Obstacles On The Way Of Being A Successful Investor?

Hemant Rustagi
Chief Executive Officer, Wiseinvest Advisors

All of us want our investments to grow manifold. However, very few can claim to be happy with their efforts as an investor. That's because many investors either don't plan their investments or fail to implement their plan effectively and that compels them to make haphazard decisions. Then, there are those investors who allow their emotions to drive their investment decisions. Needless to say, they invariably fail to make their money work for them.

Therefore, the moot question is, how can investors achieve investment success on a consistent basis. It is important for every investor to remember that although investing money successfully may sound like a complex process, in reality it is a simple process that requires one to follow a disciplined approach. In fact, investors falter time and again either because of certain bad investing habits or following certain misconceptions that do not allow them to achieve investment success on a consistent basis. Here's is what comes in their way and how they need to avoid these tricky situations.

DELAY IN INVESTING 

Many investors delay the start of their investment process either because of lack of knowledge or believing that they do not have enough money to start investing. The fact is that one can start investing with as little as Rs.1000 and invest in a well-diversified investment vehicle like mutual fund wherein professional fund managers manage their money. In fact, delaying investment process can cost them dearly. For example, if a 30-year-old investor makes an investment of Rs.5000 per month through SIP in equity funds till retirement, i.e. for 30 years, he can expect to create a corpus of Rs.1.77 crore (at an assumed annualised return of 12%). However, if the process is delayed by 10 years, i.e. if money is invested for 20 years, the expected corpus would be around Rs.50 lakh.

TIMING THE MARKET 

It is a proven fact that there is no right or wrong time to start investing. However, many investors still believe that timing the market is the best strategy to make higher returns. Hence, they wait on the sidelines for a steep fall so that they can invest at the lowest levels and book profits when the market moves up. As a result, they miss out on a number of opportunities to make handsome returns. A case in point is a rise of 500 points in the Sensex a day after announcement of recent state election results. Only those who were already invested benefited from that rally. In fact, those who have been waiting on the sidelines for a fall may feel compelled now to invest at a much higher level than if they had followed a disciplined process of investing regularly.

LACK OF EFFORTS TO BECOME FINANCIALLY AWARE

A sound investment advice can help investors in getting the best results from their investments. Therefore, it pays to take help of a qualified investment advisor. However, having an advisor does not mean that one should not make efforts to educate himself/herself about various aspects of investment process. A well-informed investor can keep the advisor on his toes and ensure that investment decisions are driven by keeping his/her interest in mind. Fortunately, there is so much information available in print and electronic media as well as on the internet that can make investors aware enough to ensure that their head-earned money is put to work in the right manner.

FAILING TO ACT

There are investors who keep thinking about making investments but fail to take any action. Every time investors miss out on an opportunity to earn handsome returns, they vow to start investing so that they do not miss out on the next such opportunity. However, they continue to wait on the sidelines and pay a heavy price. Then, there are investors who invest majorly in traditional options like bank deposits and small savings schemes but often complain about lower returns. When they are advised to invest in market-linked products offered by mutual funds, they sound convinced but often fail to move their investments into mutual fund products. Investors will do well to understand the pros and cons of investing in different investment options and act by investing in what suits them the best and can give them positive real returns over time.