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(Precious) Words of Wisdom : "Wall Street makes its money on ACTIVITY, you make your money on INACTIVITY." ~ Warren Buffett

The Biggest Investment Blunder

Investors have once again — for the umpteenth time — committed the biggest investment mistake. Despite repeated warnings, they STOPPED THEIR SIPs and REDEEMED THEIR INVESTMENTS.

With the markets going nowhere for last 2-3 years, people lost patience. Moreover, repeated bad economic news from India, US and Europe scared them. So they stopped their SIPs midway and left the markets.

What was supposed to be the best time to invest, people were selling. Meanwhile, the smart FIIs invested around US 23 billion in 2012...their second highest investment ever in a year.

And now the markets have surprised everyone by appreciating by more than 25% in 2012. As such all these investors once again find themselves left out and all the money has been made by the smart FIIs.

Don't repeat the biggest investment slip-up repeatedly committed by others.

History has proved time and again that "worst" of the times are, in fact, "best" of the times to invest. But I guess, people don't read history.

Unfortunately, because of the flexibility offered by MFs in terms of investments and redemption, they become the first victim of our irrational investment behaviour. There is no penalty if you stop your SIPs. There may be a small exit load if you redeem your investment within a year. So the moment things look bad, people stop their MF investments.

History has proved time and again that you cannot 'time' the markets. But I guess, people don't read history.

Indians loves gold, real estate and bank FDs. Americans love businesses. Indians look for jobs. Americans create jobs. Indians prefer safety and security. Americans prefer risk and entrepreneurship. India is poor. America is rich. This 'business' culture is what we need to import from America...not their burgers and cokes. Either we should start businesses or invest in businesses.

History has proved time and again that good business always make money. But I guess, people don't read history.

An Investment In Knowledge Pays The Best Interest ~ Benjamin Franklin

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