Patience is the most common attribute to be successful in investing and is advocated by everyone. Also, it is absolutely true that it is more important to be patient than to be wise when it comes to investing especially for a volatile asset class. Everyone preached, very few practiced. Well patience is a skill and skill can be acquired. Skills can be learned through knowledge and practice.

When it comes to patience, most investors fail to invest for three reasons:

1. They don’t know their risk profile
2. Not clear about their investment tenure
3. Not sure about the future use of said savings or investments

Rather, return is the most important criterion in determining money flow towards a specific product. Money follows performance. The past and present mass flow of money strongly believes this to be true.

In general, the most important expectation from an advisor is the ability to predict how the particular market/asset class/product will move. And when the holiest question is asked by the client, “What is the market like?”, there is a bombardment of knowledge all over the economy, indices, RBI, interest rates, politics, policies, liquidity, and the list goes on. Prediction is considered as an important attribute for an advisor/distributor and it is also exhibited by many advisors/distributors as most investors believe that the only time to invest in the market is when it going up. It is important for the future success of consultation/delivery that we acknowledge and accept this fundamental flaw. To be honest, we have all fallen in this hope somewhere. Accepting this as a first step towards addressing the underlying genetic defect.

We have never had more opportunities for prosperity, happiness and longer life than for any other generation. The challenge common to all is limited time and resources in achieving this. We mostly rely on our core asset to achieve everything and that is our earning potential.

The biggest single waste of money when investing is without identifying one’s risk profile and setting clear, specific goals. Many people waste their most productive capital in reacting and reacting to what is happening around them. Health, Happiness, Wealth and Prosperity- Most of the people strive for their whole life, but very few achieve it because they do not have any written goal. People with written goals and plans earn and accumulate, on average, ten times more than others with a similar level or higher intelligence and education. Therefore, before buying any financial product and seeking an answer to the question “what does the market think”, one should work on identifying their risk profile and writing down goals and achieve them accordingly, commensurate with the risk profile and investment tenure. Must plan to do.

Volatile assets such as equities have risks, fluctuations in the asset’s price and returns. Risk profile refers to tolerance with respect to such fluctuations. One side of tolerance is financial capability or readiness for sudden emergencies resulting in large amounts of cash outflow and the other is related to the psychology of investors. Unless investors are clear about their risk profile, they are more likely to have a bad investment experience. Setting goals allows an investor to determine the investment horizon and liquidate accumulated funds. It not only helps in building a portfolio with optimum allocation to various assets but also helps it to withstand the volatility of different asset classes such as large fluctuations in price and returns.

Also, it is very possible to know one’s risk profile and life goals rather than trying to predict market movements. Market timing is more important than market timing and market timing requires patience and patience comes from knowing one’s risk profile and life goals. Remember that we have the ability to control our emotions, but we can never control the market or timing, yet we spend so much time doing this and rarely do we have the time to identify our goals. There is time.

It is very easy to be happy, but it is very difficult to be simple.

Views are personal: The author is Mithun Desai, Managing Director of Jumbo Wealth in Surat.

Disclaimer: The views expressed are those of the author and are personal. TAML may or may not subscribe to it. The views expressed in this article/video are in no way intended to predict or time the markets. The views expressed are for informational purposes only and do not imply any investment, legal or taxation advice. Any action taken by you based on the information contained herein is your sole responsibility and Tata Asset Management will not be liable in any way for the consequences of such action by you.

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