My Mistakes in My Investing Journey and The Lessons From Them
Our 15th ‘Investor Story’ by :- Author: Shreyans Shah for Fund-matters
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When I was asked to write this blog to share my Investing journey or lessons that I have learned in my short stint in the journey, I was first overwhelmed as I saw my predecessors who shared their stories were rankers to my average ranking student and I thought what different could I do to not share the same thing and share something different to the readers here. I probably took a week to decide what I’d write and by chance, the timing of me writing a blog here coincided with me conducting a Twitter Spaces session about, “How to make losses?”
Now the listeners who tuned in to the session were as curious as you might be right now thinking what is this guy even talking about. And let me tell you I too was not sure of how it’d be received but after I let my thoughts take over and speak my mind, I too realized that this is something that should be shared with as many Investors out there as possible to help them with whatever I can and thus this blog is my attempt to do the same…
Before we begin, I should clarify that I am a novice in the world of Investing having been here for about 4 years. So, there would be some mistakes which you would have already made and a little bit of some mistakes which you will do in the future but consider this piece as a personal story and carry lessons only which you think are useful to you. Let’s begin.
My Mistakes through the years:-
Mistake 1:-
“Investing is 90% of you doing nothing and 10% of you actually executing things.”
Starting as an Investor for a non-investor is always exciting and a moment of joy with adrenaline flowing at rapid speeds inside your body. So it is natural that you as a beginner might think that it is very important for you to be able to time your buying just before the asset goes up and time your exits just before the assets fall down.
In this pursuit of finding the best price to buy/sell, what you miss is the value of time which is actually the major stimulus that helps magnify your Investment value. When I started, I started with Mutual Funds, and believe it or not, I used to believe in finding the best dates to invest via SIP. There was this feature on Paytm Money that used to map the returns earned by past investors by investing at various dates and based on that, it’d suggest the best dates to the investors. I don’t know if it is still up or not, but I now am of the opinion that it is not necessary to go 100% efficient on your money while Investing.
Investing should be peaceful and not something that makes you tense. What you need to ensure is that you invest. Sure, the best price would matter if you were a trader but as an Investor, you need to zoom out and think if some extra basis points would really make a difference if you miss out on best entries or exits? As an Investor, your ultimate goal should be to attain your goals and not attain the maximum return possible by timing the movement of the particular asset.
Mistake 2:-
High Risk doesn’t always mean High Returns. “Risk hai to Ishq hai” has to be the answer to your risky investment decisions right? Wrong!
Just like others, I too used to believe that High Risk = High Returns until some losses set my thoughts straight. It isn’t always necessary to chase high-risk assets in order for you to get hands on some return numbers that you can brag about on the Internet. Sometimes you gotta understand that it is necessary for those who need to catch a train or multiply their wealth overnight and not for those who want to take it slow and preserve what they have made. We know that equity as an Asset Class is a risky asset and most Investors stop at the same. But some, to take some more risk and in a way take a chance at earning higher returns, venture into unlisted equity or art or even Venture Capital. Sure the gains are in a number of times and not on a percentage basis, but the probability also drops massively there.
What I like to do here is to calculate the added amount of returns that are expected over an added amount of risk. So for example, if I have the possibility to earn an extra 10% over a 12% increase in risks, I’d simply not do that and take my returns and sit the world earn. It is just not for me; at least now. And it should not be for you even if you are an Investor who needs to grow their wealth and not multiply. There’s a difference!
Mistake 3:-
Trying to be the Next Big Bull or the next Warren Buffett? We have all been there, right? Trying to do what the big players do is something that I too have done and still do, no denial in that. But what I have realised in these years is that everybody has their own style of Investing Decisions that lead them to have their own Investing Style. You have your own set of favorite Stocks that you like to invest in, you have a set list of stocks which you don’t like and always make a loss whenever you invest in it, no matter how good it is fundamentally.
I have a mentor who tells this that even Stocks and Humans vibe with each other. A particular stock has its own personality and you have your own. It is necessary for both of your personalities to gel together (have a vibe) in order for you to have a long-term relationship. And this is true. I am sure if you try to look at what I said and with your Investing history, you’ll find these true as well.
Now, the problem here is that we know everyone has their own Investing style but what if on the top of it you try to match someone else’s style? It can go wrong, right?
I am not telling you that imitation is bad, but blind imitation is bad. It is true that nobody has enough time to find their own unique style and thus we try to adapt what’s working on a larger scale for everyone and then try to apply on ourselves. But the problem here is what I discussed earlier, what works for them doesn’t necessarily mean that it will work for you. So, the ultimate thing to do here is to keep learning different styles and modify it as per your risk profile and your own taste and then try to figure out what works for you and what doesn’t.
Now my list of mistakes could go on and on as I try to figure my way out but we have a boredom limit here. I don’t want to keep you up reading and getting all bored up. So let me start winding now. Hopefully, we’ll continue this some other day.
So what have I learnt?
I have learnt that an Investor should never stop learning. I have learnt that in investing, resting is more important than acting. I have learnt that I am unique and I have my own style while you could have your own. And I have learnt that it is okay, it is okay to not get the best return as long as you are content with what you have achieved and your goals have been fulfilled.
How do I use my mistakes to better serve my clients?
People make mistakes and they take the lessons from it and move ahead but let me brag a little here and say, I make a mistake, I take a lesson and move a step further I use it to make my clients’ journey easier. My clients are my experiment projects if I must say 😉
With the mistakes that I have made in my journey, I try to be a guide to my clients that I never had and reduce the friction that is created with such mistakes. Well, with different persons we see a lot different mistakes but with some common mistakes out of the place, you only have an Avenger level mistake to be taken care of.
Takeaways:-
We always try to find ways in which something worked for somebody in their Investment Journey. We try to find some common rules or hints that will help us do better. But what I always say is that instead of finding ways that worked for successful people, try to find some common mistakes which not so successful people made in the past and learn from it. Take notes from the mistakes and go ahead in your own journey of being Financially Free because it is you and your money and not your money vs someone else’s money. Until next time,
