A reader says, ” How did you manage your emotions for all those years when you had negative or zero returns? I always had this question about your investing journey. How could you keep faith that it will all turn positive one day? I wouldn’t have done it for so many years. Did some sane advice from someone help you? I find that behavioural control is the most important thing”.
“How could you do it at that time when there was not much information probably on the Internet? If you could focus on your psychology or your internal mental turmoil of those years, then it will help many investors sail through the difficult times. People generally boast their success stories, but they hardly go through the difficult times, and what helped them”.
Context: The reader is referring to the gain or loss in my equity mutual fund retirement portfolio up to Dec 2019, shown below. I cannot update this graph as I have rebalanced the portfolio.
Notice for the first five years and three months, returns were zero. In hindsight, I am thankful I did not quit during those years; otherwise, I would never have achieved financial independence. You see the gains suddenly shoot up due to this graph.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
The gain or loss is again plotted (green). The yellow dots represent the annual increase in investment amount. Or What I call the investing CAGR (not investment CAGR). Notice the huge year-on-year growth in the amount invested in equity MFs in 2010, 2011, and 2012. When you dump in money when the market moves sideways, you reap the gains when the tide turns – in my case, around the time when economic conditions were favourable -sheer coincidence.
For updated portfolio details, see:
- Portfolio Audit 2023: The annual review of my goal-based investments
- 15 years of mutual fund investing: My Journey and lessons learned
To answer the reader’s question, multiple factors were at play that enabled me to stay invested through those years.
- I owed my brother-in-law Rs. 3 lakhs (he bailed us out paying for my father’s hospital expenses). I owed myself never to be in debt again. Driven by the fear of debt, I was extremely emotional about financial independence at retirement. And fear is a great stimulus. How the fear of repeating mistakes drove me to financial independence
- I used what I refer to as emotional logic to stay invested. I convinced myself about the need to beat inflation and told myself that I could never do this if I did not invest in equity.
- I recognised that I had immense time – more than 25 years to normal retirement. I could afford to sit it out. Time on our side is the most effective risk mitigation weapon against equity.
- I do not follow the news or opinions on social media at all. This helped me stay calm.
- I tracked how much I invested far more than I looked at the portfolio’s current market value. I should also be thankful that I was not tracking returns.
I was occasionally jittery about seeing the portfolio in red all the time, and I did ask myself if I was doing the same thing. I reassured myself that this was the only way. As Dolly Parton said, “If you want the rainbow, you have to put up with the rain”.
Equity returns are always clumped. Sometimes, it will rain and rain, and sometimes it will dry to the bone. Everyone is yearning for those bumper life-changing returns. It is much simpler to wait for those by being in the market (and investing as much as possible systematically) than staying away from the market and waiting for the right time to enter (or exit).
Caveat: Long-term investing in equity comes with no guarantees of success!
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! 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 you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
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 is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will 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
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This 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
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and 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 300 (instant download)