Let’s get some things straight

Read till the end I bet that you won’t regret it…

People are saying that markets are risky… That they would rather have an FD to get rich…

Tell me, how many billionaires or millionaires do you know who have made money from a savings account or FDs?

While putting Rs 5,000 in the markets, you talk about risk. But you eagerly put Rs 8-10 lakhs in a college education without any surety that you will get placed…!

Believe me, those Rs 5,000 will teach you way more about life and markets… I personally had lost Rs 8,000 in my initial days but have learned many lessons and recovered them all long ago…

Now, some facts…

Savings account and FDs will give you at max 6% and 7.5%. Agree?

But taking into account inflation and after-tax amount, you will eventually lose all those 7% and most probably would lose money… It’s actually negative returns…!!

Some people would then say, “But what about diversification? FD is good for diversification…”

No! Use debt instruments for diversification instead of an FD. Yes, debt is good for your financial health.

Now, how to create wealth?

History is proof that if you want to create wealth by investing (not business), then only the stock market and real estate can yield you higher returns.

Why prefer stocks/mutual funds to start investing journey over real estate? (Shift to real estate in later years)

  1. Lower capital required. You can start with as low as Rs 5,000.
  2. The stock market is highly regulated by SEBI. And price transparency for all stocks is there. In real estate, you have to do certain analysis as well to determine the correct price of the property.
  3. Stocks are highly liquid. In real estate, you have to find buyers which may take even months.
  4. You can invest online from anywhere through the Demat account. In real estate, you have to visit a property to evaluate its potential.

But what about high returns…?

Investors are satisfied by 6-7% returns in savings account and FD but not with 15-20% returns in the stock market. If someone by chance makes about 40% returns, they tend to compare with them.

Don’t talk about extra-ordinary returns. In a while, you can get them but don’t try to chase them. Warren Buffett got rich by getting 21% CAGR over time and you want 30% returns? Come ‘on guys!

A person while expecting 25% returns and getting 20% would be more stressed and worried than a person expecting 15% returns and getting 20%. Both returns are the same but the reaction is different. So, expect about 15% returns each year and consider extra returns as a bonus and enjoy life.

Give Yourself Time and You Will be Wealthy…!!!

To Your Investment Success


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