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Equity Investment: A Lesson in Patience and Perspective

When most people buy equities, they often start checking the stock price the very next day—or at best, within a week. For many self-proclaimed "investors," the long term means just a month. But think—does the management of a company whose shares you’ve bought look at business growth in such short spans?

Equity investing is much like farming, and it follows a simple yet powerful set of rules:

• Sow the seed (make the investment).
• Water it regularly (stay invested and be disciplined).
• Wait patiently (give it time to grow).
• Reap the rewards (harvest long-term returns).

Unfortunately, when it comes to equities, many investors want instant results—“haathon mein hi sarso ugti hai” (mustard seeds sprouting in our hands instantly). We expect quick profits without understanding the nature of true wealth creation.

Our Approach to Investing Needs to Change

We pass down gold for generations, and grandparents open fixed deposits for their grandchildren. But how many of us consider investing in a share of a strong company—say, HDFC Bank—for a child’s future or a wedding? How many plan for retirement through long-term equity mutual funds? Very few.

Fundamental Investing vs. Speculation

Equities offer two types of returns:

• Speculative returns: Short-term price movements
• Fundamental growth: Wealth creation over time through business performance

Sadly, 95% of retail investors chase speculative returns. They try to time the market instead of spending time in the market. This short-term mindset is the leading cause of losses.

Investing in equities with a long-term horizon is not only rewarding, but it also beats inflation and creates real wealth.

Ask yourself—can you predict what the Indian economy will look like next month? Probably not. But over 5 or 10 years? You’ll have a much clearer answer—and it’s likely optimistic.

Understanding Risk in Equities

People often label equity as "risky." But what is risk?

• In the short term, risk means volatility—how much prices fluctuate.
• In the long term, the real risk is not preserving the purchasing power of your money.

Let’s consider a real-world example: Look at the price of petrol over the last 30 years, and compare that to the returns from FDs, gold, or traditional insurance plans. You’ll notice how these instruments may not even beat inflation in the long run—while equities have historically outperformed.

So Why Don’t People Make Money in Equities?

The answer lies in emotion. The two strongest emotions that drive investor behavior are greed and fear:

• When markets rise, greed kicks in, leading to irrational exuberance.
• When markets fall, fear takes over, prompting panic selling—even when there’s no real need to sell.

Investors forget that equities are meant for the long term. Constantly checking daily profit/loss and predicting short-term moves is a futile exercise. If emotions make you restless, it's better to forget about the investment and allow it to grow undisturbed.

Final Thought: Be a Long-Term Partner in India's Growth

Equity investing is not about quick wins—it’s about building wealth over time. By staying invested with discipline and patience, you not only benefit personally but also become a partner in India’s growth story.

So, invest in equities—not as a trader, but as a long-term investor with vision and conviction.