How to make your relationship with equity investments work

By Vinay Ahuja, ED, IIFL Wealth

Having a successful long-term relationship is not all about chocolates and roses. In fact, it’s really hard work. You need to nurture it, give it time, be patient with it, and let it evolve on its own. Interestingly, this is true for any relationship, whether with a partner or your equity investment portfolio. The rules really remain the same because both are an extremely important part of your life. While one provides emotional stability, the other is designed to provide financial stability. Here are a few things to remember if you are looking to make both your personal as well as financial relationship a success.

Focus on what works best for you
Not every day in your relationship will look like a romantic film. You are a unique individual and hence the partner you choose or the investments you make, should meet your specific requirements. Many people create an investment portfolio and then immediately start comparing it with the neighbour’s portfolio. There is often the fear of missing out on the next best thing, which can compel you to trade your reliable investments for the latest fads. However, always remember that what works for your neighbour might not work for you at all. So, if you have chosen an equity investment for your portfolio, then you need to be patient and stick with it instead of constantly comparing the performance of your portfolio with that of others.

Ignore short-term tantrums
Have you ever stormed out after having a big fight with your partner or loved one? If yes, then has it also happened that after giving yourself a few hours to cool off you have regretted walking out in a mercurial state of mind? The answer to both the above questions is probably in the affirmative. When we have a knee jerk reaction to an event or development, more often than not, we end up regretting it. This is especially true in both relationships and investing. Just like in a relationship it is important for you to understand your partner, it is equally integral for you to understand your investments. Once you understand your partner, you have to let the relationship grow at its own clip. Breaking up with your partner every time there is a tiff or a disagreement will always leave you with heartbreak. Similarly, once you do your homework and make an investment, you have to give it time to grow and generate wealth. Exiting the investment at the first sign of volatility or minor negative developments will always result in a suboptimal investment experience as you will never be able to reap the true potential of any investment.

Treat it as a long-term relationship rather than a fling

A short-term fling can be thrilling while a long-term relationship seems boring. A fling is an emotional rollercoaster that can make you extremely euphoric and take you to abject dismay all in a matter of a few days. A long-term relationship, on the other hand, is steadier. It is not as much of an emotional upheaval and can better withstand intermittent skirmishes. Similarly, when it comes to investing, you must adopt a long-term approach. In the short-term, volatility can really keep you at your wit’s end and influence you to make wrong investment decisions. However, over the long-term, volatility gets smoothened out, as a result of which you have a better investing experience and can reap the true benefits of investing.

Any relationship should be a source of joy. However, the onus lies on you to make the relationship a success.

Read the original article:

The Economic Times