Tough head line that I chose to just tell you stories of how people DO NOT MAKE much money.

Case 1:

A 40 year old wakes up and decides to do a SIP of Rs. 40,000 per month. Then suddenly he remembers he cannot..and tells his wife..why do YOU not do a SIP.

She knows NOTHING about investing, does not understand the word risk..but goes by what the husband says and starts a sip. Lucky that she started in say 2014. The SIP goes on smoothly for 3 Years (oops she forgot did she?)…whatever. So the contribution is Rs. 360,000, and its value has gone to Rs. 450,000.

Great, so she continues with her SIP , right? Well no. Somebody tells her / her husband that in mutual funds you should BOOK YOUR PROFTS. So she redeems…now she is waiting for the market to fall..so that she can buy.

Case 2:

One dutiful son of a RE loving father defies his father and starts a SIP in a good fund. He has been doing sip for 5 years. One day when he his father is visiting him from Kerala he sees the statement. So he tells his son..’see your money of Rs. 400,000 has grown to Rs. 730,000, let us use this to make a down payment for a flat in Cochin. Great idea.

Bad builder. Rs. 730,000 gone. Swallowed.

Case 3:

Wife forces husband to withdraw SIP money and give it to a builder. This was hawked by a big ‘Wealth Manager’ of this country. I am seething with rage but I know a couple of people whose money is stuck there and are hopeful of getting it back. I do not want to name the Wealth Manager and s…w up the chances of these people getting their money. So not naming and shaming. Rs. 1 million. They were promised that the builder will give them the ‘appreciation’. 3 years have passed, and the money is still far away, forget the interest. IN this 3 year bull run in the share market this money may have ACTUALLY doubled!!

None of these cases are representative of what happens in real life. Sure all 3 are real cases, and I hope that such cases are rare. However when you see the amount of data that is thrown at you regularly you do see people who miss amazing opportunities because of the following:

• Not doing a Goal Based Investing
• Listening to the wrong people
• Your parents love you does not mean they are competent to advise you on investment
• Not knowing that profit taking does not mean anything unless you have your Goals and Asset Allocation in place
• Staying uninvested for long hurts far more than staying invested in a bull market
• Market has gone up DOES NOT MEAN it will come down NOW.
• Yes market will come down but none of us know when
• When the market comes down YOU will be too nervous to invest
• When markets are down if YOU do no investments it is still fine, but DO NOT WITHDRAW
• When markets are high if YOU do not withdraw it is fine, it is even ok if you stop investing, BUT the habit breaks
• SIP is more about habit forming – more psychological than mathematical

Like Sachin your middle class family should allow you to play cricket (or invest)….THIS IS LUCK

You should start investing early in shares / mutual funds (Skill)

Nobody should interrupt your investing or ask you to withdraw (more luck less skill, but both)

You should believe that E is better than Debt (skill, luck, Passion, Attitude)

You need all 4 – skill, luck, Passion and Attitude – to make money. Honest, decent money.