CA Mehul S. Shah
As a human being we wish for wealth. We wish to enjoy wealth for ourselves and hold aspiration to accumulate wealth for our future generation. This is continuing from ages in our society. This concept has paid huge dividends to all of us. Age after age, generation after generation we have enjoyed tremendous benefits from this concept. Over a period of time different methods and approaches for wealth creation have surfaced. All the methods and approaches have taught us that there is no short cut to create wealth. But one thing stood out that those who have continuously applied systematic, discipline, dynamic approach have gained far better returns than ordinary one. There is no doubt that over a period of time money invested will growth but the return on investment will depend on the selection and methodology of investments. So it is necessary to learn what is smart investing.
In my view there is no standardised method or approach of investment that can be uniformly applied to everyone. Investment approach will differ from person to person. It has to be customised. Smart investing is always depends on decision taken on a particular time. If the decision turned out in your favour you gain and if not, you lose, if it has given higher return you are smart investor and if it has given average return you are ordinary investor. Therefore, all things boil down to ability to decision making ability.
That takes us to learn how to create decision making ability. The decision making ability for making investment is a continuous process, evolve through experience and in my view will largely depends on ability of a person to understand the basis of making investments.
It requires deep down efforts to understand each of the above factor and will require good amount of time for gaining understanding. As they say, learn by experience. However, a summary given below will give some insight to start with.
I believe these avenues are known to all of us. Generally, we are familiar with the manner of making investments in each of the above forms. No further discussion is needed.
Fundamental Principles of each form of investments
Each form of making investment has different benefits and drawbacks. The fundamental principles of each form are nothing but benefits offer and drawbacks involve. They are as under :
As such we are aware about the benefits and drawbacks and therefore aware about the fundamental principles of making investments in various forms. However, the key issue is we hardly follow these principles while making investments. Lack of discipline comes into play in this area . Ignorance or laxity in these areas makes us different from smart investor and ending up in getting lesser return.
Understanding Economic environment, forecasting future and accepting and adopting changes
In my view if a common person is able to take care of fundamental principles of each form of invest ents and observe basic principles, he/she need not to go much deeper into understanding economic environment, forecasting future and accepting and adopting changes. These areas are purely for hard core professional investors. It requires thorough professional knowledge and experience. It is preferable were investment size is big and small variation in return can make material difference in absolute term. I believe this is not the forum to go in to details of the same.
Key is selection of right mix of investment to get return on investment and creating wealth. I believe the selection process is driven by balancing between individual’s capacity of earning, age, spending habits, linking with future cash flow needs, accumulated wealth at given point of time w ith percenta ge allocation, timing of investments, rotation/adopting ch anges and tax and legal issues. Therefore it should always be customised. There cannot be blanket call on selecting investment which is uniformly applied to all. General calls by and large should not be resorted to unless fit in to individuals par meters. In my view the key is to get alignment of each of the above actors and maintain balance in your approach. Those who keep in place the balance will generate more than average return . Do take professional assistance in case you are not competent.
Investing will help us in comfort zone but only smart investing will take us to luxury zone. Let’s th rive from comfort zone to luxury zone.
Let’s now move from Wealth to Health. As they say health is wealth. But in today’s environment it is only a philosophy. I believe we need to maintain balance between health and wealth. Absence of one will make our life miserable in today’s world. So while creating wealth is important, it is equally important to maintain good health. There are simple ways to have healthy body. Over a period of time, in general, it is experienced that following simplest of things can avoid medicine and helps stay healthy :
Simplest of things, which we all know very well, yet we hardly follow it, resulting in to health issues. How many of us believe in following simple things. We have made our life complex by acting complex. We do too many unwarranted things but less important things. We spent hours on social media but are not allotting minutes on health. We spent thousands on junk food but will not spent hundreds on fruits and dry fruits. Most of us forgot our hobby. Are we going to healthy this way ? We know all the answers.
To conclude be it wealth creation or staying healthy, we are aware about what we have to do. But the issue is of implementation. We can become smart investor by maintaining right mix of investment and also stay healthy by following simplest of things. Get everything by following simple basic things and avoid making it complex.
Choose your routine, adopt change, be simple, follow basic and have healthy and wealthy life.
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