We all know what happens to the resolutions which are made for the New Year.
So it is time to make ‘unresolutions’ instead of ‘resolutions’.
Normally we start out with, “I will do this…” and “I will do that…” but after a few days or weeks, we are not able to keep up with these commitments. So, let 2019 be a little different.
Let’s try to make constructive resolutions which do not have an active target but rather involve ‘not’ doing something. For instance, instead of aiming to reduce your weight by ‘x kgs’, resolve not to gain weight, at least. I call these Un-resolutions.
Coming from the world of investment, here are some unresolutions I would recommend:
1. I will not stop any of my Systematic Investment Plans (SIPs) before the end of their tenure.
This is a commitment investors implicitly make while starting an SIP. But the moment they see dips in their portfolios, the first thing they do is think of shutting down their SIPs.
You know your cash flow best and I am sure that when you had made the commitment you were aware that the markets would go up and down.
2. I will not redeem my investments before my goal is reached.
Most investors enter the equity markets with a time horizon of 5 years+ but their patience levels start wearing down, especially if the markets go down. Even when markets are up, they panic at the thought that markets may go down in the future. Most investors lose money only because of their emotional decisions. Redemptions should be made only when the goal, for which the investment had been made, is nearing.
3. I will not have unreasonable expectations from the equity markets.
Majority of investors want to make quick money in the equity markets. They want to double their money within a year, or less. If that was possible, the whole world would invest all their savings only in the stock market. The long-term return trend for equity funds has been ranging from 15-20% CAGR, which itself is a good return. This is nearly double the returns possible on most fixed income instruments. Setting unreasonable expectations leads to disappointments and then investors erroneously decide that investing in stocks is akin to gambling.
I am sure these unresolutions will go a long way towards making your portfolio healthy and wealthy.
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