It is not easy to be an investor in the markets. The markets manipulate the mind, constantly. The servant becomes the master. This is the story of how an investor falls.
Take a look at the image below.
This is an investors’ mutual fund portfolio. The equity portfolio is about 10% of the overall portfolio. Mutual funds are about 4% of the overall portfolio, or 40% of the equity portfolio.
I imagine this is how it played out.
Now, this investor started in a small way back in 2005/2006. Some friendly neighbourhood advisor strolled in (or the bank RM) and said “Why don’t you start a SIP?”
“Would you also like to do tax savings? The mutual fund tax saving schemes can be a good option. It will also give you a dividend.” I imagine the distributor/RM saying.
“That sounds good.”
It was done. But looks like she wasn’t ready to commit more. It was a start nevertheless.
The small SIP kept going and there wasn’t much that happened in for 15 years.
In 2020, the investor found it difficult not to get swept in the overall mood of the market. It was time to take advantage and invest. This was an opportunity. And it was well guided by an advisor.
The returns from that investment far exceeded the imagination.
“Let’s add more!” This was 2021, yet another opportunity phase.
The investor started to look around. The returns were just too good. The blood is still fresh on the tongue.
“Hey, but why is my advisor not giving me funds that are chart toppers?” (Ye dil mange more!)
The demons of fear and greed are fighting it out in the investor’s mind. It is a mess.
The demons win, the investor decides to take the reins in her own hands. The market seems to be presenting an opportunity. But this time, “I am betting on the toppers.”
The first step towards the fall… unknowingly, yet unsurprisingly.
How difficult it is to continue doing the right thing and not seek unnecessary adventure?
How difficult it is to have patience in the investing journey and building wealth?
How easy it is to become our own enemy?
Fortunately, a close friend of the investor pushed her to seek advice again.
Between you and me: How are you fighting your demons? What would you do differently?