Let’s say, you were driving from Bengaluru to Chennai - a distance of 300 km, expected to take 5 hours. Halfway into your journey you realise that because of the excellent road and light traffic you’ve taken only 1.5 hours to get to that point.
Do you now:
1. Continue driving
2. Get off the car and take a bus
Silly question, right?
You’ll most likely tell yourself that now you don’t have to worry too much about the rest of the journey. You may even take a break for a cup of coffee.
Unfortunately, most people behave very differently when it comes to investing. Worse still, we see investor behaviour which is similar to looking at your watch every 1 km and asking yourself whether you should take the bus. And a lot of investors actually get off and take the bus as is clear from past experience.
This is because of a mistaken infatuation with short term returns. Is my return low, or is it high? Should I Invest now or should I wait? Investors worry when the Sensex is up and worry again when it goes down.
When you drive from Bengaluru to Chennai, there are going to be rare instances when you’ll be driving at 60 kms/ per hour. most of the time you’ll be driving slower or faster. But getting to Chennai in about 5 hours is what matters.
Similarly, your equity returns will vary on a daily or monthly basis but a long term average return of 16% is what you’re aiming for.
Don’t celebrate the 25% that you got in March. It’s only making up for the 10% you got in January. Celebrate, instead, that you’re now closer to your goal and have to worry less about the hiccups that may (and will) come your way.
Celebrate your wisdom in staying invested when your friends were either running scared or booking profit (a complete misnomer).
Enjoy the journey and stop looking at your watch.
Want to understand where something like Scripbox can help you do better investing? You can find out here.