Who are you — Speculator or Investor?

Do not let the ‘Speculator’ mindset impact your investments.

To invoke Amitabh from the timeless classic ‘Hum’, duniya main do tarah se log paise lagate hain — #1 Jo paise banate hain (Investor) #2 Jo paise lose karte hain!

Investments ka Shahenshah!


It has not been identified by scientists or psychologists, but by investment experts and financial advisors. ‘Speculator Mindset’ is injurious to your long term gains. This mindset has probably harmed more investment portfolios than a stock market crash. And unfortunately, it can get to most of us.

The speculator mindset occurs when long-term investors start to think like stock market traders. Traders are speculators because they take recent events under consideration, draw tentative conclusions based on them and invest at risk to make a quick buck. This is exactly what long-term investors should not do, especially if you’re just starting regular investing.

For anyone new to mutual funds, it is imperative to think like an investor and not like a speculator.

Speculator mindset will come easily because we are conditioned to expect quick gains out of anything related to money. But for first time investors, the speculator mindset can only hurt their investment portfolio. Hence, here are 4 things new investors should not do to make sure you don’t become a victim of the speculator mindset.

1. Don’t look at your investments every day

We know it is extremely tempting, but checking the performance of your investment portfolio on a daily basis is of no real use. When you’re investing for many years, a day or a week’s performance will not have any major effect on how the portfolio fares. What you should do is a periodic check. Once or twice a year would suffice for most investors. Just review your portfolio to make sure the reasons you invested in the funds are still intact. Continue investing in them if their fundamentals are still strong or make changes if required. But do that sparingly, not frequently. Watching it regularly is the job of your advisor. Use a platform that would watch the portfolio for you.

2. Don’t run away from a market crash

Be greedy when others are fearful and be fearful when others are greedy. This is an oft used cliche on investing. But we believe, not often enough! Investments are actually very simple if we let them be. All you really have to do to earn good returns is buy cheap and sell expensive. And when is the best time to buy cheap? That’s right. After a market crash. A bear phase is the best investment opportunity for long-term investors. Market crashes happen for different reasons, but the economy always recovers and investments made in a downfall can turn out to be extremely rewarding as the recovery happens. This is why you should not stop your SIPs in a crash.

3. Don’t time the markets. Don’t even try!

Speculators and traders try to figure out where the markets are headed, but no one can accurately predict the movements. Will a bull run continue? Will a bear phase get worse? No one can tell. We have no control over the markets. What we can control is our own investment behaviour. Long-term investors should continue SIPs irrespective of where the markets are. Spreading investments helps you average out the cost of acquisition. If you wait for the market to reach a certain level before you start investing, you will only keep waiting.


4. Don’t fall for tips. No penny stocks. No hot picks.

Tips are for waiters, not investors.

A friend or relative might talk about a fund or a stock that he made money out of. They might have done well, but blindly following suggestions and tips might not turn out to be as fruitful for you. What you invest in should be aligned to the goal you are investing for. Missing out on some quick earning opportunities is better than losing money on a speculative investment gone bad. Instead of falling for tips, study and analyse the mutual fund you wish to invest in. Understanding the basics and investing after research is always better than going by hearsay.

Do not be a speculator. Invest in your Long/ Short term Goals, Park your money safely or Invest in curated equity themes. Be patient and disciplined. Getting wealthy is a journey and not a limited time offer!

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