How To Crack The Code Of Successful Investing In 2019? - Outside View by PersonalFN

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How To Crack The Code Of Successful Investing In 2019?
Jan 16, 2019

Last month while travelling to Gujarat to attend my cousin's wedding, I overheard the conversation of two co-passengers.

One of them was telling the other about the amount of loss he made when the stock market was down. He had taken his stock broker's advice to invest in a particular stock that would give him triple returns, but he lost his money. The other passenger was telling him to follow his investment strategy.

[Read: Beware Of Free Financial Advice, It Might Bomb Your Financial Wellbeing!]

Listening to them, I wondered about similar cases.

How many people blindly follow free broker/relationship manager/ dealer's/ friend's advice when investing?

How many think about investing to grow wealth for long-term benefit?

Preferably most people try to imitate the other or follow an investment guru to become wealthy.

This is a grave mistake!

Let me share a secret code for successful investing "To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework."-- Warren E. Buffett (Preface to "The Intelligent Investor" by Benjamin Graham)

From this quote you can see the striking resemblance of ideologies of both the successful legendary investors. Charlie Munger and Peter Lynch follow this basic principle as well to build wealth for themselves from scratch.

[Read: Do You know How Warren Buffett Manages His Wealth?]

In short, the code of successful investing is a sound investment strategy aligned as per your goal based financial plan and not falling prey to any behavioural biases.

The sudden screeching halt of train brought me to the present. I noticed that one of my co-passengers was not seated in his place and the other one was attempting to strike a conversation with me.

As the train departed from the station, the passengers again resumed their conversation and asked my views about investment. My response came quick, 'Investment is an individualistic exercise; so, something that works for you may not work for him.'

You should think about your financial life goals and create a plan to achieve them. Perhaps both were momentous investors, the idea of goal-based long-term investment didn't go down well.

I continued to explain, the stock market gives short-term quick gains with a huge risk of loss. Long-term investment in the stock market can help accumulate wealth and is devoid of short-term volatility if one sticks to plan as per your financial goal.

If you want to be successful, you should treat investments like a train journey and your financial goals as the milestones that you cross to reach your end destination of a peaceful rich life. Begin your journey by setting your goals sooner.

Your goals set must be S.M.A.R.T.:

  • Specific
  • Measurable
  • Adaptable
  • Realistic
  • Time-bound.

Once your goals are set, create an investment plan to be focussed on the end objective, based on your risk profile and save & invest in a disciplined manner. Consider the right investment avenue wisely like the mutual funds that offer the right combination of asset mix (equity, debt and gold) based on your investment time horizon and your risk profile.

Remember to start investing right away for your successful long-term wealth creation. Saving and investing early helps you build a bigger corpus over a longer time horizon because of the power of compounding.

Although Mutual funds are worthy investment avenues to address your future needs. Make sure you select the best mutual fund schemes whereby the envisioned financial goals can be accomplished efficiently. To select the best mutual funds, click here.

End of a journey or the beginning of a financial journey

Well, there isn't a "one size that fits all", investing as per a financial plan is one of the most vital parts for reaching your goals - it acts as a guide. Hence its crucial to create one and adhere to it diligently. By sticking to it, you will most likely not give in to your emotions of fear, hope, and greed. By giving into any one of these, you can get swayed from your path to financial freedom. So, keep calm and focus on your objective even in the most turbulent market cycles.

With the end of this discussion, my journey too came to end. My co-passengers got in touch with PersonalFN services to know more about investing in mutual funds, thanked me and bid me goodbye.

Editor's note:

PersonalFN offers you a great opportunity if you're looking for "high investment gains at relatively moderate risk". PersonalFN's premium report: The Strategic Funds Portfolio For 2025 (2019 Edition).

In this report, PersonalFN will provide you with a ready-made portfolio of its top equity mutual funds schemes for 2025 that have the ability to generate lucrative returns over the long term. Subscribe now!

Author: Aditi Murkute

This article first appeared on PersonalFN here.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.


The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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