Trust the process

The investment journey is a life long journey; you can never expect it to be a straight line. There will be periods of lull, highs and lows. If an investor friend has told you that they have never seen negative in their portfolio ever, then they are lying.  Every investor would have to witness all these phases in the long journey. Even Informed and experienced investors are tested on their conviction and patience during the lull and low periods of equity market. So, I can understand the fear, anxiety and insecurity of first time or uninformed investors. Successful investors are those who trusted the process and powered through the different phases.

The process of Goal setting, Risk profiling, Asset allocation and Portfolio rebalancing, all this leading to achieving the goals.

You as an investor need to work alongside your advisor to ensure that they know of any changes in your life that might impact your finances. And they need to constantly monitor the portfolio and see if any changes are required basis risk and asset allocation. And mind you this process is a collaborative and iterative which means that it is a continuously evolving, as is your life.

One mistake all investors make is, they look at each fund in the portfolio and take decisions that may hamper the entire portfolio or skew it. View and evaluate the portfolio in its entirety; one needs to understand that at any given point in time there could potentially be a negative performing fund due to a variety of reasons – sectors, policies, geopolitics, etc. If the specific is not performing vis a vis the peers in the category then an action can be taken, else trust the process.

Returns that you receive on your equity investment are a function of time spent in it (duration of investment) and periods of highs, lows and lulls of the stock market during that period. Remember you are not in control of the external factors like politics, stock markets, company results, etc. However, you are in control of your behavior, so have faith in the power of patience and perseverance, trust the process.

Lastly, in this journey, you could have many people luring you with different schemes with quick returns or high returns. Ask yourself, will it help meet any specific goal, does this fit my risk profile, does it fit in my asset allocation, if yes, then you may proceed, if not, then again trust the process and say No to such schemes and advisors.

An investment journey is remarkably similar to a travel journey, where planning, endurance, and navigation skills (yours and Advisor’s) determine the success of the trip. At the same time, despite all the planning, many external factors occur that are not in your control like flight/train delays, car breakdowns, road bumps, potholes. You either reschedule, take a detour or just take it in your stride and move on to your destination. You just power on because you want to reach the destination, same goes with investments. Just trust the process and continue with some detours and bumps along the way…