Are you chasing FAST money or QUICK money?
The dictionary meaning of ‘fast’ and ‘quick’ may be the same. But in “my” financial parlance they are totally different. In fact, so different that it becomes a matter of life and death- or a matter of poverty or prosperity- if you do not appreciate the distinction.
For example, Honda City runs faster than Maruti 800; Mercedes runs faster than Honda City; and Ferrari runs faster than Mercedes. In short, “fast” as per my definition is inherent in the quality of the product.
For example, Banks FDs give more returns than Savings A/c; Company FDs give more return than Bank FDs; and Shares give more return than Company FDs. In short, there is a product-wise grading of the returns that you can expect from different investments.
If you are planning your investments suitably to earn “faster” returns- based on your risk-talking ability- you are doing fine. No problems at all!
The problem is when people chase “quick” money.
For example, people cut lanes in their Maruti 800 to go ahead of Honda City; Honda City breaks red signal to go ahead of Mercedes; or a Mercedes overtakes from the wrong side to go ahead of Ferrari. In short, “quick” as per my definition is the POOR and DANGEROUS quality of driving.
For example, people invest in FDs of dubious company to earn more returns than bank FDs; they invest in shares based on ‘hot’ tips to make more money than company FDs; and they trade in Futures and Options to make more money than shares. This is nothing but POOR and DANGEROUS quality of investing.
As you will appreciate, poor quality of driving is too risky. You may be lucky many times for many years. But one- just one- stroke of bad luck and you may not live to tell the tale.
As many incidents in the past- Harshad Mehta scam, C.R. Bhansali scam, Teak Plantation scam, StockGuru scam, Ketan Parekh scam, SpeakAsia Scam, Abhinav Gold scam, Home Trade scam and many more- prove that people lose crores and crores to poor quality of investing. And even if there is no scam, people are losing money every day in F&O trading and penny stocks.
I have always wondered, but the answer still eludes me- despite being aware of the grave risks, why are people so reckless and foolish with their driving habits? Why are people so reckless and foolish with their investing habits?
If I find the answer, I will surely share with you. But in the meantime, let me reiterate the obvious:
- Look for fast returns as per your risk-appetite and with appropriate precautions, and
- Please desist from taking shortcuts to make quick money.