Bear the pain and invest in equity through loss or you will never change your lifestyle!

Published: August 25, 2019 at 8:28 am

When you start an exercise regimen, the day after you would fee soreness and pain in new areas! I guess muscles that were never flexed before behave like that when flexed for the first time. Most investors who have started investing in equity mutual funds since 2014, 2016 would never have seen a prolonged period of negative returns. When they see their losses evaporate day by day, a new sense of loss, fear, regret and panic sets in. Unless you bear the pain and invest in equity through this period of loss, you can never change your lifestyle.

Professional fitness trainers would advise you to work through that new pain and make your body get used to it. That is exactly what you need to with equity. You have to bear the prolonged period of loss and keep investing. Many ask how did I bear the loss for the first five years of my Ten Years of Mutual Fund Investing: My Journey and lessons learned. See the article for details about this image that shows the gain or loss in my portfolio (June 2018) Nifty Next 50 so good then. Mutual fund success story: gain or loss in the portfolio

I say then because, in Dec 2018, this is the situation. See: My personal financial audit 2018 It would probably be worse now (for NIfty Next 50)!

Retirement equity portfolio vs Nifty Next 50

I have nothing against the said index, merely point out people who looked at past returns only and invested in without understanding risk are suffering, as they should. So how did I bear the loss? Quite simply by not looking!


Well, I did know that my portfolio was in red as I logged in to the brand new HDFC Fund portal but I did not know the annualized return or graphed the folio as above. In 2014 when the daily gain from the portfolio was more than my monthly investment I realised something was happening!

The point I am trying to make is, this is the nature of equity. It will torture you for months to years and reward you in a few weeks and then the torture will start all over again. When losses begin, gains made over the last few years can disappear in the course of weeks.

Hence the need for portfolio management, risk management, goal-based target corpus management etc. However, none of these involves stopping investments based on news and opinions. Leaving aside tactical investing which requires a lot more maturity and a lot more discipline, systematic investing is investing with a system and not invest each month!

If you need money within the next five years or maybe even 10 years, pull out, invest somewhere safe and be done with it. If you are only in your 20s or 30s with needs 20,25,30 years away, you have to keep investing through this period like a machine otherwise you are destined to a middle-class Indian all your life. I apologize if that is offensive, but it is the sad reality of life.

By all means manage risk in your portfolio, but first, recognise that the first and foremost risk is you. Yes, you, your emotions and temperament.  If you can keep that in check and stick to the plan (assuming you have, else stop reading useless recession articles and work on that!), you give yourself a chance to get rich.

If you want a 100% guaranteed that you will be rich, then you are the in the wrong place, my point is, not only should you have a plan, you must back it with some optimism and enthusiasm and inertia.

Without these qualities, I the son of two middle-class government servants could never have changed my “social staus” a couple of notches up over the last 10-11 years.  That is what I spoke about in yesterdays video

Also, see:

And,

Do you have a plan? If not start with our free e-books, put your life in order and then start a hobby not related to money.

Do share if you found this useful

We now publish both equity fund and debt fund (+ hybrid fund) screeners each month!
Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 415 investors and advisors use this!
Unlock the secrets of successful financial advisors and entrepreneurs with our new course!
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Join our courses in exclusive Facebook Groups!

  • 550+ members are now part of our new course: How to get people to pay for your skills! (watch 1st lecture for free). Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show how to achieve by showcasing your skills and building a community that trusts you and pays you!
  • Goal-based portfolio management! Join 2220+ members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment of Rs. 3000 only. No recurring fees! Life-long access to videos (10+ hours content)  in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps