A Letter to Investors
By: Sapient Wealth Advisors
Tags: 2020, Unexpiredlessons, Wealth Creation, Investing, Investors

Photo by Jude Beck on Unsplash

Dear All,

Hope you and all in the family are doing well and fine. Wishing you all A Happy Diwali and a Prosperous New Year.

2020 has been an extremely abnormal year for every human being on this planet and the stock market too.

No expert has been able to predict accurately the short term movement of markets consistently in the past and none I repeat none ever will be able to do so in the future also.

If there is only one time that the market has always rewarded investors for investing, it’s for investing at the most UNCERTAIN TIMES. We don’t get rewarded for investing at the time when everything around us looks good but, we ONLY GET REWARDED for the investment decisions we take during the tough times. When the going gets tough, the tough get going it stands true in investing as well.

The media and social media will discuss so much about the recent events or the likely events like

US Elections / Bihar election

2nd wave of covid

Partial lockdowns in Europe

Macro issues/Micro issues

Geo-political disturbances

etc…

We need to realise and understand such events/ issues have occurred in the past, are now occurring and will occur in the future as well. Should we just worry about these Uncertain Times which are certainly and repeatedly occur is a question to ask ourselves.

The most important thing to understand and focus has to be our goal to create wealth in the next 10–20–30 years for our children’s education, buying home, retirement, medical contingency etc.

If you have a 10 to 20 year Investment horizon and are looking for 11 % CAGR, it is quite possible that for 9 years you are at 7% and then in the 10th year you reach 11%. That’s the nature of the market and most investors do not have the patience to hold and and in fact do not hold on.

It’s easy to say we are long-term investors and start looking at every purchase with a 3–5 year lens but we all know if the stock doesn’t move up in 6-months we will start to question all our work.

Investing is hard. The true price you pay for strong long-term returns are:

Volatility

Uncertainty

Occasional short-term and long term underperformance

Financial Freedom journey can get boring at times, as you repeat the same proven process month on month until you get financial freedom.

But if boredom is the price to pay for freedom, it’s a wonderful deal.

We also want to highlight that any one who would have recently started investing and think it’s easy to get 20%+ annualized returns, then investors are setting themselves up to learn a lesson the hard way.

The beauty is, markets changes everyday, but good investment guidance never changes. It’s timeless.

Life begins @ Retirement. One has to plan for investing our money prudently to live comfortably post retirement.

Article by:

Roopa Venkatkrishnan — Roopa is a Director at Sapient and is known for her simple yet profound approach to investing and money management built around the principle of compounding of wealth. She takes pride in creating HNIs and is passionate about spreading financial literacy to all sections of the society.