Except God and a Fraud, no one expected that COVID would stop the entire World for 6 full months.
During the March lockdown when the Sensex tanked by more than 40% in a matter of under a week, there was widespread panic.
There was fear on everyone’s face whether the stock market would go down to ZERO as Corona was something no one had prepared for and no one knew what destruction it can cause.
I then plunged head long into reassuring all my investors about their investments and the equities.
I wrote lots of messages in Whatsapp, facebook and even on my blog all highlighting one single fact that LOSS IS TEMPORARY AND GROWTH IS PERMANENT.
I encouraged all my readers to hold on to their investments and if possible, to even top up if the finances allowed.
I strongly put across the point not to get feared and sell their equities and kept requesting DO NOT CONVERT YOUR PAPER LOSS INTO PERMANENT LOSS.
Reporting some of the messages here so that we can recall those time when our confidence at the lowest ebb and how these messages pulled the spirits up…
MESSAGE NO.1 :
BEFORE INVESTING KNOW THIS...
Every Stock Market falls has everntually proved to be temporary and a BUYING opportunity.
Use Market falls to boost your returns as ultimately FALL IS TEMPORARY, GROWTH IS PERMANENT.
Nobody likes to see their portfolio going DOWN but its essential to remember that these are NOTIONAL LOSS.
Stopping Sip and worse, REDEEMING at this point of time will only convert temporary Notional Loss into a PERMANENT REAL LOSS!
MESSAGE NO.3 (The most important one)
TREAT EQUITY LIKE YOU TREAT LAND AND GOLD
The biggest issue with Indian Investors that when
1. GOLD prices fall, their first reaction is....GOOD.....Now I can buy more
3. When Land Prices fall, their reaction is ….CHALEGA....I AM HOLDING FOR LONG TERM
But when the same investors's mutual fund or equities fall, their reaction is....
IS THE END OF STOCK
Has my money gone??
Let me Take out whatever is left!!
When anyone is looking
at selling off Real Estate and the land rates have fallen by 30%, their ONLY
reaction is.....”WHY SHOULD I SELL NOW?? ITS DOWN BY 30%....i WILL WAIT”
but, the same investor, will not even blink when it comes to selling Equities even at a loss!!
DO NOT ALLOW YOUR NOTIONAL LOSS TO TURN INTO PERMANENT LOSS!!
SOME MORE MESSAGES
1. Negatives are inevitable (its a part and parcel of any business including Equities)
2. Equities is NOT for Short Term. Never was. Never will be.
3. Positive Growth is a given. Equities have outperformed all other asset classes by a reasonable margin but the problem is VOLATILITY.
You have to bear with it.
4. When the Investment is LONG TERM, why should you even bother to look at your portfolio??
You will only be increasing your BP.
So, bear with the volalitility. Enjoy the Ride. \
5. Stick to Asset Allocation. Stick to Good Quality Funds. Invest in Funds which are aliging to your Goal.
Due to my constant
messages, reassurances and understanding the depth of potential loss and the
possibility of recovery…..ensured that almost all of my investors STAYED ON.
And because they stayed
on (including you), the loss actually has now converted into PROFIT.
Let me take one real live example of my investor
On 24th March, the investor’s portfolio was down by 37 lakhs and like everyone, this investor too was in panic mode.
Because the investor did not sell but held on to the investment. The Investor’s potential loss of 37 lakhs has now turned into a paper profit of 32 lakhs…A GAIN OF 69 LAKHS in less than 6 months.
Some of my articles shared during those times
1. Dont fear the CARONA.. https://www.goodfundsadvisor.in/2020/03/carona-se-daro-na-kick-out-carona-fear.html
2. Correction is Temporary…Growth is permanent https://bit.ly/2O8iaBF
All my messages
ultimately reinforced that YOU SHOULD HOLD AND IF POSSIBLE ADD MORE.
And almost all my messages would end with this quote….
“ALL BEAR MARKETS HAVE ONE THING IN COMMON…….THEY END” !!
Because the investor did not sell but held on to this investment, the potential loss of 37 lakhs has now turned into a paper profit of 32 lakhs…A GAIN OF 69 LAKHS in less than 6 months.
This is the biggest
advantage of interacting with a HUMAN rather than a Robo or a Web portal as the
Human here…i.e. the IFA…..oops the MFD will ENSURE THAT INVESTORS DO NOT SELL
UNDER PANIC AND PREVENT THEM FROM CONVERTING THEIR PAPER LOSS INTO REAL LOSS.
The MFDs have been doing a yeoman’s service in not only bringing new investors to the industry but ensuring that these investors are HAND-HELD and guided on every step.
I would like you to note that Equity like a Business will have volatility. Strongly urge you to treat Equity Investment like the way you treat Land Investment or Gold.
When we are investing in Stock Markets...either directly or through the Mutual Fund route, the simple fact is we are INVESTING IN A BUSINESS.
Business is FOREVER and always having its ups and down.
No business will do well all the time.
“If we are facing in the right direction, all we have to do is keep on walking,” goes a Buddhist proverb.
So, when the Direction is right....in this case...our Direction is Wealth Creation and our vehicle also right...that is the EQUITY MUTUAL FUNDS...then there is absolutely no need to keep looking at the NAV on a daily or even a Weekly basis.
Sometimes it makes great sense to be like an Ostrich and ignore the noise all around.
FINALLY PLEASE UNDERSTAND THAT HAND-HOLDING IS PARAMOUNT TO ENSURE THAT WEALTH IS ACTUALLY CREATED.
Do not be #PaisaWiseRupeeFoolish
Mutual Funds Sahi Hai only if MFD Saath Hai
Regards and all the very
To your Financial Growth,
Author – Don’t Retire Rich