THREE PILLARS OF INVESTING

Let's talk about Successful Investor. I have an interesting fact that I have Experienced, People read Books about How to become Successful Investor, How to study Economy, Market , What will be of Market, How will people behave, etc. If you pay attention and think deeply - How to be Successful Investor?, It's just Psychological Things. Inorder to become Successful Investor you want TRUST, as Money is very dear to you, because when you invest you deliver funds to others. Who do Trusts? It's People you.. It's your Challenge. It's not others. To become Successful Investor, it's your Challenge. Second Thing to become Successful Investor is "PATIENCE" AND "DISCIPLINE". These things make you Successful Investor. Let's understand about Psychological Factors. 

How is Trust Established? It depends upon you. Whenever You trust some one or not Trust someone-  What's the Process. You Trust Someone by seeing the Intent, Character, Transparency, Confidence, Consistency. Trust is a Natural Instinct. How it comes? Let's understand with an Example.

One Father called his 5 Year Old Boy and asked How much you Like Chocolates? The Child says - I like Chocolates very much. The father then asks him How much Chocolates you want - More or Less? The Boy laughs and says - What Dad.. As I love Chocolates I will take more. Why will I take less. At that time Father gave two options to his child - Take 2 Chocolates right now or take 3 afterwards. What Option will he choose?  Of course, 2 chocolates. There are many reasons as he opted the First Option. But the important reason is - When Father asked his son - You said you will take Chocolates more, then why hadn't you taken less? Boy says - Today you are giving me 2 Chocolates. I don't know whether tomorrow you will give me or not. The 5 Year Old Boy - whose Soul is holy, doesn't trust his father. The small Child who has not learned worldliness, whose Soul is Holy, there is no hatred, jealousy in his heart - he finds himself difficult to trust his father whether he will give 3 chocolates to him or not. The biggest Challenge in Investment is Trust. You have to Cross this River. The number of Investors who have failed is they have not trusted the Investments.

There comes small Obstacles, Confusion, Ups and Downs and they come out of those Investments. Leave Journey incomplete and doesn't become Successful Investor. The first condition to become Successful Investor is TRUST. You have to Trust. You have to Trust your Country that it will flourish, your Mutual Funds Investments will rise and so Mutual Funds in India are called TRUST. They appoint Asset Management Companies to help you in rising the Investments. Always remember, if there's no  TRUST, NOTHING is there. And always Remember, its your challenge to face the Trust and trust the Mutual Funds. It is how to think to Trust - 

Intent  

Character

Transparency

Competency

Consistency

If you have  Trust there arise one thing - PATIENCE. We do not get Patience from  Birth. Patience is that thing, that power which we have to follow, to learn, to understand.  What Patience Means? Patience means when atmosphere is not friendly, how you behave. Whether peace exists in your mind? We say Patience as delay in Job done. The Interesting fact is that the things which make Life Successful, are the one which makes Investments Successful.

One Psychologist  from Standford University, some 40 - 50 years back tried to say from his experiment about the importance of Patience in Life. He took along which his team some children of age 3-4 years. This is called Marshmallow Experiment. In this Experiment he gathered all children and categorized them. As Children were hungry, they were given Marshmallows. Children became happy as they got some food to eat. But they were told if you quit eating these marshmallows for some time as the team is going out, you will be given double. They were given two options - Either you eat now or wait for some time to enjoy double marshmallows. You have to be patient. The Team examined the Children and saw that some children ate the marshmallows immediately, some children tried to not eat and eat after some time. One child picked one piece of marshmallow and tried not to eat but slowly ate it . There were only some Children who did not eat Marshmallows. How did they earned Patience????? They adopted very fantastic technique. They stopped seeing marshmallows. They went far from the table of marshmallows and started playing some other things. They started wondering here and there, started talking to themselves, but did not see marshmallows. Because whenever we see, smell, our wants increases. So, we get training in Mutual Funds to not to see NAV daily. Who sees daily the prices of shares, NAV, are impatient. But the moral of the story is who ate Marshmallows, and who had not eaten, created their files. After 40 - 50 years, they examined the Children and saw those whose were impatient children, did not succeed in life and those who were patient, touched the peak of success. This is the power of PATIENCE. But how we created and made patience is to stop seeing the thing which troubles you. So, let's stop seeing daily NAVs. 

Why are we Impatient? The time which our God has given us gets consumed and never comes back. So, every individual has natural instinct to save the time. And so, whenever there is delay in some work, he thinks his time has got wasted. This thing affects him very much emotionally. He gets distracted and thus leads to increase in taking wrong decisions. So, there is very big importance of Patience. But, there is no Patience until there is Trust in you. Patience influences your Decision - making, because at that time you are becoming distracted. How you feel when anything happens that cause delay? We also goes through such condition in Investments. You make investments, and when you find no returns after 3-4 weeks you pull out your money from the market. How will the Patience come? No person will help you, you yourself help to create Patience. When you doesn't have Patience within you, what happens? Let us understand. 

My Brother with his few friends few weeks back went to jungle to see Lion. As my brother and his friends reached Jungle, they saw a jeep and a Guide in it. They were said to keep patience as they want to see Lion. They agreed. They were given 3.00 pm timing. For first 15 mins, they didn't see Lion and become troubled. Inorder to feel comfortable and relieve them from troublesome situation, their Guide stopped the Jeep, told to get out from it and showed footprints of Lion in Dust. They became very excited. They realized the Lion has just passed away half - an - hour back and walked and again lost hope as they couldn't see the Lion. Again, Guide stopped the Jeep and showed the Footprints of Lion. Again, they got excited and moved further. Now, only 15 mins left to complete 3 hours, and they are not able to see Lion. Guide tells them to keep Patience. But they are unable to keep. Just then a monkey's voice came. Guide said, Lion is coming and again stops the Jeep. All are seeing quietly, but couldn't find Lion. The 3 hours got completed, but couldn't find Lion. But they had hope and wished to see Lion. Again they Purchased Ticket for 3 hours. One friend from among that group told there is no Lion and will go to his room and will sleep. So that friend left the group. The left 4 returned and again climbed the jeep and started the journey. Again catched the new guide. This guide is wretched. As we change schemes in Investments for no returns, in the same way we changed the guide. Two hours passed, and we were not able to see Lion. My Brother and his friends were talking among themselves. Our faith is being challenged. There is no Lion.. such thing.. They have opened the business for earning money. The same people talk about Investments. Slowly they started thinking that there is no Lion in Jungle. One of his friends asked "Is there any Lion in Jungle or not"? Same Question Investor asks " Does this market gives returns or not?" As the time passes, patience ends and distrust increases. One among them friends tells that friend was smart as he did not come with us again and slept in the room. You meet such people as they say not to invest in Stocks than to invest in F.D.'s. Last 15 mins were left, suddenly a jeep put a break and the guide told to turn back and see the Lion.. They enjoyed seeing the Lion for 5 minutes. Prior to 5 minutes they were assuming there is no Lion in Jungle. Guide is fooling us. So, guide is there for keeping patience in us. For Investments, Patience is very important. In life, the very big weakness is Lack of Patience. Patience comes from Trust. Later, We had trust that there is no Lion. When distrust comes, Patience becomes weak and there is no third thing that is Discipline. Discipline means regular investment. We would do regular investment when we would trust that India is progressing. We would trust that our Mutual Fund Investments are with experts. When we have Trust, Patience comes and then Discipline exists and we will do regular investments. About 700 years back Saint Kabir has told us " DHEERE DHEERE SE MANA, DHEERE SAB KUCH HOYE" - everything happens slowly. Trees will never grow big by pouring water togethether. When the season comes it will bear fruit. We need to take care of this - 3 Psychological Traits - 3 Pillars of Investing - When there is lack of trust, then there will be no success... When there is no Patience, There is no discipline and if there are no these three, there is no success in Investment.  

MENTAL ACCOUNTING

 I would like to say an interesting fact. On seeing and understanding this fact, whether you are able to invest rationally or not is not confirmed but it will be confirmed that you will not make mistakes. The credit goes to famous Psychologist, Economist, Noble Prize Holder in 2017 - Richard Thaler after great and continuous efforts since 30 - 40 years. Wonderful thing he says - Firstly" Human Being is Contest Robber by nature" and Secondly he says "Human Being is Lazy by nature". Do you believe such fact? Thirdly he says "There is weird relation with rupee and names it as "MENTAL ACCOUNTING". What is MENTAL ACCOUNTING? Let's see and understand this ...................................

Let us take an example.........

1. Lets play a contest and winner prize is Rs. 10 K. If you won the contest, how would you feel? You would feel happy? Because you had earned Rs. 10 K. 

2. You receive a gift of Rs. 10 K in cash from your Relative. How would you feel? You would feel happy and will say "My goodness .. I received Rs. 10 K in cash". 

3. You lost your Rs. 10 K cash in morning when you came in the Event Hall and after some time, a Man comes on the stage  and asks Whose is this Rs. 10 K??? And you say "It's mine". That lost Rs. 10 K you again received. How would you feel? You would feel more Happy. You would jump and dance. In previous 2 cases, you were feeling happy and now you are feeling more happy and celebrating your received money. 

So, you have received 3 Rs. 10 K. Firstly, you won Rs. 10 K in the Contest. Secondly, You received it from your Relative as a Gift. And Thirdly, Rs. 10 K which was yours, few minutes before had lost, you again regained it. In both 3 Events, you Received Rs. 10 K. In that both  Three Events, have you felt same kind of happiness or More Happiness in a particular Event? In which you have gained more happiness? Yes, you have gained more happiness in that event in which you lost your money and then again received. What would you Remember from these cases, Friends? Geeta of Krishna. Why we are being told Geeta of Krishna? Those who are Psychologist, Economist. Without being Psychologist, it's impossible to become Economist. How detailed Study does they do, Friends........... Let's Understand, how it is....

You have made a big sin and sin is you have not understood "Fungibility of money". Try to understand this concept.

You say your Rs. 10 K which was lost, you received more happiness on being getting it as compared to other events. I agree with you on this and believe that Rs. 10 K is very Dear to you. Next day you go to Super Market to buy some Items and your Bill contains Rs. 10 K each of 3 things. At the time of Payment, you give Rs. 10 K each Separately Thrice to Vendor and says This 10 K is the one which I had won in the Contest, This 10 K is the one which my Relative has given in kind of gift and Lastly, this Rs. 10 K is the one which I had regained it after losing and feels more happier, so give me more Items as I am sacrificing my happiness. Will the Vendor give? Of course not. Why is Happiness different? Did you Understand Friends.... We are Statue of Emotions. What we feel is not important. We go into Fiction Instead of staying in Present and from here itself Making Mistakes Starts in Investment. I don't say that with Mental Accounting you don't make losses. Mostly Through Mental Accounting you make Profits. Do you know what Profits do you make? You are likely to develop quality of Self - Control on yourself. But if when you are trying to Develop Self - Control on yourself means you lack the ability to Control yourself. So WHAT IS MENTAL ACCOUNTING?........

MENTAL ACCOUNTING means you distribute your Money in different Sources. This is by allocating Money for Children's Education, Purchasing Car, Owning House, etc. If the money finishes from one sector, you do not withdraw money from another sector. All Companies follow such Strategy. Because Company wants to control expenses of a Particular Department. Company which follows such Policies, Philosophy... Should be followed by Individuals? Company does this for the purpose of Control. But can we do Self - Control or do Mental Accounting. How do we make Profits and Losses through such Strategy. 

Let's see and try to understand this .....

One more thing I want to speak about Mental Accounting. This is very simple thing. Mental Accounting is such thing that it makes an individual to do Finance and Economic Sin. Peruse it . 

You go into one shop for buying some Items or Products. You are with your Friend. Both wants to Buy some Items. You make Payment through Cash whereas Your Friend uses Credit Card. Who among them will spend more? Of Course, Your Friend. How do you know? Because the same thing we do. Why the expenses raised through Credit Card. This is because when we out pocket our hard cash and we see it, we realize we have earned through a very hard work. Why we became more Happy on regaining the Money which was lost in the previous event? Our brain tells that it's our hard work income. So, when we remove cash from Wallet the same feeling of hard earned money comes in our mind. When we make payment through cash our heart hurts. While we do not realize when making payment through Credit Card. We lack in realization and thus incur huge expenses. This is Mental Accounting. We give money through feeling, emotions or through rational thinking. 

In 2003 when I Firstly realized Mental Accounting. My father wanted to go into a big function. He wanted to buy a suite to wear in a function. My father used to wear a Tailor made Suite. This time my Father decided to wear Branded Suite. He went to shop to purchase which was Rs. 2990. It was huge Price for my Father in 2003. My father realized this is not value for money and should not purchase it. My father did not purchased Suite and came back home. After coming home my mother asked Why haven't you bought Suite? My father said it was too costly. At the same evening, My father's mother - in - law came to meet my Father and Mother. She stayed one night with us. Next day when my father was going to office, she asked to drop her to Railway Station. My father agreed to Drop her. My father was in the way to drop her to railway station, His Mother - In - Law hands over an Envelope of Rs. 10 K. She was very smart women, as she didn't give him at home. If she had done, My mother used to take the Envelope. The same evening my Father arrived home late. My mother asked him Wow.. You purchased Suite. Why my Father bought Suite? This is because he did not considered his own money. He felt it is Mother  - In - Law's Money, so he spended. He Differentiated Money and Money. Such an Individual cannot become Good and Successful Investor. Why does so? In our Culture, we treat our Funds, Money as God, Goddess Laxmi and we insulted her. Our goal in Life is Purushartha which means "Object of Human Pursuit". It refers to Four End Goals of Human Life. It is Dharma, Artha, Kaama and Moksha which means righteousness, moral values prosperity, economic values, pleasure, love, psychological values, liberation, spiritual values. It means Hard Work. And you have to do hard work in above Four Places. In which Artha is very Important. We live in four Varnas which means Grahasthashram, Sanyasashram. You have heard about these. In these Grahasthashram is believed to be most important and in this Earning Money is considered very important. The person who has Funds only remains happy. What sin have you made? You differentiated Laxmi and Laxmi. You treated your Salary as Mahalaxmi and treated Money of Mother - In - Law lesser Laxmi. So if Laxmi is there, she will get angry on you or be happy on you. One respects Laxmi and the other does not. So Let's understand how it impacts us....

It impacts hugely on us and more it gets affected to our Investors. Let's take an Example.

One Individual makes Investment of X of Rs. 50/-. This Rs. 50/-. is the cost. Whereas, on the other hand you make Investment of Y of Rs. 50/-. Both Investments you make Of Rs. 50/- NAV. After some time you need Money. You talks to your advisor and says to tell the price of NAV as he wants to withdraw the money. The advisor tells the price as Rs. 25 of X. What is Happening? You are making Losses. Seeing this you go to your home and asks your Advisor the price of Y. He tells the Price as Rs. 75/-. What Happened? You made Profit. See it carefully. You can withdraw any one of them and satisfy your needs. You can even sell the losses and earn money and can even sell the Profits and earn money. Which Investment would you choose? X or Y. You would sell Y, in which you are earning Profits and has performed good. If other things are similar, would you have to do such thing. 

Let us Understand...

 There is one Father and his two sons. He is friend of yours. But stays far in other city. You know one son is worth and other is not. The son who is not worth is not improving himself. He is getting worse day by day. Your friend kicked off his son from his house. Whom had he Kicked off - Worth son or Not worth son? Of course, Not worth son. Do you kick off the best performing individual from your life. What you did in Investment? You removed good performing Investment. And continued to invest Not performing Investment. Sometimes go to NSE and BSE Website. Whenever IPO comes, what happens in IPO. Every Company's Successful Businessman distributes his company among People. People through IPO purchases the Company and becomes part shareholders. After some days, it gets listed and Trading starts. Through Trading, those people who have invested in IPO incurs Profit or Loss. Mostly what People do? Whenever Profit, Investors gain, they sell those stocks in 2-3 days and those who make loss, remains invested. What is the Impact? In India, whichever Company has come through IPO, all are listed. There came such great Companies which made 30 -50-70 crores from Rs. 10 K. But Public doesn't have those Companies. Because with small profits, you sold those Stocks. And there are many such companies which have incurred losses forever. Trading stopped. And prices worsened. Just see in the Annual Report, Promoters have run away whereas, shareholders have sticked to those stocks. So, what you did? You sticked to Loss making Investment and sold Profitable Investments. So, how will you make Money? Why such mistake occured? Mental Accounting. You thought this Loss of Rs. 25 of Investment X was of hard - earned money. So, Why would I sell? In the second Investment you think, Market has earned for me like in the case of Mother - In - Law, so lets make money, if the price lessens it will go away. 

Friends, this is Mental Accounting. The person who does Mental Accounting Invests his funds in Bonds and not in Stocks. So this is a thing of loss. The person who does Mental Accounting keeps his money in F.D. of 7% and borrows Car of 11%.  Because you differentiated money between money.

 Understand. Do not differentiate between money. Money is fungible. It is one and the same. If you understand this, you will become a Successful Investor and you will enjoy life. 

Role of an Advisor

When we make Investments, does we require an ADVISE. Definitely. But do we need an ADVISOR? Because, in today's times, we get all types of Information ready and its readily available in our hands. In such a time, does we require ADVISOR? If Advisor is needed, how do we select? Let's see how Important Advisor is? How does he helps in INVESTING FUNDS? 

Friends, you might have heard in India, and all over the world, especially in USA, the Financial Asset - Mutual Fund. Why I would like to share Picture of Mutual Fund of USA? Because since 100 years it has launched Mutual Funds, While India has completed almost 50 years in Mutual Funds. In USA, first Mutual Fund launched was in the year 1924. And in that Country, half of the population invests in Mutual Funds. So, it is important to share information about Mutual Fund. 

There is Dalbur Associates Firm in USA. This firm finds how investors achieved the Returns from Investments in Mutual Funds. The picture below is very Fearsome. Please see carefully. The picture is about whether you are a Successful Investor? The columns in picture figures it out about findings of 20 years. This means, if you see 1999 or 2000, it is 20 years before 1999 i.e. from 1980 to 1999 - how much market has given Return and how much Returns Investors have earned. This is about Equity Investments. From 1980 -1999, the Returns of S and P is 17%. But returns of Investors by Investments are 9-9.5%. You can see further till Years 2013. The Returns which Market has given is not equal to the returns of the Investors. 

Now let's see India's performance in Mutual Funds. CRISIL has shown that how Equity Diversified Mutual Funds has performed in India. CRISIL Index of AMFI has shown, if you had invested Rs.1000 in April 1997, so in Dec 2017, you would have earned Rs. 50,000/-. It's 50 times high. Its so wonderful. The sad thing is there is only 2% Earners - only 2% Investors have earned in Mutual Funds. Most of the people do not complete the journey. What difficulty arises on their paths. Why problems occurs? This is because of Fear, Envy, Jealousy and we thus make mistakes. Who can help us from making these mistakes? At this time, Advisor can play a vital role. There is myth that the job of Advisor is to inform Wonderful Schemes, Give Profitable Tips. This is not his work. This work is of  Media like TV, Magazines, Newspapers. You know why it happens. Many Investors oftenly asks What are Good Schemes, I have money to Invest. Let us see into Detail ....

Let's see Funny Example -------- Why there is Need of Advisor and Why Not? We work emotionally, humans get influenced emotionally. I have learned from somewhere, which I have brought forward for you. Below is an American Association code of Medical Ethics Opinion 1.89. Members of American Association suggests that Physicians should not treat their sons nor members of their family. One father doesn't do surgery of his son, nor a son does surgery of his father. Why? Does he forgotten the way to do surgery? This is not so. This is because we get Emotionally Hi- Jacked when we apply to ourselves. We oftenly do mistakes when emotions arise into our brains and mind. So, who is an ADVISOR? Advisor is he who protects ourselves. World's famous Economists says that "You are the only Enemy of your Investments". No one harms you or can harm you, except yourselves. Because, when other person tries to harm you, you try to Defeat him and when you yourself harms, you cannot understand. 

If Investments were so easy, all people would have succeeded. Many Investors cannot succeed, because its simple when we see Investments but its not easy because there exists emotions. Emotions decide your motions. Let us try to understand in the form of story. Many Investors say that there are lots of media like TV, Magazines, Newspapers which gives information and I can manage all my funds with the help of it. 

So, let us try to understand this story. Whenever we Do Invest, we Probably predict the Market.  Can we predict the Market? We can't. In market whatever ups and downs comes is similar to ups and downs we face in our lives. Let us see the Market of USA because it is from last 70-80 years as compared to India's Market history of 35 years. Lets see the graph of DOW JONES. 

There is rise in Index of Market in proportionate to the fall in the Market. This means there comes ups and downs in the Market. See How it influences and affects by reading below example.

 One person asked  a Mountaineer Tenzing Norgay whether you are Sherpa? Who are Sherpas? He immediately replied Sherpas are Advisors to climb the Mountains. They help us in climbing the Avalanche. So, the person asked -  Can we climb Mountain without Sherpas? Do we require Sherpas for climbing Mountain? He replied - No, Without Sherpas you can climb the mountain. The person asked - Whether any one has climbed the mountain without Sherpa? The Sherpa answered - Yes, 2% Mountaineers have climbed Mountain without taking the help of Sherpa. The person then asked - Then why there is need of Sherpa. The Sherpa kept silent for 2 minutes and he answered - When you are standing below the Mountain you are King. It's your wish - Whether you want to climb Mountain or not? But once, you climbed it, you lasts your wish and you have to come back. You can't stay on Mountain. And when you descend the Mountain, there comes a challenge. If 100 people have successfully climbed, 76 people have injured and lost their lives when descending the mountain. It's difficult to climb the mountain but it's very difficult to descend it. Many people do make Returns in the Upward Movement of Market but most of the People doesn't make money in Rise and Fall of Market. Many People collapse when market falls. In the rising Market even Donkeys win, runs fast than horses, but in the falling Markets we understand who are Donkeys and Horses. 

So, Friends, This Market does Falls and Rises. The sayings of Tenzing Norgay is exactly that - The story of Yudhishtira. See what happened in Mahabharat. In Mahabharat one moment came when Duryodhana said to Yudhishtira to play Dice Game with him. Yudhishtira challenged him, as he knew Duryodhana doesn't know well how to play Dice Game and he considered himself as a successful Gambler. He was very fond in Gambling. His weakeness was to do Gambling. He thought - whether to accept such kind of invitation or not. When you think - Whether to invest or not - What do you think? The market will rise, will fall or will remain neutral. The feelings of rise, fall and constant comes in our mind. When you will feel - the market will fall, you will not Invest. When you are neutral about the market, you will wait and when you hope the market will rise, you tend to Invest in the market. When Duryodhana invited Yudhishtira, Yudhishtira had three questions in his mind - To play, not to play, what to do? If Yudhishtira was uncertain, he was not able to decide, if  he was not certain that he would win, he wouldn't have played. When he played, it was assumed that he would definitely win. This is called Over - Confidence Buyers. Yudhishtira felt that he knows well to Play Dice Game, he is expert in the whole world, so not to fear. He thus accepts the Invitation. See the miraculous thing, You think the market will rise, but after Investing the market falls, because you can't predict. Yudhishtira also cannot predict. He thought he would win, but he started losing. When he started losing, what happened?  When you get stucked into such kind of incident which you are not prepared or not prepared mentally, what happens? You get tensed, stressed. When you get Tensed, you make wrong decisions. You have seen Gambler, as and when he starts losing money, his level of stress rises. He should leave the game when lost, but he doesn't do, instead he Pours more money into it because of stressed Emotions. In the same way, Yudhishtira does the same, who is called Religious by nature, he puts his wife at stake. Why does he do? Because he was not prepared. Why such kind of mistake happened with Yudhishtira? He was full of over - confidence. He felt he knows how to play, he is an expert. Such great mistake he made which Duryodhana never made. Duryodhana doesn't know how to play. Because he took Advisor - Shakuni with him, whether he is good or bad. But you have watched it carefully that Yudhishtira went alone without taking the help of Advisor. Imagine, if there would been Krishna, who was Advisor of Pandavas, has there been such kind of scene. There not would have been Mahabharat. We are the creatures of habit. Habit never changes. After putting his wife at Stake, after seeing his brothers loosing, again after 1 year, he plays Dice Game and that too without the help of Advisor Krishna. Because Habits doesn't easily change and again lose. After stumbling twice, when he realised, there arises War of Mahabharat, Arjun with folding hand invites Krishna as an Advisor. And Krishna gives him two options - Take my Military or Me as I would not fight. This is a wonderful thing. The Military which was never defeated, on which we can win any War, Kaurav took it with them. Duryodhana felt upset as Krishna firstly placed proposal in front of Arjuna to take Him or His Military Force. If Arjuna took Military Force, He would only have Krishna with him which is of no use. He felt happy as Arjuna took Krishna and not Military Force with him. Military Force means Portfolio - Even if there is a good Portfolio - never gives Return when Market falls. A War never wins without a Leader even if there is Strong Military Force. Duryodhana lost even if he took Strong Military Force. Krishna in the form of Advisor, never fought the war but only gave advise and thus Arjuna won. Arjuna moves one step back on seeing his loved ones and tells Krishna not to fight with his loved ones. If he would have taken Military force, he would not have won, he won only through Advise of Krishna. Thus the Role of Advisor plays an important role. 

Advisor is a friend, Teacher of yours. Advisor is one who saves us from Ourselves.

WHY SHOULD I INVEST ???

 I have experienced many times that many people don’t understand what’s the difference between SAVINGS AND INVESTMENT. For this our Parents are Responsible. Our Society is Responsible. They never taught why there is difference between Savings and Investments. But why, they were not able to teach us? Becoz, in there era, there exists no one thing, which is called INFLATION. This Inflation only caused difference between Saving and Investment.

Let us try to understand this - One who will understand this concept, it seems will cross First Ladder of Investment. Doing Savings is a Mental Instinct. Which means any Animal does or can do. You have read many stories in your childhood that before the Autumn season animals store and save their eatables. So, why do we do Savings. Because we fear that we don’t know what will happen in future. And Second Reason of Saving is it gives mental piece. I have done Savings. If any Problem comes, I can overcome that Problem.

What do we call Investment? Investment is the talk of Modern Era. There was no existence some time ago in the world. Investment means Financial Freedom, means I will not face any kind of problem in Life. And Investment does work for and helps Savings that you will not have to work for money. Frankly speaking, we want to work for money, we want to make money so that we will live. Will we earn whole of our life? There comes that moment in life when money works for us. This is called Investment. “Money works for us, you don’t work for money”. So, why a common man can’t understand such Difference.

Lets try to understand this, and to understand the difference between Saving and Investment, from where does it come? It comes from Money - Rupee, Dollar, Pound, etc. Any thing which includes 3 Qualities or Features - Medium of Exchange - in which you can deal, Unit of Value - which can define your kind and Easily Transfer and Store Value and Time from one Era to another Era. Any thing which comprises these three qualities is called Money. This Money has only made Investment. HOW?

When Money was firstly used in World, You have heard it was made up of Gold, Silver. This is because of Precious Priceless Metal. The Services would depend upon the Pricelessness of Metal. So, in the World, there was no Inflation. This was because of less presence and Supply of Gold and Silver. As per the rise in Economic Development, there was raise in growth of Income, and when Income was given in currencies, you were allowed to only give as per the Supply of Metals. Less Supply of Metals thus leads to Low Distribution of Income and vice versa. You have heard when Spain, Portugal, France and England ruled over other countries, they collected huge mass of Gold and heavy precious metals and stored in Europe. And after that First Time we understood Inflation. Which means when Heavy Mass of Precious Metals like Gold, Silver came in Europe, Inflation occured. Why Inflation rises as Per Economist - This is because of Rise in Supply of Currencies.

Let’s see Further ..

Slowly and Gradually, People kept moving Forward, Businesses kept moving Further, Friendliness came to exist among Countries. But there occured First World War, Second World War. And after such 2 World Wars, it was found that on the basis of Gold and Silver Metals there is difficulty to run businesses. Then seeing this, all Countries of the World signed an Agreement to use US Dollars and on the other hand USA promised to pay 1 Ounce Gold against 35 Dollars. This lead to Final Conclusion that if you have Dollar in your Pocket, you have Gold. This is called Gold Standard or Representative Money. Whenever Representative Money remained in the world, Inflation raised every moment. Inflation used to exist when there were Wars, Famines. Some countries took advantage of such incidence. Due to anxiousness of such incidence, USA President Richard Nixon before 15 August 1971 scrapped such agreement and thus would not Transfer Gold into Dollar. But Demand for Dollar continued to rise. This is because this was a legal tender. This was called FIAT CURRENCY. FIAT CURRENCY is such currency which doesn’t own any value, but Gold and Silver has their own Value. When Partition occured in my House what I experienced is that 100 years or 70 years back, there was Partition of Gold and Silver Coins, that 1 Rupee of Gold and Silver Coin has value in itself and has value of more that 1000 Rs. in current scenario. This is because it has its own value. But this Paper Rupee we are using, it doesn’t have its own value and is thus FIAT CURRENCY. FIAT CURRENCY has its value when Government is behind it. When Government stopped backing it, Rs. 500, Rs. 1000 doesn’t work. We have seen in Demonitization .

What’s problem with Fiat Currency? Problem with Fiat Currency is that it is made of Paper, Government can print it as per their wish. So, as per the rise in Supply of Currencies, the Inflation rises. This Inflation has not seen earlier by our Parents, Grandparents and not understood so they did not made difference between Saving and Investment. For Successful Investor, he should understand that Inflation is a big Enemy. This Inflation started creating Difference and gap between Saving and Investment. My Grandparents stored and saved Gold and Silver metals, so their wealth thus kept on growing whereas my Parents saved and stored Money, but it didn’t grew. Both of them saved Rupees but how come the Difference existed. This is because FIAT CURRENCY caused Inflation. How Inflation occured by FIAT CURRENCY, Let us try to understand…

Lets take an Illusion. First option is I give Rs. 2000 to You. Second Option is I give Rs. 100 to You. Among these Two Options which one would you like to Choose or go ahead with. You will take Rs. 2000 note. Because Rs. 2000 note is 1000 higher than Rs. 1000. As any one would opt for Rs. 2000. Now, Let’s imagine. As you have seen in Movies, with the help of Time - Machine you can go in the Past or in the Future. So, I uses the Time - Machine and tells you that Rs. 100 I will give you in the year 2000 and Rs. 2000 note will give you in Year 2018. Friends, what would you take? Of course Rs. 100. This is because 18 years back value of Rs. 100 was more than Rs. 2000. We call Rupees as Wealth. My mother used to tell Study Well so that when you grow old you can Earn Huge Money. She was wrong. My mother doesn’t understood that Rupee is Weak. As the time moves ahead, it decreases its value. My mother used to tell Wealth for Gold also. He used to store and save Rupees also. She used to like both. Let’s understand Gold which is second form of Wealth.

I am giving Two Options in the same way as earlier said. One is 50 gm Gold coin and other is 100 gm Gold coin. You can choose any one from these. What would you like to choose? Of course, you would take 100 gm Gold Coin because Rs. 100 gm Gold Coin value is 50 gm higher than Rs. 50 gm Gold Coin. Lets imagine. I take same Time - Machine and take you in the Past. I give Rs. 50 gm Gold Coin in Year 2000 and Rs. 100 gm Gold coin in Year 2018. Of course, Rs. 100 gm Gold Coin. This time you did not change your mind. Remember, last time you have choosen Rs. 100 instead of Rs. 2000 because the value of Rs. 100 was more than Rs. 2000 of today. But what happened in terms of Gold. Even today Rs. 100 gm Gold Coin is higher than Rs. 50 gm Gold Coin. It was higher in value long 1000 years back and will even remain in future. What is the reason? This is because it is Asset. It is Finance. Gold has power. It goes on rising as it moves ahead. But Rupee is not Finance. Rupee is not Asset. You make an Investment in Rupees, in F.D.’s is not Wealth. Because as the time will pass, the value, the Power of Rupee will fall. Those People who do Currency based Investment don’t rise, they are not called Wealthy but those who Invest in Assets - 3 types of Assets are Popular - Gold, Land and Equities are Wealthy. You have seen whenever people talk about rich people, Millionaires, they have invested in Equities, Gold, Land. If you see First 500 people in Forbes Magazine, What Rich People have? They have Equities, Ownership of Business.

Let’s remember Wealth is - which value rises with time, and that thing which falls when time passes, never invest in. This is not the route of Investment. There is a big difference in Saving and Investment which books can’t teach, life teaches us. Society and our parents cannot teach us because they have not seen such Inflation.

WHY PEOPLE LOSE MONEY IN STOCK MARKET???

 

In the World of Stock Market  Everyone like to talk about "MULTIBAGGERS" and people who created wealth like Rakesh Jhunjhunwala. 

But tell me Friends what about the failure stories. Every year, millions of people in India end up losing money in Stock Market. But nobody likes to talk about it. 

There is a very good saying, 

"WE CAN LEARN MORE FROM OUR FAILURES THAN THE SUCCESS". 

I would be telling you 7 Common Mistakes and People losing money. Major Human Psychological Factors that are the root cause of all the Problems .................................................................

PENNY STOCK

First Mistake is Investing in Penny Stock. Most people have obsession in Penny Stock. They think that when they Invest in Penny Stock the Downward risk is very low. 

For example, if they Invest in the Stock worth Rs. 5, then they think that most they would lose 5 Rs. per share. But, the Upper Potential Risk is huge. Friends, one out of 100 Penny Stock have Upward Potential, rest all have Downward Risk. And How much you can lose? You can lose all your money. In fact, I ask many people, why they like Penny Stock and many of them said that they like to get High Units. This is again huge misconception. 

For Example, there is a share of Rs.10. Lets call it Share A and there is Another Share B worth Rs. 1000. Now people think that if they Invest Rs.10,000/- , they will get 1000 Units of Share of A and only 10 Units of Share B. So, let's invest in Share. Of course, this is not the right way to Invest. In fact, Share Price has got nothing to do with Valuation. A Share worth Rs.10 still be Over - Valued than Share worth Rs. 10,000. 

For Example, MRF is a classic case. It is currently  Trading at Rs. 86,000/-, but it is still reasonably valued. Yes, it is not Over - Valued even in Rs. 86,000/- per share. By the way, do you know which is Costliest Share in the world? It is Berkshire Hathaway. The Company of Mr. Warren Buffet. Do you know the price of 1 share of Berkshire Hathaway? It is 3.67 Lakh USD. In another words, it is Rs. 2.7 Cr. So, share price has nothing to do with Valuation. Majority of people lose money because they end up investing in Penny Stock. 

Next Mistake is ..............................................

NO IDEA OF VALUATION. 

VALUATION. WHAT IS VALUATION? 

If I ask people, no one has any idea about VALUATION. They just invest because they think that the share is good or if some one suggested the share. My Friend, Valuation is the most important criteria along with the fundamentals of the Company. No matter, how good a share is, no matter how good the future growth potential is. If the share is super - expensive, it won't give you high return in the future. Majority of people lose money because they end up investing all their money in super expensive stocks without looking at the valuation. 

Next Mistake is .......................................

They Follow the Herd 

This is the biggest problem in our Country. Majority of people end up Investing in Companies where their Colleagues have invested, Friends have Invested or Relatives have Invested. 

It is like 

"DOOBENGE TOH SAATH MEIN". 

On a serious note, I have seen many people simply investing on Tips from Friends, Family Member or Colleagues without even knowing anything about the Company. They have Blind Faith. Again, a major reason of Losing Money.

Next Mistake is ...........................

People Look for 52 Week Low

Many people have the tendency to Invest Money when the stock touches 52 Week Low. 

"YAAR AUR KITNA GIREGA", this is their Attitude.

 BHAIYA AUR BHI GIR SAKTA HAI. Majority of people talk at 52 Week High thinking

 "YAAR AUR KITNA BADHEGA". It doesn't work like that. You can't simply avoid the Stock just because it is at 52 Week High or can't simply invest just because a stock is at 52 Week Low. But on the other side, there are also people who just invest Looking at High Returns in the past. They invest when the Company has already given Bumper Return. No. Both the Approaches are wrong. A Stock at 52 Week Low could even fall further if the Stock is fundamentally weak. But if the Stock is fallen to 52 Week Low due to External Reason like COVID and the Stock is fundamentally strong then it makes sense to invest. Majority of end up investing at poor quality stock at 52 Week Low. And a Stock at 52 Week High can either fall or rise based on the Fundamentals of the Company and future growth prospect. 

Next mistake is .......................

 People avoid quality Stock

I don't understand why? But people have the KEEDA to identify the Hidden Gems. 

"YAAR HDFC BANK TOH SABKO PATA HAI... KUCH AUR BATAO".. TITAN, RELIANCE, TCS TOH SABKO PATA HAI, KUCH AUR BATAO.. AISE STOCK BATAO JOH KISI KO NAHI PATA.

Many people lose money in market because they simply avoid the real gems and keep searching for the hidden gems. There is another problem. People not only avoid High Quality Stock but end up investing in Poor Quality Stock and, when their Share Price Fall they invest even more to average out their price. Friends, this is a Recipe of Disaster. 

Next mistake is They end up investing in Day - Trading and Futures and Options. Many people want to make quick money in stock market. As a result, people end up doing Day - Trading and even invest in Futures and Options. Friends,  Day - Trading is not every one's Cup of Tea. You need to be Professional Trader. Many People lose their money in Stock Market because they end up investing money on Day - Trading and specially in Futures and Options by buying huge lots on Leverage and even on Borrowing money from others. When they lose money they invest more with a hope to recover their lost money. And end up losing even more. 

Next Mistake is ................

People never learn from History

For Example, if today Sensex is at 50000 people think that it will only go up. But my Friend, if you look at the History you would know that if the market rise, it also falls. And when it falls it eventually rise. People today are going towards Technology Stock. They are willling to buy Technology Company at any Valuation. I am not saying that they are bad. But if you look at 2000 Dot Com Bubble, there was a time where every Internet Company was attracting Super Expensive Valuation even without any Profitable Business Model. Eventually the Bubble burst and people lost money. So, don't just invest in a Company because it is a Technology Company. Look at the Financials, Business Models and of course, the Valuation. Likewise, Today everyone want to apply for IPO's, every IPO. "BHAIYA AISA NAHI HOTA HAI". Not every Company that goes for IPO is good. Investing is not a Science. There is no Fixed Formula. It is more of an Art. If investment was all about Financial Numbers, every Finance and Economic Professor would be a Millionaire. The biggest factor that decides the Success and Failure of Stock Market is Human Psychology. 

Thrill

People need Thrill.

Let's understand the Human Psychology. If I gave you two Option of Investment. First, Nifty 50 Index Fund that can give you an average of 10 per cent Average Return for Next Average 10 years V/s Second, Active Mutual Fund that can even give 15 per cent return or can also give 5 per cent return. What would you choose. Majority of people would go with Active Mutual Fund because if you know an Average 10 Per cent Return, then there is no thrill. On the other side, even if there is a slight chance of 15 per cent return, then you want to take that chance even though there is huge downward risk. This is the reason why Index Funds are not so popular in India. 

On the other side, If I tell you, that a stock can give you average 20% return for the next 10 Years V/s a  Stock that can either give 100% Return or can also give you negative return. Then Majority of People would go with Option 2. 

I want to Share a Story when G Pay became famous. When G Pay hit in India, People used to Transact with PAYTM. So, earlier PAYTM used to give Rs. 100 or Rs. 200 as cash-back which can be used in another Transaction. But Google Pay did something Extra - Ordinary. Do you know what was that. The Problem with PAYTM cash back was that people already knew the amount they would receive. So, there was no thrill. Google Pay introduced a Scratch - Card System. So, you make the payment and get a Scratch Card. Now this was a Billion Dollar Idea. Since, people didn't knew the Cash Back they would receive, it created  a thrill in their mind and Google Pay started by giving good Cash - Back. So, if someone make a payment of Rs. 500 and got a Scratch - Card with a Cash - Back of Rs. 100, the person was thrilled. He did not expect this. This releases DOPAMINE in the body which is the Hormone responsible for the Happiness. So Dopamine is also known as "Feel-good" Hormone. So, it started sharing its Google - Pay Experience with Friends and all over Social - Media.

 Instantly, Google - Pay became a hit. Infact, the strategy was so brilliant that it would cost Google Pay less than PAYTM CASH BACK because later Google Pay reduced the Cash Back on Scratch - Card and many times Scratch Card would show BETTER LUCK NEXT TIME. Still there was a thrill. And friends, you must be wondering Google Pay guys must be a Genius. This Concept is nothing new. Humans have always been thrilled by these Scratch - Cards. And hence concept of Lottery has been prevailing in our society for 100's of years. It is just that Google Pay has made an Online Version of it. Later, PAYTM also followed the same strategy. In fact, this Dopamine is the main reason why people are glued to social media. The urge to get instant gratification with someone liking your photo.of your photo. Anyway, if you want thrill please visit Goa or Vegas. Real Investing is boring. It is like watching paint getting dry or watching grass grow. 

Next reason is ....................................

 Greed

This is again big problem. 

"YAAR 10 PER CENT WALI NAHI, 40 PER CENT WALI COMPANY BATAO". Greed is the reason people end up investing huge amount of money when the market is at top. Greed is the reason people end up Borrowing money to invest in the stock market. Greed is the reason people end up investing in penny stock. Greed is the reason people end up doing Day - Trading and Futures and Options. And greed is the big reason why people end up losing money. 

Next reason is ...........................

 Lack of Patience and Discipline 

"YAAR AISA STOCK BATAO KI 6 MAHINE MEIN PAISA DOUBLE HO JAYE". This statement sums up the mentality of majority of investor. Everybody wants to get rich, but nobody wants to get rich slowly. If you study Warren Buffet, he became a Billionaire at the age of 56. But majority of people lack patience in investment. In fact, if they invest in the great stock and mutual fund and it doesn't give return in next few months, they end up selling it. Because, they simply don't have the patience. 

Discipline to invest systematically at various level inspite of market volatility. Discipline to stay invested in the market. It is not easy. And the majority of people lack discipline. 

Next reason is they can't handle the pressure - Friends, you need a lot of conviction to go against the wind and stay invested when the market fall. Or infact, invest even more during the fall. But Conviction, comes only from knowledge. That brings us to the final root cause which is Lack of Knowledge.

"YAAR SIKHNA NAHI HAI.. BAS TIP DE DO KISME PAISA LAGAYE". This is again a major Culprit in people ending up losing money. Unfortunately, Money Management is not a part of school curriculum in India. Nobody, teaches it. Nobody likes to discuss about it. JOH HONA HAI, HONE DO. No wonder. Every year millions of people in India end up falling in various financial traps and destroy their financial life. 

TRADING Vs INVESTING - HOW TO GROW WEALTH?

Whenever we hear about Stock Market, We find Two Types of People  saying ..

Every Day we can gain Rs. 10,000 

on one side

and

We can become Crorepati in Long - Term

In Stock - Market we can do Trading or Long - Term Investing. Which is Better? Where can we gain More Money with Lowest Risk? 

Let's Begin..

In Trading, Whenever we buy any asset, we do so in order to sell. For Example, Stocks, Futures, Options, Bitcoin or anything, you buy and sell and make the profits from the difference. There are some Traders who within only few minutes buys and sells stocks and makes profit through small fluctuations in the market. We will see how it happens further. 

On the other side, Long - Term Investors doesn't buy any contracts like Futures, Options, Bitcoin, etc but hold their Investments for long time, say, 10 or 15 years or for a Life - Time. Because they think that , whenever Company does something good, the value of stocks always increases and in the long - term the stock's price always goes up. In short - term, the price or value of stocks can be little upwards or downwards due to temporary emotions. But in Long - Term its stock price actually follows its value. So, due to actual growth, Long - Term Investors makes profit. You might think, if we can make good profits through Trading, then why to wait for gains through Long - Term. Before understanding this, Let's understand the Strategy and Difference between the two with Examples. How does Two Types of People makes money and how money comes. 

Suppose you bet with your friend by Coin - Toss .

 If head comes you will win and he will give Rs. 10,000 and if Tail Comes you loose and you will have to give Rs. 10,000 to him. As and when you toss the coin, you cannot back up from the game. Either you will gain Rs. 10,000 or you will loose Rs. 10,000. If you play game once, hope so you will be lucky and win. But, if you will play this game with your friend much more times, can any one tell that some one will become Crorepati. If you play this game even 10 times, both of you will have nothing in your pockets. Because it has 50-50 per cent chances to win , either you or your friend will win. So, we call this as Zero - Sum Game. Because , you are not adding value to it. In long term nobody is getting benefitted, nor you nor your friend nor Government nor Society. But you are wasting your time by playing this game. But, even some are playing this game. Now, after some days, a big problem arises in this game. Any one who looses the game, he does not give the money but absconds immediately, as who likes to give money that is lost. And then in this game, new person enters and says to keep the money that is invested in the game with him for safety and will have to pay 1% fee for his service. This person we call as "BROKER". Now, thereafter, fourth person makes entry. He is that person in whose house you are playing the game. He says as you are playing the game in my house, those who will win will have to contribute 15% of the win money. Loosing Person doesn't need to pay, because he is lost. And you feel logically right and fair enough. This person we call as "GOVERNMENT". After few months, we see that we are not becoming Rich but this Broker is becoming Richer and Richer. And so, Broker always motivates you and creates greed into your mind to fulfill your Dreams by comparing others. Infact, after some time Broker gains hefty sum of money and he then smartly invests in order to grow his business, to do marketing, and brings newer people. After some time, again you notice, even after playing among us, our money vanishes. You think, how it happened? Both of you are not understanding. And, you add fifth person, who is your Older Friend "Rocky". He makes you realize how it happened and says It happened due to Paying this small 1% fees to the Broker. In Finance World, we call it as "FRICTION COST"and in Layman's Language it is called "TRANSACTION COST". 

In second example, again there are two friends. One does Business and Second has Huge Wealth.

The one who has huge wealth gives some wealth to his Businessman Friend in order to invest in his business. The person who has huge wealth, we call him as "INVESTOR" and the person who owns Business is called "INVESTOR AND MANAGER". The businessman works very hard for his business and gives his Wealthy Friend his Profits regularly by directly transferring into his bank account. This is called "DIVIDENDS" and sends proper report by mail detailing how much profits businessman made  and how he will grow his business in future and many more important things. This is called "ANNUAL REPORT". Now, a big problem arises that this Investor is not able to meet his Friend who is Businessman. Whenever, he invests his money, he uses the Broker's Service and transfers the money in his box. Due to this, other people are getting confused about the game. How people are making money from this? Some are saying, we can make Huge money out of it while others say, we can loose all the money. From these two Examples, we have got idea that through Trading and Investing, how money comes to People. 

Now, Let's see which Option is Better and in which Tool we can make more money? How much Risk is involved in these Two? Let's understand with one Example....

Suppose, while coming to home after office you are talking with your friend on call and your friend gives a stocking tip that "Buy XYZ Co.. and gives explanation with logic" and you get convinced with him and get very excited. After going home, you immediately checks your Savings Bank Account and sees that you have only Rs. 2 Lakhs and that too as an Emergency Fund. All money you have kept locked in the form of F.D. and PPF. Your wife will get angry on you if you touch that money. So, you checks all the house for money and your eyes fall on your wife's jewellery, but after few days you and your wife are attending a party, so your wife will be in need. You decide to withdraw this Rs. 2 Lakhs  and checks the price of stocks and sees that the stock's price is Rs. 20,000 and you calculate and find that if you buy the shares you can buy only 10 in quantity. You will not get benefitted only with 10 shares and this is a guaranteed opportunity which doesn't come again and again. He remembers even 2 years before, this friend has given him such a stock tip and immediately he remembers other friend's words that he has made use of  "MARGIN FACILITY".  You  decide to take Margin. You call your Broker and he gives you 50% Margin. Due to this, your Profit will get doubled. And thinking of this, you couldn't control yourself. You thinks when will the morning arise and when will the stock - market open and will trade. As the market gets opened, you buy the stocks. You patiently wait for the stock - market to rise. Recently, your stock is surrounding around the buy price of your stock, but suddenly notices that instead of gowing up, it goes down and you are loosing money and infact whole market is collapsing. You don't know what's goin on? You immediately call your friend, his call comes busy. Then you Google it and within few minutes you understand the reason of the collapse of the market. You sees that US President has tweeted " I WILL MAKE SURE CHINA PAYS THE PRICE". Because of this, world's market has reacted. Finally, Market closes by 3% down. You have not sold your stocks but automatically got sold because you have taken Margin and only in one day you have made Loss of Rs. 12,000. China has not yet paid price, but you had paid. Over here, you can not even blame your Friend, so you blame the Market that the Stock Market is useless, not worth. There is always loss in it. And promises never to enter  the Stock - Market. Now Guess next day what happens to the stock. It goes 5% up and over here Rs. 12,000 has been debited from your Bank Account. And then, You meet your Old Friend "Rocky" and he tells one interesting thing that " When we closely understand the Trading, we come to realize that we have to ride two times and not once. Firstly, WHAT - Which Stock will go up and Secondly, WHEN - the timing when the stock will go up". This prediction is to be done and is very difficult, which every time people misses and the risk of trading arises. In Trading, when only one thing is right, then also you looses your money. The most dangerous thing in Trading is that if you are wrong, then your money is gone permanently. In Trading, there is no Diversification like 10-15 stocks nor hope of recovery in future. And if you faces Capital Loss then Game over.. 

Finally, I want to share one important message that whenever you make profits through Trading in Stock - Market, say Rs. 1 Lakh Profit, another person has made a Loss. Because, in the world, in Short -  Term, money is limited. If you count how much money is available in world, you can count. It's countable. Whenever you make profits, money doesn't comes automatically. It's transferred from one person's account to another after paying Transaction Cost. According to me, there cannot be Part-Time Traders. You, in your Office, by taking Trading Tips from anyone, cannot think that you can become rich or your money problems will be solved. Many people loose in such a Trading game because with  Part - Time Trading and without Experience and without Knowledge and limited Capital they compete with those people who are Full - Time and Experienced with Huge Capital and are continuously learning. That's why, There is Rule in World of Trading, 90/90/90 Trading Rule. Which means, 90% new traders loose 90% their money in the starting of 90 days. So, we are talking about Long - Term Investing, due to which we all can become rich. Due to Investing, Investor also becomes rich, manager, Customer's Standard of Living also improves, new jobs gets created, Country's GDP grows and Economy grows. In long term, money and authorities both are always unlimited. Or we were in Jungle and hunting animals  instead of ordering food from Swiggy. There are so many Company's stocks which's prices have gone up since 10-15 years. Twenty years before Sensex was on 4000 points approx and now it is more than 40,000 points, means 10 times up. Whoever have invested in long term, have earned profits and will earn profit because they have played a POSITIVE SUM GAME in life and they have also used Compounding. So, if make losses in Trading, you not only loose the money you traded but you also looses the money that can be earned while compounding - THE OPPORTUNITY COST.. I am not saying you only make losses due to Trading, You can also make money out of it. Some people can even become experts in it by making various Strategies. But, you, yourself, cannot decide where you will be tomorrow morning at 9.00 O'Clock - In front of your Computer Screen or anywhere else where your mind goes, so you should understand, to which freedom you are going. Most people dream of resting the whole day or monthly expenses directly to come to their bank account without doing anything and if side - by - side income also grows. This can easily happen through Long-Term Investing, whether it be through Stocks or any form of Investment like Real - Estate. But, in Real - Estate you have to invest a big amount, which cannot be done by everyone. Every month you need to go and collect rent, but in Stocks you can also invest with small amount with SIP and your Income directly reaches your Bank Account, wherever you be. This is called "REAL FINANCIAL FREEDOM". 

Finally, I would like to say that the People who wants to be quickly rich, cannot become but if you in a right way try to become rich, you will surely become rich and you have understood secret also that through Long - Term Investing we can become rich and can improve Standard of Living. So, Stock - Market is a Coin which has two sides - TRADING AND INVESTING. 

POWER OF DIVIDENDS FOR FINANCIAL FREEDOM IN INDIA

I AM GOING TO TELL A SMALL FACT. DO YOU KNOW RELIANCE INDUSTRY'S OWNER MR. MUKESH AMBANI EARNED RS. 15 CRORE SALARY IN 2019. BUT HIS HOUSE "ANTILIA" 's ELECTRICITY BILL WAS OF RS. 9 CR. HOW IT WOULD BE TO ENJOY SUCH A LUXURIOUS LIFE IN SUCH A SMALL SALARY?

The answer is simple. Mr. Mukesh Ambani has holded Rs. 293 Crore Shares of Reliance Industries till Year 2019 and declared Rs. 6.5/share as Dividend. As, Rs. 293 Crore x 6.5 comes to Rs. 19,04,00,00,000 Crore. So, this is the secret of Rich People. 

The income of Middle - Class People is Salary and that of Rich People is Dividend which always grows more than inflation rate. To earn Salary we have to spend time whereas if we talk about Dividends, money works for us. As Robert Kiosky, says "POOR AND MIDDLE CLASS WORK FOR MONEY WHEREAS MONEY WORKS FOR THE RICH PEOPLE". This is so, Rich People become more richer and richer and Middle - Class remains in the same place. THIS IS ACTUALLY A MENTAL GAME.

But, WHAT ARE DIVIDENDS? WHY DO SOME COMPANIES PAY? CAN MIDDLE - CLASS MAN RETIRE EARLY ON DIVIDEND INCOME? IS DIVIDEND INCOME STABLE? WHAT ARE PROS AND CONS OF DIVIDEND INCOME?

Because when we talk about Stock - Market and Investing many people get frightened and mental block exists in their brain that it is very difficult thing. 

First Question will come to your mind, WHAT ARE DIVIDENDS? The simple and short answer is that when we buy stock of a particular company, we become the Owner of 00.0000000001* of the Company. Which means we own a part of piece of the Company and when we uphold it we become part owner of profits. When a Company makes huge profits, it will be good news for us, because profits will ultimately come to us. Board of Directors will decide whether the profits has to be distributed among shareholders or to retain. 

WHY COMPANY PAYS DIVIDEND

If Company is Big and Matured and there is no scope for more growth, Directors usually pay Dividends to Shareholders. Actually, the thing is, that most people don't know that Most Stable Companies whose Business model is mostly stable and whose profits also continuously rises, these Companies already announces currently the rate of dividends for particular years. There are many Stable Companies in India which pays Dividend and these have enough stable dividends. So,  Finally when a Company pays Dividend, it's directly credited to your Bank Account just like the Salary which comes directly to your Bank Account. So, you have understood the Concept of Dividend and you can earn wealth through Stocks in two ways ---> One way, when you Buy low and Sell high and Second Way, when you hold the Stocks after being bought. This is the only easiest way to earn wealth through Stock - Market.

If you check records of last 100 years, many millionaires have created wealth only by holding stocks. When we hear of Stock - Market we always listen - when to buy and sell stocks. But if you check the record of Warren Buffet, he has not sold the stocks in life. He has only sold those stocks which are very bad, but usually he buys good stocks and holds them. For example, Warren Buffet earned more dividends than the salary of CEO of Coke. This is because he bought COKE STOCKS long years ago and remain invested. 

You might be thinking - CAN WE RETIRE EARLY ONLY WITH DIVIDEND INCOME?

Let's see? 

We should know the bitter truth that Indians merely 99% don't plan about retirement. Our Retirement Plan means our Children who will support when grown older. To some people their property rent is their  Retirement Income and to some their little savings is their Retirement  Income which due to inflation becomes very less in value which is very sad thing according to me. Because to invest in Real - Estate you want a big amount and no one talks about stocks because people feel very risky. Now Let's see How can we Retire with Dividend. 

Most people tell to me that stocks are risky, but I tell you that stocks are not at all risky. Not investing in it is a BIG RISK. I am talking about buying stocks and holding them for a long - period of time. Which means you will buy those stocks which there is no fear to sell. Now, you will think if you will not sell the stocks, how you will earn profits. As I have told your earlier, there are two ways to earn profits through Stock - Market. Firstly, it's CAPITAL INCOME  secondly it's DIVIDEND INCOME. Now we will see, how Dividend is the World's Best Option for Retirement Income. 

If we buy some good Company's stocks, we can usually expect returns around 15%. If you invest Rs. 1000 in Fixed Deposit which pays you interest at 7%, you will get Rs. 70 next year and even after 10 years you will receive Rs. 70 and after years and so on in the form of interest. Not less, not more than this. If you invest Rs. 1000 in Stocks and if your company pays you only 2% Dividend, then you will get Rs. 20, but after 10 years when Company grows by 15% CAGR then Market - Price of Stock will be more than Rs. 4045 and Company will pay Dividend as per Market - Price, means 2% will come to Rs. 81. So, here you waited for some years and you will start receiving benefits before retirement and After 20 Years your Stocks price will be more than Rs. 16000 and will receive Dividend Rs. 327. Now you compare where is Rs. 70 and Rs. 327. The trick is that The long you remain invested, the more profits you will receive forever. And this thing Warren Buffet has clearly understood. So, Warren Buffet always choose Dividend Paying Stocks and remain invested for long - time. Not only this, but your Original Capital is also growing by buying Dividend Paying Stocks as compared to Fixed Deposits. 

If you are young in your 20s or 30s, you can apply this strategy and easily retire before your 40th Birthday. If you are afraid to loose money by investing in stocks, you can create Portfolio of 10-15 Good Companies. Even if you are not understanding, which good companies to select, then you can invest in Dividend Paying INDEX FUNDS and you will not need to research the Good Companies. This is game of Compounding. It doesn't get quickly. It takes time. Warren Buffet every year writes letter to his shareholders which states "THE STOCK MARKET IS A DEVICE FOR TRANSFERRING MONEY FROM THE IMPATIENT TO THE PATIENT". Dividend Investing Concept is not new, it's 150 years ago World's most Richest Person has said "DO YOU KNOW THE ONLY THING THAT GIVES PLEASURE? IT'S TO SEE MY DIVIDENDS COMING IN". This was said because to middle - class people SMS of Income comes from only one Company, whereas to Rich People SMS  of Income comes from 10-15 Companies.

Lastly, Investing is very simple, but not easy. This simple process is made complicated by people from Financial Industries who wants to make money and for some people investing will remain always difficult who can't use common - sense, who are greedy. Because Investing is all about common - sense. According to me, to become rich in such an easy way was not there before. You have to study little bit finance and become financially - unbreaken.