Don't buy a stock if you're not willing to keep it for 10 years - Warren Buffett
In today's world everything is right on your finger tips from buying it all online from a book to a TV, from locating a remote area to checking traffic in your area. Everything is available under one roof just sitting in one room.
But people or being more specific, investors who don't have smartphones tend to make higher returns. Everything has its pros and cons.But how is not having a smartphone related to mutual funds? Let me tell you how.
Guess what? not having a smartphone has turned out to be an advantage for the investors. By this statement, I mean that, investors who do not check their daily gains or losses have proven to be more happier and wealthier. An investor with a daily update or habit of checking their investments makes him fear even the one day loss going in the markets.This trend is most common among the new investors. Even with a 2% of loss in their portfolio makes them want to withdraw from their investments. Let me tell you that a one day loss or gain is not the factor that would affect your goals! Not planning your investments, not having a guided investment, investing without a goal would have a bad impact on your portfolio.
An investor should have a fair update about his investments but the point here is not to fear from such small lows and highs of the market. Ofcourse having a guided and planned investment and knowing what is happening to your investments is the best kind of investing being done. But reacting to the markets on a daily basis is not what you should do!
Investing is all about patience. It is a game of time! Mutual funds work on compounding basis that pays off best with a long term period. The catch of investing in mutual funds is not choosing high return fund but to stay in the game and not to quit. Past returns do not determine the future returns. The more early you start the more long you can invest. Patience finally pays off for one of our investors.One of our investors had invested in 2004 as lump-sum of Rs.2000. He had completely forgotten about any such investment as there were no such devices or such advance technology to check the day gains/loss. Recently when tracked his lump-sum investment turned out to be 4 lacs. This sudden revelation made him wealthier and mentally very very happy about investing.
Had he been checking his monthly account statements, keeping a track record of the daily market and the 2008 market crash that hit hard to every investor, he would have ended up withdrawing his loss and would have never invested in the future. He is an ideal investor that the mutual fund world requires. By not withdrawing during the crash he recovered all his losses making it a temporary loss and also reaped the benefits of the market growth.But also not excluding the fact that had he been planning and given proper guidance he could have achieved much more than 4 lacs!
The idea here is not to sell your smartphones but to avoid the habit of reacting to such day to day fluctuations. Having set the financial goals, starting off with professionally managed and guided investment portfolio any loss or market crash can be tackled and your financial goals can be achieved making you wealthier and happier than before!