Some free gyan for investors:
- Gyan #1: Nobody knows what will happen in future.
- Gyan #2: Never forget Gyan #1.
Make this the starting point of all your investment decisions. This will nearly always save you from all the fake financial advisors and self-styled experts.
Many of these finance advisors and experts (who are now known by another rubbish term “influencers”) are only in the business for their own financial interests, and not for those of their followers.
Over time, you begin to notice that their so-called advice is often meaningless gibberish decorated with profound-sounding sham. They even contradict their own gyan which exposes how they don’t even know what they’re talking about.
For example:
Advisors: Time in the market matters, not timing the market.
Also Advisors: Don’t invest huge amounts in lumpsum, invest through SIP for cost averaging.
Taken separately, both statements sound logically correct. But taken together, they are mutually contradictory. Some of them even go one step further and explain it with an example which further displays their foolishness.
They say, “Suppose you got ₹6 lakh as a payout for some investment. You should invest it through SIP of ₹25 thousand over the next two years.”
This causes your money to stay out of the market for a long time! After one year, half of your money has not “spent any time in the market”. 1.5 years later, ₹1.5 lakh of your money is still “out of the market”!
But weren’t you supposed to spend more time in the market? Then why did they advice you to keep your money lying around for several months?
Here’s the reality:
SIP is nothing more than an automated investment.
SIP is not a magic wand that amplifies returns. Whether it gives better or worse returns than lumpsum investment is only known in hindsight. (Hence, Gyan #1)
Similarly, spending 10 years “time in the market” doesn’t guarantee profits. Plenty of stocks are in the similar price range that they were at 10 years ago. Quite a few famous ones have even tanked catastrophically.
Don’t make investment decisions based on “cool” one-liners. It requires long time and effort to understand stock market investment, and the learning is never complete.