Investor behaviour, and not the market, creates wealth

When the Country’s economy is growing, markets will perform and the investor will create wealth.

But, this is not always the reality and the equity market growth may not be in line with the country’s GDP growth. Further, if we look into the global scenario, only 4% of the stocks generated all of the wealth created globally and the balance 96% stocks could not even beat the risk-free rate. Also, if we consider India, only 14% companies could give 25% + returns over the past 20 years. This indicates that growth at macro level may not translate into equity market performance. Also, it has been observed that, both globally and in India, investor returns in equity funds is less than the equity funds returns. This is due irrational investor behaviour in different market scenarios (Buying high, Selling low).

To reap profit from the market and create wealth we should invest responsibly. Because, creating wealth from investments depends on our behaviour and not the market. So, what should one do?1. Invest in Equity through Mutual Fund: Get the support of responsible and knowledgeable asset managers and risk managers. Opportunity to invest in a wide spectrum of companies with very little investments.

2. Get in touch with a responsible Advisor: An advisor recommends funds as per your goals, take care of investing processes, educate you and prepares you for uncertainties.

3. Be a responsible Investor: Start with a goal in mind, be rational and think long term. Stop following market trends (avoid timing the market) and stay invested following long term investment goals.

If you have found the above content useful click on the + below to: Share | Print | Mail

Leave a Comment

Your email address will not be published. Required fields are marked *