Investor mentality.

Investor mentality

Investors often exhibit a contradictory approach when it comes to markets. While customers hunt for sales in mall, investors don't invest when there is a sale in the stock market. Similarly, genuine advisors are not favoured by investors as they don't make tall claims or give a rosy picture. Kabir says that there is no value for truth but people flock towards liars with great expectations. People look for excitement and they end up becoming victims of the market.

why a returns focus may be harmful and what should investors be focusing on. He gives the example of an amateur swimmer who ends up in a river. The swimmer will be focused on getting to the shore safety and not on winning a medal. Similarly, most investors are amateurs and need to focus on safeguarding themselves first rather than trying to win. Focus on wealth protection should be of more importance than investment returns. Investors need to understand the risks. With short term requirement, investors need to manage volatility whereas with long term assets, one needs to manage inflation risk. If investors use such a process, then the journey will be successful.

Investors should not aim for only return; getting return is a byproduct of investing in the process of buying a mutual fund. Your first aim should be on finding your dreams and goals. Move to the real reason behind why you want to invest. Focus on your dreams and don't get lost in the noise of returns.

When you follow the dreams and invest, returns will automatically follow.Many investors take huge risks without understanding the asset class they are investing in. Investors need to educate themselves about asset classes before investing. Just as with a batting line up, players have different strengths that contribute to a team, so different asset classes contribute to your portfolio. So diversification is key with investments.

How secure is your retirement plan? Will it be able to beat inflation and cost of living? Talk to an advisor to see how your retirement plans stack up for your future needs.

Vikas Deshmukh

Independent Financial Advisor 


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