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THE UNUSUAL INVESTOR – “Part Three of the Personal Finance for Beginners Series”

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Photo: iStock

New Delhi: If you are one of those investors who like their trades fast and get quick returns then this article is a good read for you. While speed is exciting, it’s not necessarily always a good thing, especially when it can jeopardize everything involving your hard-earned cash.

As the age old saying goes, patience is not the ability to wait, but to keep a good attitude while waiting.

It’s patience, or the lack of it, that makes or breaks a good investor. A patient person has all the virtues it takes to become a successful investor — a long-term strategy, the ability to wait, a resilient attitude, and the legroom to experiment. On the other hand, an impatient investor will panic at first sight and be unable to hold on to an investment long enough to reap their profits.

THE COST OF IMPATIENCE

An impatient investor is someone who likes their trades quickly and gets results faster, essentially making them more of a trader than an investor. While there’s nothing wrong with wanting quick returns, haste often leads to mistakes. Impatience most often leads to unnecessary panic trades that result in higher transaction costs, rash decisions that can lead to unfortunate outcomes, and a lack of diversification. Faster returns always come with the downside of having to take on more risk.

There’s a fine line between a quick calculating investor and a reckless investor, and boy do people stick to that line!

Investments made purely out of greed can dissolve the money faster than the blink of an eye.

BUT I WANT WHAT I WANT

If you’re an investor who is willing to take some risk in expectation of higher returns, then there are investment opportunities for you that are significantly less likely to lose you money.

THE LEADING VOICE: THAT’S WHAT EXPERTS SAY

PV Subramaniam, CEO of Subramoney.com shared his expert input on the thrill of investing fast. He said: “If you want a guaranteed return in the short term, you have to know that the company is rock solid, that it’s delivering foolproof returns. The catch is that you only know the recap that you have to wait longer than planned.” He added that it’s very rare that bigger wins and longer lock-ins don’t go hand-in-hand.

Most importantly, he highlighted the difference between a trader and an investor. “A trader thinking of short term moves and has a low margin stop loss compared to an investor whose vision is longer term and who tends to have a lower stop loss.” He said that the only way to be a good investor is to learn from your mistakes, but that requires investing in a stock long enough to even recognize your mistake.

“If there were actually a stock that could give you a 10-15% return in an instant, don’t you think everyone would own a piece of it?” he argued. He added that index stocks can never go wrong in terms of a surefire return, but again, one would just have to wait to reap those benefits.

He recommended some stocks that he sees as solid investments such as Tata Steel, ICICI Bank, Reliance Industries, while his sector bets revolve around steel, metals and oil.

“Only get into stocks if you’re committed to purposeful investing,” he said. When investing is driven by greed rather than purpose, it amounts to what a layman would call betting.

He advised to follow the methods of renowned fund managers like Prashant Jain, Sankaran Naren, Roshi Jain and others who have been in this field for years.

When asked how to make quick money from digital assets like cryptocurrency, he said, “Crypto is not what crypto does; Crypto is what you do, what you end up doing with your crypto inventory, the currency you hold, etc.” He went on to say that cryptos are very risky and it takes a lot of patience for the holder to actually get anything out of them to win, which is why cryptos are not suitable for a quick investor.

He advised that it’s best to navigate your investments a little slowly and develop some patience to potentially reap some profits from your investments.

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