Myth of Instant Money

One thing that people want to know is :
                     How we can get instant money?

They just wanted to be hand over a ‘Secret’ to double their money in an instant.
It’s like going to a magic show where the magician converts one pigeon into two using a ‘Magic Wand’.

One interesting thing is when these same people go to see a magic show they behave more sensibly and just clap on the act of magician.
If they behave as unreasonably as they do in matter of investing they would have snatched the wand away from magician and run as fast as they could and then try to create pigeons in vain attempts.

This thinking process in case of magic is at most futile with no real consequences…..at most you will be frustrated and will soon realize that it was an illusion and nothing more.

However, in case of investing this kind of thinking process can be irreversibly devastating to the financial health of the person.

The problem intensifies when as a natural process this Demand for the‘Secret’ is followed by Supply:

“Get rich quick” schemes: Make 120% in 1 WEEK using our ‘Secret’formula.
*Annual charges: 100000 INR.

Yes, that’s 120% in a week and NOT 1.2% a week (which itself is more than85% a year).

Now, who is going to get rich by these kind of schemes is a no brainer.
Is it something different from claiming to generate pigeons out of thin air !!

You can decide that yourself….by asking right questions…

If they indeed have a ‘Secret’ formula that works so well they would have more than what Mr. Warren Buffett have….which is just over 34% per annum over a period of 40 Years.

What makes these sensible persons to behave so insensibly when it comes to finance and investing that they are even ready to consider these kind of options?

We will try to understand it in details… Stay tuned.

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Go Slow and You’ll reach

People want some ‘key’ to their financial problems. But don’t have any time and patience to learn…..just give us ‘instant’ results.

The problem is everyone want so much, so soon, and so fast. Therefore, it’s tough to step back and realize this is a process, not a lottery ticket, and that you have to be in it for the long run.

They think in terms in which they have become acquainted…instant food…instant coffee…so they think there must be some instant solution, a key that someone can hand over to them and all their financial problems will be resolved.

Sorry to disappoint….But…..there is no key. It is a long effort and requires patience. And the more you are in a hurry, the longer it will take.

The first thing to do in any worthwhile pursuit is to have the right mindset.

Let’s try to understand it through a Zen story:

Once it happened that two monks were traveling. One was very old, the other was very young.

When they got off the ferry boat they asked the man who had brought them to this shore: Will it be possible for us to reach the town where we are headed before the sun sets?

Because it was a hilly track and the sun was just going down, at the most they had one hour. They had to arrive before sunset because once the doors of the town were closed, then the whole night they would have had to remain in the forest outside of the town.
And it was dangerous, wild animals were there.

The ferry-boatman said: Yes, you can reach if you go slowly.

The old man said: Yes, I understand;

but the young man said: You are fools, you both. How can one reach if one goes slowly? I am not going to listen to this stupid nonsense!

And young man started running, it was a hilly track, and he was in such a hurry.
He fell down: he was hurt, wounded, all his things scattered.Then the old man caught up because he was coming slowly.

He looked at the young man: he was crippled, blood was flowing, and he said:Now how will you be able to reach? You tried to reach quickly and now you cannot reach at all.

This is a parable but gives many insights about how it is in investing or life in general.

So first step is ….

Go slowly, patiently, not in a hurry and you will reach to your destination.

Story of first interaction with Stock Market

One of the first reason people are attracted to Stock Market is the success stories they have heard during any social gathering.

Most of the times the protagonist of the story is an average guy who happens to be ‘a friend of a friend’ and story is studded with references of him being lucky and how Stock Market multiplied his money multi fold in a short span of time (which keeps on shortening with every narration).

Now, Stock Market for the listeners appears to be some kind of Casino where you just need to have ‘a little luck’ and you are good to go.

Very excited having found the elixir of wealth….opens a brokerage account…..transfer money to it and in next few days try to overhear some‘Tips’from ‘Guy’who is already into it .

Switch on the TV and try to make sense of BUY/SELL recommendations of ‘Experts’ who seems to know and have opinion about everything in Stock Market.

With a lots of enthusiasm and courage finally buy some hot stocks.

Now the cycle of following the Up and Downs of Stock Market every day begins….. filled with the hopes of getting the invested money to double in few days or weeks or in long term of few months.

Exuberated with every rise of points and engulfed in pessimism with every fall of points in Market.

Finally after few months and lots of nerve wrenching experiences due to Stock Market fluctuations (not to mention 20% to 30% percentage down).…. and after countless prayers to GOD
                      “just get me even and I will never do this again.”
…..….the person decides enough is enough and sells all his holdings with a promise to never come back to Stock Market again.

Sound familiar …huh?

What went wrong?

  • Is something wrong with the Person?
  • Or maybe it’s Market?
  • Or it’s the wrong timing of investment?
  • Or it’s the wrong Stocks chosen for investment?
  • Or is it something else?

To be able to even attempt to answer this question we need to understand some basic things….. things that at first may seem rudimentary but ignoring them is planning for failure in your investment journey.

So, let’s begin our journey towards financial literacy….Stay tuned.

Step towards financial literacy

“To get the right answer, you have to ask the right question”

Have you ever wondered about some of the following questions?

  • What makes you comfortable giving your hard earned money to any stranger in a hope of amazing returns?
  • Who convinced you about the fact you don’t need any finance education and you cannot do it yourself?
  •  Why you are always afraid of financial jargon even though they are just simple terms garbed under the veil of sophistication?
  • Why many sensible persons and most of them successful in their respective professions are paralyzed by ‘Fear’ when it comes to finance and investing?

There might be more questions that you can ask to yourself and wonder why you have never tried to find answers to some of these basic questions.

One possible explanation could be that to be a successful investor of any kind requires actual work and since work is necessarily involved, many people will try to avoid it, since that is human nature.

One very valid reason to avoid learning is that we’ve got limited time and in that time we have several things to do like spending time with our loved ones and jobs that already take more time than we have.

So what makes it important to educate and train yourself in matters of finance and investing?

While trusting others with your money can be a viable option given that you have the ability to find and evaluate skilled people on whom you can rely.
Learning about Finance and investing is that ability that gives us power to evaluate various options and choose the one that we deemed more fruitful.

It is actually a mindset that we can employ to every aspect of our life and not just to the matters related to money.

“Investing is simple, but not easy.”
Warren Buffett

It is indeed simple but not easy and it’s not about any ‘secret’ formula but about encouraging people to understand the right mindset while it comes to investing.

As the saying goes,

“In the long run, if you want the best financial advisor in the world, you need to look in the mirror.”

So let’s begin our journey towards financial literacy.