- around 18-22% returns p.a.
- that too "tax-free", and
- with "zero" efforts.
Yet, very few investors, took home these stupendous profits.
As promised, I now expose the real reasons behind the golden opportunity tragically lost by investors to transform themselves into millionaires and crorepatis.
Of course, many would have already guessed it right, when I alluded that
... if an untrained driver causes an accident, is it the car's fault?
... if a driver breaks the traffic rules and causes an accident, again, is it the car's fault?
In plain and simple English, the losses happened not because of any inherent problems with the investment per se, but rather because the investors either "didn't know" the right rules or "didn't follow" the same.
1. The most obvious and the most damaging reason was to quit when the tide turned. It has been proven time and again that worst of the markets are the best of the times to invest. Yet most people buy during euphoric times, when the funds and the underlying stocks are the most expensive. The day people overcome this fear of the depressed market, would be the day when they lay the seeds of making spectacular returns, definitely.
2. Equity markets are volatile in nature... that is an indisputable fact. Equity markets give staggering returns... that too is an indisputable fact. So how do you reconcile the two? Simple. Do SIPs. SIP is the sure-shot way of combating volatility and coming out a winner. And SIP is not some esoteric concept. SIP (or Systematic Investment Planning) is exactly the same as your Recurring Deposit (RD). The only difference being SIP is in MFs and RD in Bank FDs. Among the many unfortunate victims were the people, who simply forgot to apply this simple and straightforward money-making formula.
3. Planning! Yes, this is the key ingredient missing in hundreds of MF portfolios that I have come across. Some have too many funds, some too few. Some invest too much in mid-cap / sector funds, some too little. Some jump at the top-performing funds of the day, some invest in New Fund Offers with blank track record. No wonder, such ad-hoc portfolios produce disastrous results.
Now would you agree that it was bad driving that caused the accident and not the bad car?
Three... that's it... only THREE SIMPLE rules. All you have to do is to stick to these three simple rules... and there is no reason whatsoever that you won't have millions in your bank account. I am not saying so... the numbers conclusively prove it.
