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Stick to your lane

...and make lots of money

Maximise investment returns with patience and strategyAnand Kumar

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dhanak हिंदी में भी पढ़ें read-in-hindi

You are crawling along in a traffic jam. You are in one line of cars, and there are other lines of cars on the left and the right. For some reason, your line is moving much more slowly than the others. You decide to squeeze into another line, which is moving faster. Somehow, you manage to do so, ignoring the angry honking of the drivers behind you. However, as soon as you have accomplished this feat, your new lane magically becomes the slowest one. This happens to all of us all the time, not just while driving but also when investing. I'm sure you know what I mean.

We've all been there-watching the stock market go up and down like a roller coaster, wondering if we should hold on tight or jump off at the next turn. It's natural to feel a little anxious about your investments, especially when the market seems to have a mind of its own. But here's the thing-slow and steady really does win the race when it comes to investing.

Let's talk about hard data for a moment. Historical data shows that while the market's daily movements are about as predictable as a coin toss, the odds of making a profit get better and better the longer you stay invested. In fact, if you hold your investments for five years, the chances of earning a positive return jump to 90 per cent, and if you can stick it out for a decade, that number soars to a whopping 99 per cent!

So, what does this mean for you? Well, it means that instead of getting caught up in the daily hustle and bustle of the market, you should be focusing on the long game. Sure, short-term fluctuations can be scary, but they're just a part of the journey. The real rewards come to those who can keep their eyes on the horizon and stay the course. Of course, it's not always easy to stay calm when the market is in turmoil, especially if you are sitting on good profits. But that's where a well-diversified portfolio and a solid investment strategy come into play.

The cure for this ailment is also simple and something our readers understand well. It's just the basics like diversification, asset rebalancing, cost averaging and the rest of our old and trusted friends. By spreading your investments across different asset classes and sectors, you can help to minimise your risk and smooth out those bumpy patches. And never forget the power of SIPs. By investing a fixed amount at regular intervals, you'll buy more units when prices are low and fewer when prices are high, which can help balance out the impact of market volatility over time. That's the foundation on which the entire Value Research philosophy is built, but it can't hurt to be reminded of it often. Perhaps we should get some 'Investing Basics' posters printed and give them out with the magazines.

It goes without saying that every investor is different, and your investment strategy should reflect your unique goals and risk tolerance. However, the basics are the same for everyone. If you're going to need some of your money within the next five years, it might be a good idea to keep a portion of your portfolio in debt instruments, which tend to be less volatile than equities. But if you've got a longer time horizon, don't be afraid to let your investments ride the waves of the market, and history suggests that you'll be rewarded for your patience.

At the end of the day, investing is not an IPL match but a test match. By staying focused on your long-term goals, maintaining a well-diversified portfolio, and leveraging the power of SIPs, you can confidently navigate the ups and downs of the market. And remember-even the biggest market downturns have historically been followed by even bigger recoveries.

Also read: Mechanical rules for investing


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