how the Nifty has behaved post every market correction.
So you can see from the above table, how the growth in Nifty after every correction has delivered a CAGR between 14-28% over the next 3 years.
Same is the story with quality stocks. Despite facing the darkest hours they have not only recovered quickly post correction but also outperformed with time.
So stop worrying about moments of darkness in your investment journey. Invest in star performers.
It is rightly said - "After every storm if you look hard enough, you will find a rainbow appear."