“Indians are great savers but bad investors”

Money represents different things to different people. For some, it could mean financial independence. For others; it could be security or the means to enjoy a desired standard of living. All of us work hard to ensure that we have enough money at the end of the day. And we invest this money in a variety of investments so that it can make even more money. In a way, saving is a postponement of happiness – the investor commits to consume less today in the hope that he will be able to consume more in future. But do we save and invest in the right manner? Is there a plan of action that guides our investments? Many investors randomly put money into various instruments without considering what they are putting away the money for. Some will spend more time planning a vacation than deciding how to invest their life savings. Most people buy assets as and when they become hot property. But this approach to investing is self-defeating. The investor is likely to realise some years later that his portfolio has not taken him anywhere. Not surprisingly, financial planners often get desperate pleas for help from first time clients whose investment portfolio is usually a complex web of financial products hoarded without any thought. “Indians are great savers but bad investors”. We don’t understand the importance of attaching investments to our goals.

Investing requires a methodical and disciplined approach. You need an investing roadmap so that you reach your financial goals. This requires you to look at the big picture. Ask yourself, why are you investing in the first place? Only after you determine your goals, and the time horizon for achieving each one of them, should you choose the appropriate investment to reach these goals.  ”When investments are linked to your goals, it makes you a focused investor. One is mentally prepared to deal with volatility so that abrupt decisions based on prevailing market conditions can be controlled.”

Thanks & Regards,

Nitin L. Ghadge.