Today’s investor has a plethora of options. Which asset class to invest in, via whom to invest, which services to select, and how much to allocate are all options.
You also have news networks and social networking sites, all of which provide information, facts, and updates 24 hours a day, seven days a week.
The tremendous growth of options has been aided by the last 18 months. So, have you become a better investor or made your investment process easier as a result of all of this? To that, the response is: it depends.
Allocation of resources
Investing in large cap, multi-cap, mid-cap, small-cap, and hybrid schemes were all available in various forms during the evolution of mutual funds in India.
The classification has been more open in recent years, allowing investors to make the best decisions possible. This shift has made it easier for investors to allocate funds more efficiently based on their risk appetite.
Aside from sector-specific funds, there are now geographic-specific funds that allow you as an investor to participate in global investment opportunities.
This is yet another positive step. Based on the investment requirements, the investment process and methods must be simple to comprehend and implement.
This can be confusing for a beginner investor who has just started earning money and wants to set aside a portion of it for investing. With so much data and knowledge available, decision paralysis might set in, resulting in a poor investment decision.
Patience and Process
In this scenario, the latest fad or return might easily persuade a prospective investor to make a decision that isn’t really the best investment option. A good investor does not need to have the highest IQ (Intelligence Quotient), but they must have patience and follow a procedure.
Knowing oneself is the most crucial thing an investor can do. As an investor, you must understand what makes you tick, such as whether you are prone to watching market changes on a regular basis and taking profits at regular intervals.
What impact might price fluctuations have on your decision-making process?
Can you wait on a price discrepancy in stocks for a length of time that might be a few days or a few months?
The important thing to remember is that your Emotional Quotient (EQ) will determine your investment return.
It has been proven time and time again that a constant purchase and sell in an account does not benefit investors very much. Much of the profit is eaten away by transaction costs. Compounding’s value is only realized over a longer period of time.
It’s important not to mix up activity and action. Inactivity might be considered an action if the reason for the inactivity is obvious. Creating wealth is a marathon, not a sprint. Start small and early if necessary, but get started.