The period of festivities across the country has commenced – Raksha Bandhan, Janmashtami, Onam, Ganesh Chaturthi, and soon moving towards Navaratri and Deepawali.

 

These festivals, primarily celebrated for happiness, wisdom, and prosperity, provide an invaluable opportunity to imbibe a few learnings for our investment portfolio and life.  

 

One of the epic scriptures written in Indian history is the Bhagavad Gita – the song of the lord. Bhagavad Gita is a descriptive scripture based on a profound conversation between Arjun and almighty Lord Krishna.

 

Via the holy Gita, Lord Krishna enlightened Arjun and all of us with small references and gifted us the most valuable life lessons. Interestingly, Srimad Bhagavad Gita has been taught at the BITS, Pilani, for several decades and in a few foreign universities.

 

The participants of this elective course state that this paper gives them a better perception of the scheme of human life and nature. With this clarity of thought, decision-making is better.

 

In those days, Krishna’s wisdom, counsel, and clever strategies enabled Arjuna to emerge victoriously. Now it can help millions to overcome their anxieties and be a guiding light toward effective investment planning.

 

Having a goal is the most important investment objective. All actions, plans, and strategies must revolve around the set goals. Be it setting aside a corpus for child education, marriage, family vacation, retirement, or any other purpose.

 

A goal-based investment approach helps you choose suitable instruments and ensures you have the required funds when needed. You must maintain a focused approach to your investment plan and work towards attaining your financial goals by creating a well-diversified, strategic, all-weather portfolio.

 

Suppose you intend to build a corpus for retirement; your portfolio needs equity exposure as it can potentially deliver inflation-indexed returns in the long run. Similarly, one can look to a liquid fund for building an emergency corpus, offering better returns than a bank savings account.

 

As Krishna said – never lose sight of your goals; there may be several distractions on your way to your plan. Have the power to slash all the distractions and market-related worries.

 

One should always stay focused and invest for a stipulated time frame in the market to generate optimal returns. It is essential to remain patient during short-term volatility. At the same time, avoiding risky propositions and falling prey to herd mentality is equally crucial.

 

One must never be stuck on one single strategy. Nothing is constant in this dynamic world. It is vital to evolve with the times and execute appropriate strategies. Changes in the economic or political landscape might turn a highly profitable company into losses.

 

To review, revise and rebalance an investment portfolio is paramount. Acknowledge and acquire new information to modify your investment strategies to suit the latest market conditions.

 

A robust investment portfolio must have a certain degree of flexibility between asset allocation, diversification, timeline adjustments, and the investment amount. With this, you can be assured that your financial plan will survive through the thick and thin volatile markets and macroeconomic conditions.

 

Never let emotions overpower rational thinking. Make a mental note of the words of Shri Krishna – desire obscures knowledge in the same way smoke covers the fire.

 

To desire is innate to humans but should not significantly influence the investing decision. Never be too greedy or too fearful in the market.

 

Lord Krishna guides Arjuna to think beyond emotions when facing his kin. For instance, emotional biases might play in when one has to eliminate a long-held underperforming investment. Ideally, redeeming or selling any security should be based on how it fits into your overall investment portfolio.

 

A bad investment, if ignored, makes achieving your financial goals much harder. Many investors do not realize that a few underperforming schemes could affect the overall portfolio. In such situations, an advisor, your Krishna, can show you to stick to rationality as much as possible and help you make decisions based on analysis rather than emotions or hot tips.

 

Unsurprisingly, due diligence and research help avoid traps that evoke your greed to take over your investment decisions.

 

Remember, as the financial guardian of the family, you are the charioteer like Krishna, making an informed financial decision and building a secure financial future. Like Krishna guided Arjun, your financial wisdom – own or acquired through your planner – would guide you through tumultuous times in the stock markets.

 

The market may seem overwhelming and complex if you are unfamiliar with investing. It can be tricky when you are new to it, facing a dilemma, and have mixed thoughts or during volatile market conditions.

 

Nowadays, much information is readily available on various platforms. However, it is essential to filter the information or advice you receive. With the bull run emerged several fin-fluencers offering simplistic investment advice.

 

Moreover, with these influencers’ increasing popularity and reach, several companies are using them as marketing channels, raising issues of conflicts of interest. Interestingly, most of these so-called experts (on social media) operate in regulatory no man’s land, with no rules governing them (like registered investment advisors or research analysts).

 

Together, these financial influencers have a follower count of approximately 12.9 million people, a considerable number in a country with limited financial literacy and retail participation in financial markets. As of March 2022, India had a total of 41 million unique investors in mutual funds and 89 million accounts. 

 

So my dear readers, know what to look for and choose your ‘Krishna’ wisely.

 

Decide what advice is worthwhile and what is not. Popularity does not always equal success. Not every time; everything and every decision is about getting rich quickly. Significant rises will always catch the eye but getting returns slowly (while it may appear boring) also matters. Over time, it can transform your life.  

 

In the words of Rakesh Jhunjhunwala, the big bull of the Indian market

 

“If following Rakesh Jhunjhunwala was all it took to make money, a lot more people would be rich. It requires patience, and to learn from mistakes.”

 

Best Regards

 
Ms. Tarunika Jain Agarwal Ph.D. 

 

Alpha Research