3 reasons you did not get rich in a day

By Karthik Zaveri

If you were invested, you would have made anywhere between 4% to perhaps more than 12% in a single day.

Take the example of HDFC Ltd. This company that gives about 8% to its depositors for investing money with them for one full year. The smart owners of this company made the same 8% in just a day!

Who are these smart owners? You and me -- if we are shareholders of this company! Awesome isn’t it?

This is not routine, and skeptics would say that you could lose the same 8% in a day. However the logic is not so simple. If you are the owner of a company that is growing at say 15% per annum it is quite likely that your investment in the shares of this company will also rise by 15%. These are fundamentals.

Now in reality the return on your investment tends to be “plus or minus” this 15%. That’s emotions-- which also plays a role in any market. The fact is that emotions can sway the price but this swaying of price revolves around the fulcrum of fundamentals.

Why you missed the bus

Such opportunities and more are available and will be so, to all in future as well many times over. The choice to make is whether you still want to keep money in that recurring deposit or fixed deposit or PPF or something similar.

1. You are afraid to take risks

Most of us desire to have a lot of wealth, but are generally not prepared to take the right approach. The irony is that most of us tend to know the correct approach.

We understand that equities and real estate are assets, which are accessible to us at large and that they produce the maximum returns. But we don’t want to risk money in equities.

2. You don't have enough knowledge

If we dig deeper into this mindset you will see that we are not afraid of taking risks. We are afraid because we don’t have adequate knowledge. We don't have anyone to advice us and help us build knowledge. Understandably we do not want to admit to this; it hurts our ego.

The consequence: Decisions are taken with inadequate or half-baked knowledge. Hence, we land up with what we deserve.

On the other hand, many of us actively build our knowledge and read many articles, research reports etc. This is far better than not doing nothing. Hence there's more information available to us, and we might even be successful in making a shortlist of multiple avenues or assets to invest in.

3. Allocation is a problem

The real problem: Choosing the best in our shortlist due to limited means. Thereafter as Murphy’s Law would have it, many of the assets that we did not invest in, have increased in value. We feel left out and as if something has gone wrong. The more timid ones jump ship.

Do note that what we did may not be wrong but it will take time to remunerate us. That is the paradoxical law of nature and that is the way it will always be. But do not lose steadfastness and try not to be disheartened and most importantly never stop learning. If you deserve you will get it!

What next?

All you need to do is make the effort to be on the right path and then continue on this path, which is an even bigger challenge. You will be rewarded eventually. Sometimes it may take a couple of years, but it will always be worth the wait.

Kartik Jhaveri, an expert at Financial Planning, is a Certified Financial Planner and a Chartered Wealth Manager. He may be reached at kartik.jhaveri@transcend-india.com

Disclaimer:The contents of the above articles are the intellectual property and copyright of the author, Kartik Jhaveri. No part may be used or reproduced in any form or manner. If you choose to act upon the information contained in the above article it is at your own risk. This article is purely educative and you are strongly advised to consult an expert prior to taking any significant decision.