We all love to drive, and the passion starts when we are about to turn eighteen. We are eager to have our driving license in-hand, it’s like having wings-to-fly, like a free bird. I guess each one of us has experienced it 😉.
After spending years in Investment advisory, I feel there is a parallel between Investing and driving. So, grab your seat belts and read to understand.
Destination: The destination of everyone is different, or rather unique. And above all, we may choose different routes, for the same destination. It’s just like investments! What we look forward on our investments, is defined by our destination & the route we choose. And most of the time this decision is influenced by our near & dear ones, and that’s where the first mistake happens. Investment is not about copying someone but understanding one’s purpose.
Time: Can I drive my car to reach Ghatkopar from Andheri, in 30mins? The answer is yes, as well as no. It comes with a lot of parameter, your understanding, various options & the risk involved with each option. Similarly, any investment will have many parameters to be looked, risk assessed & options worked. Accordingly, one can arrive at the time.
Racing: Who doesn’t love overtaking and speeding on the roads? but this is equally risky. The risk and returns go hand in hand. Higher the risk, higher is the return. You decide the speed on your vehicle. Similarly, you should also understand your risk appetite. This is where the mistakes happen, and one ends up either in a hospital or below par returns.
Switching lanes: Switching lanes is important to smartly save yourself from being stuck behind huge vehicles or long traffic signals. But switching lanes too often may lead to accidents or the same kiosk which was being avoided. Similarly, switching between investment products depends on the goal’s cycles & other parameters. Switching too often, usually gives heartburns, and not advised.
Traffic: Traffics are all the factors that affect the equity market that is from national economies to international politics. Sometimes you reach your destination early, maybe on time and at times even late. But as the traffic moves on, so does the country’s development and thus the returns on your investments.
License to drive: being on the driver’s seat, who have multiple factors & assessment going on in your brain, from the time you start to the time you reach your destination. Similarly, for Investments, if you wish to be the driver, first ask this question: do you have the “Investment Driving License”?