“I don’t invest in stocks. I find investing too risky!”
This is a common statement I have heard from many of my college friends who are yet to start investing. They feel they are better off without investing in stock market, and staying with the safety of bonds, and (mis-sold) insurance cum investment products like ULIPs.
It really amazes me when such educated people think that investing in stock market is risky.
This is especially when they are already taking much bigger risks by listening to their greedy advisors and wasting their money on financial products that are never going to make them any money!
What I tell them is that if investing is risky, so is swimming, crossing the road, riding a bike, and driving a car.
With proper training and guidance from our parents, we learn to do these things fairly early in our lives.
But the sad part is that, parents rarely teach their children how to treat money – how to save and how to invest. And that is what makes the grown-up children believe that ‘investing is risky’!
The truth is…
The truth is – investing isn’t risky. It’s made out to be risky by the number-crunching, jargon-filled analysts, fund managers, financial advisors, and other stock markets experts.
After all, if they don’t make you believe that investing is risky, how will they ever be able to sell you their wares – stock tips, mutual funds, and bad financial products?
The common perception amongst most individuals (like my friends) I have met over the years is that investing is way too risky.
Most of these people nurture the dream of becoming rich one day. But ask them how they plan to do it, and the common answer is – “By working hard and earning money.”
See, hard work is definitely a virtue. But why not let your money also work hard for you?
It’s, after all, your servant. And the only way you can handle the role of a master is by making your money work hard for you…by letting it grow faster than inflation.
One mental roadblock that most of us suffer when it comes to investing is that we fear change. We are generally terrified of anything that we don’t understand or something that requires hard work and deeper understanding.
Investing is risky, if…
I am ‘not’ saying that investing is not risky. It is! But only if you are ignorant about the subject and still try your hands at it.
If you do not understand it, or if you aren’t properly educated on the risks involved, investing can be incredibly dangerous.
Just ask someone who lost a lot of money during the 2008 stock market crash, what he knew about investing in the stock market except that he was acting on free and hyped-up stock tips received from friends, relatives, business channel experts, and brokers.
Like you will arrange a swimming coach for your child who wants to learn swimming, you must get yourself educated if you want to learn about and pursue investing.
Don’t worry, as getting investing education isn’t expensive at all (at least if you are learning from others mistakes and not yours’).
You can find a lot of mentors (investing legends like Warren Buffett and Ben Graham) and a lot of literature (their books, shareholders’ letters etc.) that can help you in your investing education and training.
Even our attempt at Safal Niveshak is to exactly do that – to educate and enrich you with investing wisdom so that you can make your own intelligent and independent investment decisions.
Warren Buffett once said – “Risk comes from not knowing what you’re doing.” By educating yourself in investing, you will know what you’re doing. And that will take away a lot of risk from your investment decisions.
So, investing in stocks isn’t risky if you know how to do it the right way.
It’s taking advice from people who don’t know what they are talking about all the time…that’s risky.
And the biggest risk is…not investing at all.
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