If you want to create wealth IGNORE these excuses!
Everybody wants to be rich and wealthy, but when it comes to creating wealth, people would rather avoid the hard work of investing and blame their fate for not having enough money! If creating wealth is on your mind, there is no way out but to invest. So if you have been using the following excuses not to invest, stop making them right away!
Let's face it! Investing is not easy and once you begin, you have to dedicate enough time and effort to it. But as much as that is true, investing according to your risk profile over the long term is only way to create wealth. Indians being hoarders by nature are naturally averse to taking risk. So if you are on the same path, you know what is the thing to do, or in this case, what NOT to do if wealth creation is your goal!
1. 'I do not make enough money'
It is a myth that you have to make tonnes of money to take the investment route. For small investors, the ideal route to invest is through mutual funds schemes that can be chosen according to your own risk appetite. Not only are mutual funds "safe" as they are diversify your risk, you also get the added advantage of professional fund management. Besides each mutual fund scheme has a systematic investment plan or an SIP option that allows you to contribute small amounts of money at periodic intervals.
Making small changes to your lifestyle, like cancelling a gym membership, or cancelling certain magazine or newspaper subscriptions (because you read them online anyways!) can go a long way in saving money.
This money can then be redirected to SIPs and you will be surprised that you will have a decent corpus to boast of in a few years!
2. 'I do not understand investing'
It is true that lack of knowledge or little knowledge can be a dangerous thing when it comes to investing as you may lose money. But do not use this as an excuse not to invest as it is easy to educate yourself on the basics of investing these days. There is a surfeit of information on the dos and don'ts and do it yourself sites that have made it very easy for potential investors to take the plunge themselves.
All you have to do is to read up diligently and you are bound to feel knowledgeable and confident about investing sooner than you think. If you still don't think you can do it alone, take the help of a finance professional you can trust among your friends or relatives to help you get the hang of things initially.
3. 'I have enough time to do it later'
When it comes to building wealth, through investing, time is your best friend. The earlier you begin, the more the chances are to see your wealth multiply and grow over the years. So if you are in your late 20s or early 30s and are procrastinating, stop right away!
It's time you drew up a financial plan according to your risk profile and begin investing as per your risk appetite. So do not be under the impression that investing is for the 'oldies'. The sooner you begin, the better off you are!
4. 'Stock markets are wayward'
So you have heard horrible stories about people losing their shirts off their backs because they were addicted to trading or "gambling" as you would like to belive investing is. But let us assure you here that is only one side of the story you have heard! The person who "lost his shirt" may not have done things right and invested in penny stock in a bid to become rich overnight. Well, that's the number one rule of the capital markets.
You cannot enter any investment plan with the hope of making "fast money" or "doubling your principal amount". Investing requires a patient, disciplined and long term approach and there are no shortcuts here! Of course this is not to say that there will not be any volatility or the markets will be in bull run always, but the key is not to panic and make wise decisions about altering your portfolio as and when the need arises.
5. I will lose my hard earned money'
If you are choosing equities as an asset class to invest, there is no getting round the fact that you will suffer losses at some point of time, just like you will make hefty gains at times. The key is to remain invested through both these phases and not to make any erratic decisions, if the asset class you have chosen sees a sudden slump.
Once again you have to re-evaluate your portfolio against the broader perspective of your long term financial goals and you can minimise the impact of the risk you are subjecting yourself to.
At the end of the day, what matters is a long term approach with patience and discipline. If you think you have these virtues in adequate measures, do not let these above excuses stand in the way of you creating wealth! So get set and begin your investment journey as soon as possible!
Illustration: Dominic Xavier/Rediff.com
The author is Co-founder and Director Credit Vidya.