Sometimes life’s best lessons are learned through stories, so let me start today’s blog by a small story..
A foreman, who was given the charge of a gang of extremely lazy labourers, asked them to dig ten feet holes near a large steel mill. The lazy workers were further agitated when they were told to dig the holes here and there. As time went by, they kept digging, and finally they dug up nine holes.
The labourers could not understand why they were being made to dig so many holes near the factory. They also grew desperate, tired, and extremely agitated. They decided to stop right there and not to work anymore. As they were about to retire, the foreman told them something which made them spring back to action forgetting all their agitation and tiredness.
The foreman told them that he was actually looking for a broken pipe which supplied water to the quarters where these workmen resided. The labourers sprang back to work at once.
What is the implication of this story?
To work without definite goal is not just uninspiring, but also difficult. On the other hand, when a man knows the purpose of what he is doing, he is able to focus better, be more sincere, creative and diligent in what he is doing.
Lets now, modify this story,
The Labourers – Our hard earned money,
Foreman – We, the investors
We have investible surplus of Rs 10,00,000 and we decide to invest in 15-20 stocks / mutual fund schemes. We start investing and tracking the returns. Everyday, on our way to office we observe the price of stock / NAV of mutual fund schemes.
Mostly, many of us can’t stomach the short term volatility and become desperate, tired, and extremely agitated and so we decide to stop i.e. withdraw the investment and decide not to invest in Equity anymore or we start trying to time the market.
Whenever we feel like this, we must ask ourselves 2 simple questions:
1. What is the Purpose/Goal of this investment?
2. Where will I invest this money by withdrawing it?
We realise that this amount of Rs 10,00,000 we do not need now. We saved it for buying our dream car after 5 years.
Now, we look at the long term returns of the stocks/ mutual funds schemes and forgetting all the tiredness and agitation, we continue with the investment and do not track the schemes daily and are at peace as we need the money only after 5 years.
“Going half way and then thinking of the destination is not a good idea. Its always better to have clear idea about the destination before starting the Journey.”
To invest without definite goal is not just uninspiring, but also difficult. When one invests with a Goal in mind he is able to to focus better, be more sincere and regular in investing.
Always remember that,
” People Don’t plan to fail but They Fail to plan..”
In upcoming Thoughtful Thursday series, we will discuss more about how to set financial goals and relevant considerations for the same. Stay Tuned..
CA Nitesh Buddhadev , CA Mitsu Buddhadev, Nimit Wealth Management
You may reach out to us at firstname.lastname@example.org for any queries, suggestions or feedback.