4 Important lessons to becoming a successful investor - Teachers day Special
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4 Important lessons to becoming a successful investor - Teachers day Special
Markets hold precious teachings that go a long way in augmenting returns and steadying the ship when the ride turns turbulent
When we talk about teachers, we remember those who have taught us valuable lessons at different stages of our lives. Most of us see faculty at educational institutions, mentors in professional life and role models as teachers.
But look around, dig a little deep and you will find another teacher close to you, imparting crucial life lessons imbibing which not only fortifies your finances but also help you ride choppy waters with ease.
Markets have always enlightened and guided investors in different ways. So, what are the big lessons this valuable teacher has taught? Let's find out.
* (1) Be disciplined, foolproof your homework
A core tenet of investing, discipline is a common thread binding all successful investors. Markets have always rewarded those who displayed discipline with their investments. It has penalized those who have been erratic and in disciplined in their approach. Stock markets are long-term bets and you will taste success if you follow a systematic approach.
Equally important is to get your basics rights and ensure you foolproof your homework. Before investing in any stock, howsoever lucrative it may seem, dig deep into the company's balance sheet, analyse its corporate governance model and look at key metrics such as P/E ratio, Beta, and so on before taking a call.
Discipline, coupled with extensive research and analysis, will help you pick a winning bet.
* (2) Invest without emotions
In stock market investments, emotions are a recipe for disaster. An emotionally-driven investment approach, more often than not, will cost profits made painstakingly over the years.
While markets have always taught everyone to invest sans emotions, investors often fall into an emotional trap, committing mistakes that are hard to rectify.
The web of emotions clouding stock market investment is more likely to cause heartburn than bring cheer. It is important to adopt a goal-based investment approach.
Venturing into the market and investing in stocks warrants aligning your life goals and taking into account the big picture.
* (3) Don't fret over short-term volatility
Stock markets are inherently volatile. This is because several internal and external factors affect them, most of which are beyond the control of retail investors. However, what’s in your control is not to fret amid volatility. Be patient.
When markets nosedived in March 2020, wiping out gains made painstakingly over the years, many investors went into a tizzy and exited their investments. In the process, they turned their notional losses into actual ones. However, those who remained committed, reaped gains when markets rebounded astoundingly well, taking everyone by surprise.
Today, Market have scaled new heights, adding to investors' wealth. Hence, you shouldn't fret during short-term volatility and stay put. Block all noises and focus on your long-term objectives.
* (4) Adopt a long-term approach
Stock market investments, particularly equities, are volatile in the short term. However, the quantum comes down to a great extent when you adopt a long-term approach.
Markets move in cycles, and it generally takes around eight to 10 years for markets to complete one cycle.
Also, note that stock market booms are in various phases. Adopting a long-term view will help augment your gains and counter volatility, the bugbear of stock market investing.
Summing it up
Markets hold precious teachings that go a long way in augmenting returns and steadying the ship when the ride turns turbulent. This Teacher's Day, adopt these lessons to leverage their potential to the maximum.
