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Updated on: Friday, October 15, 2021, 04:29 PM IST

Teji Mandi Explains: Bad investing styles to kill this Dussehra

Teji Mandi Explains: Bad investing styles to kill this Dussehra | Pexels

Teji Mandi Explains: Bad investing styles to kill this Dussehra | Pexels

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Dussehra is the festival where we celebrate Lord Rama’s victory over Ravana and Goddess Durga’s triumph over the demon Mahishasur. The festival is about unifying everyone and celebrating the victory of good over evil. While we celebrate Dussehra, one can take some perspective from this auspicious festival and use it in their portfolio. Our investments are built based on our hard-earned money, which makes it our duty to protect it.

FD v/s Equity Investment

Let’s take the example of two investors - Ram and Ravana. Ravana puts aside Rs 5,000 every month for 10 years in fixed deposit while Ram invests the same amount for 10 years in equities. At the end of the tenure, Ravana would have an FD of Rs 8.7 lakhs, while Ram would have Rs 13.93 lakhs in equities. Who wins? Ram. The secret is in their returns. FDs give returns of ~7%, while average returns from the stock market would fetch you 10-20%. The stock market provides better returns than FD and the benefit to withdraw money anytime.

Diversify

In Ramayana, Lord Rama killed the 10-headed Ravana with Brahmastra, which was the only weapon enough to end the war. Similarly, one doesn’t need 30-40 stocks to create wealth. As long as you are invested in ~10 fundamentally strong stocks, you will make wealth. Diversifying your portfolio and finding a good balance will arbitrage risk and returns and ensure that your future is secure.

Do Not Time The Market

Ravana outsmarted Lord Rama and kidnapped Sita, but we all know what happened in the end. He was killed by Lord Rama. This lesson should be etched in every investor’s mind. While investing, it's a common belief that you can time the market. In reality, you can’t. As a result, many end up with huge losses or fewer profits. The real returns of the market are in the long term holding of investment. The longer you stay, the more profits you earn.

Moral Of The Story

Be more like Lord Rama - patient, satisfied, calm and steadfast. A market is a volatile place that will test your temper and make you change your mind. In such situations, stay calm and patient. Do not sell off your portfolio and make losses. When the market is in a bull run, do not be greedy. Be satisfied with your investments because the grass is always greener on the other side. At last, be steadfast i.e. firm on your investing style. Do not change it by looking at someone else.

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Published on: Friday, October 15, 2021, 04:29 PM IST
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