We are generally wired to focus on current events and extrapolate them towards the future. This makes us oblivious to risks and rewards that are going to come in our life journey. And here lies the hope as well as the caution as we need to look beyond what is happening in the now. Let me give you my own examples – –       When I started my career in 1995, I was sacked in my first 3 jobs. And that too within the first 3 months. I started thinking that something is woefully wrong with me. Sacking from 3 jobs in a row cannot be just a coincidence. And then I correlated that with other happenings and concluded that bad things are happening to me. In fact, in my fourth job, till the first 6 months, I was anticipating that any day I could be called by my boss and yelled “You are sacked”. –       When I started my own practice in 2003 first as a partnership firm, then in 2005 as a company, suddenly business was happening at a good pace. I continued my good run till 2007. During this 4 years golden run, I felt, I can do no wrong. I had a magical grip on my clients and my advice on the market and fund selection was super-duper. So, I thought. Both these examples are the illustration of how my focus on only the current situation blinded me to the opportunity and risk that lies ahead. In the first situation, I was extremely nervous and accepted my fourth job at a much lower salary than my actual potential. In the second scenario, I was so overconfident that I even rejected a few extremely attractive opportunities to expand my business. I had not contemplated these situations till I read a wonderful book “Thinking fast and slow” by Nobel laureate Daniel Kahneman. He argued that our inability to see the bigger picture and only focusing on the current events makes us blind to future opportunities and risks. Only a handful of people have the ability to think hard and make the planning accordingly. But the ability to see the bigger picture is crucial and separates the super achievers against mediocre achievers. The inability to see the bigger picture is most prominently displayed in the field of investments and savings. When you are earning well, you fail to recognize the fact that in future your active earning will diminish and then you will be facing consequences of not saving or investing enough. This is equally true for people who are not earning well as they feel that their earning is too low to be invested. They also fail to recognize the fact that even if they save a small amount, this will grow big due to compounding over the period of time. Along the way, they will develop saving muscles and maybe propel themselves to increase their earning and saving. But the bigger picture ability is most missing in the stock market. Look at the stock market analysis in the TV channels and you will see how easily so-called experts change their opinion as per the current market situation. Their whole future prediction is based on what is happening in the now. Their viewers are better off realizing that the future is always uncertain, hence can’t be predicted therefore listening to those experts is nothing short of a waste of time. In fact, very often what is described as risky is an opportunity and vice versa. People who see the big picture very well know and respect what is called “Reversion towards the mean” concept. This is a prominent statistical term which can be described in simple words as “things often revert back towards their mean or averages”. So, if the stock market has a good run for a considerable period of time, then it will be a time for correction. Similarly, if the market has been low for some time, then reversion towards the mean ensures that it will go up going forward. But again, this cannot be generalized and what is good advice for one cannot be the same for others. The point here is not to time the market but to go beyond the current happenings. Life is a combination of all kinds of situations, events and cycles. When you focus on the bigger picture you are better prepared for all the positive as well as negative surprises. And capitalize them too. Manoj Pandey CFP

Yes, you heard this right. The title is correct- Don’t be a lazy investor, be super lazy. This is not crazy advice. Crazy is when investors do otherwise. There are so many misconceptions around the stock market and people instinctively believe them without checking the facts. I start smiling when people say- –       You have to move fast in order to take advantage of the market. –       You should know when to get in and when to get out from the stock market. –       You have to beat the market to earn big from the stock market. –       Experts know when the market would rise and when it would fall. But to debunk these myths, you need to rely on two solid sources- –       What the experts say and do. –       Compare the results between active investors Vs lazy investors or should I say super lazy investors. Warren Buffet is famous to hold his investments for good 20,30 and even 40 plus years. Same is true for his guru Benjamin Graham and his partner Charlie Munger. Back home, if you see the portfolio of some of the most successful fund houses, you will find that they hold stocks for the long term. In fact, I got the title of this article from Mr Pulak Prasad who is a champion fund manager with unparalleled track record. Now compare the records of the investors. I have a long list of my own investors who have amassed a decent wealth by staying invested without too much action. They simply bought good funds including index funds and remained invested without bothering whether they were beating the peer group funds or not. On the other hand, investors whether investing in direct equity or in mutual funds who remained very active, continuously tracking the market, tracking the other funds or stocks as well as the market have a mediocre track record. They have performed miserably compared with the market and on top of that paid more taxes and fees. Besides they have wasted too much time which they could have used in their profession and enhanced their career and income. So, the stock market has a very strange functioning. It rewards people who are not bothered about it and keep enjoying their life. On the other hand, investors who spend a lot of time and energy to study the market perform poorly. Unfortunately, most of the people don’t know this secret and feel that since they don’t have time and expertise to study the stock market hence, they should not enter the market. I hope they understand the truth. But it is not as if you don’t need to do anything. Your laziness once you enter the stock market works only if you have done the following things right and continue to vigil them- You need to discover your important financial goals. You need to be alert towards your income and your expenses so that you can increase your savings and deploy it towards investments. You need to do proper asset allocation. This means you need to divide your assets between equity, debt, gold and international equity. Asset allocation depends upon your financial goals, time horizon and your risk profile. If you look at the above-mentioned points, you will notice that all these points are your own and fully under your control. So, in that sense, your investment planning is more an internal thing rather than what is happening out there. In that sense, Investment is quite like meditation. You remain alert and you remain focused internally during meditation. For example, you remain focused on your breathing while doing meditation. This itself creates immense consciousness and enhances your handling of outside things. Investment planning is no different. While you focus on elements which are under your control, that results in enormous outside wealth creation. Manoj Pandey CFP

__God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. __ This prayer sums up the required action points during the market downturn as what is happening currently. So, let’s understand what we can and should do and what we should accept and let that be. This is the culmination of what I experienced during my 25 years of career in the field of investments, readings of some of the fantastic experts in this field and observation over the years of what great investors did and continue to do. So here is the list of things- First of all, the things that you need to accept and carry on- Let’s accept that you can’t time the market. Period- I saw investors continuously repenting the lost opportunities. Just the other day, I was talking to one of my clients and he said- Manoj, I knew the market would go down and I told you so as well. I should have got out of my equity and now reinvest again. Earlier, investors were saying that- I knew the market is going to go up and I should have invested my entire amount in equity. I lost the opportunity. So here you are! Please accept the fact that you can’t predict the market. No one can. So, stop beating yourself. It’s not your fault nor your advisor’s fault. No one knows the future, no one knows the movement of the stock market. It’s not in your control so gracefully accept the fact that the market will go up and down from time to time and make yourself mentally ready for the unpredictable nature of the market. Let’s accept that your portfolio will go down from time to time- When market goes down, your own portfolio goes down simultaneously. You have to accept this. I tell my investors that mentally be ready that at least once in your lifetime your equity portfolio will go down 50%. This resilience is crucial for investors. When market continued the upward journey for 4-5 years then people forgot that the market does go down also. And sometimes they remain low for substantial time as well. This mental fortitude is extremely important for investors to navigate the downturn. Let’s accept that not all asset classes perform equally- Till 6 months back, I was so tired of explaining my clients why you need to keep debt funds! They regularly complain,Manoj Ji, why you kept debt funds in my portfolio. They are clocking 6-7% return whereas my equity funds have been generating 20% plus return. If equity continues to perform poorly as has been happening for the last 6 months, some of the clients may complain, why should I continue to hold on to equity when debt funds are giving better return! You have to accept that some or the other asset class will perform better than others. Sometime its equity, sometime its debt, sometime its gold and sometime its international equity. You don’t need to chase the best performing asset class; you need to include all the asset classes. So, you need to humbly accept that every asset class is important for your long-term wealth creation. You don’t need to have either-or, you need to have all. So that was the acceptance part. Now let’s see what you need to control- 1) Asset Allocation- Even at the risk of sounding cliché, let me repeat again, you need to have the right asset allocation to make your portfolio all weather portfolio. Yes, you cannot control the market, you cannot control the interest rates and you cannot control the market timing ,but you can certainly divide your investments in equity, debt, gold and international equity. Also, there is no right or wrong time for right asset allocation. Every time is right for asset allocation. In fact, you need to revisit your portfolio now and ensure that it has the right asset allocation as per your goals, time horizon and risk profile. Do this exercise today itself. 2) Positive self -talk- How you talk to yourself makes a huge difference to everything you do or experience. If you are in a traffic jam and keep cursing it then you are un necessarily creating stress for yourself. If you instead say that traffic jams don’t bother me, I am relaxed, alert and positive. Then you will experience a different energy and resilience. Similarly, in the wake of market downturn, don’t keep reminding yourself, oh I lost this much, I lost that much. Instead say to yourself- the market has always been experiencing such ups and downs. I was always mentally ready for such downfall. My SIPs are getting more units. I don’t mind if market remains low for some more time because I will keep getting better opportunities for buying. This self-talk will create a magical impact and suddenly you will see market downturn as a good opportunity rather than fear it. 3) Your Savings- Can you control your expenses? If you remain alert then you can certainly find various areas where you can reduce your expenses and thus increase your savings. Especially when the stock market is low, make a vow to sow the seed of your long-term wealth. Promise to yourself that during the downturn of the stock market, you will increase your savings. I think if you are creative enough, you can find ways to reduce your expenses, increase your investments and take advantage of the lower market. Friends, situations are not exactly good or bad but our reactions make them so. Even the down period of the stock market can be benefitted by using the steps described above. So, make the downturn a period of “Blessing in disguise”. Manoj Pandey CFP

Most investors probably already understand the importance of a systematic investment plan (SIP). It is the most convenient way of accumulating wealth by investing small savings regularly. You not only get the benefit of putting your monthly savings in meaningful investments but also get the advantage of cost averaging because of market volatility. But there is one more benefit which triumphs all the other benefits of SIPs. And this is what Noble Laureate Daniel Kahneman described as system 1 operation. He described the mind functioning as system 1 and system 2. While system 1 is spontaneous, instinctive and automatic; system 2 is analytical, calculated and paranoid. Because it is always thinking, anticipating and worrying, taking decisions is quite tiresome for system 2. So, when it comes to taking investment decisions, system 2 may start thinking- Is it good to invest now or should I wait? Is the current market too high and likely to fall? Market is low but it is declining further. Shouldn’t I need to wait further? Lot is happening in the country and in the world. I should wait till things settle down! I must discuss with other advisors and read a lot before taking investment decisions! Should I invest in large cap, mid cap, small cap, hybrid or gold? Should I go for mutual funds or PMS or property will be better for me? All these reasons become so overwhelming that many simply postpone the decision. Others apply the simpler route and invest as per the advice of their banker, CA or their friend. Few try to do it themselves with small money and wait for the result before making bigger investments. But these investors are better off Investing through SIPs because- SIP takes away the pain of constant decision making. You use the automatic process of regular savings into your advantage. Even when the market goes down, it is a matter of happiness for SIP investors because she has bought more units in down market. Regular SIPs make your expenses disciplined. Since you don’t want your SIP to bounce, you tend to cut down on your unnecessary expenses. Regular savings gives you lot of satisfaction that you have not spent your entire income. In fact, after completing your SIP for the month, you tend to enjoy spending rest of the money without any guilt. All these are priceless benefits of SIPs. Therefore, everyone including retired people should consider taking SIP even if the amount of SIP is small. Manoj Pandey CFP Mainstream Investments Services Pvt Ltd

Most of us studied compound interest in our primary education and believe that we understand it. But as investors, our behavior indicates otherwise. We hold the investments for a short period and given the first sign of any volatility, press the exit button. Many also exit from the funds if they feel that the market is currently high and exiting would be a prudent strategy. Their logic is to reenter after correction. But market simply refuses to behave as per our calculations or for that matter even so-called expert’s. These timing stunts deprives investors the huge power of compounding and they miss the wealth creation opportunity. So, what to do? Stay invested come what may! Hold your investments as if you owned them forever. Whether you are investing a huge amount or a minuscule amount regularly, the power of compounding is always at your service irrespective of quantum of investments. In fact, serious wealth creation requires long enough time instead of huge capital. Let’s consider following examples- An SIP of Rs 5000 per month for 30 years in equity mutual funds will result is Rs 1.62 Crores in 30 years, Rs 2.90 Crores in 35 years and Rs 5.15 Crores in 40 years. Assumed growth rate is 12% per annum. Look at the rate of growth in later years. Once the base is there, your wealth compounds by leaps and bounds. Now, let’s make it little more interesting- Suppose you keep on increasing your SIPs @5% per annum, then the corpus would become Rs 2.61 Crores in 30 years, Rs 4.93 Crores in 35 years and Rs 9.21 Crores in 40 Years. Who so ever is reading this article can definitely invest Rs 5000 or more per month. I think investment is not a challenge but the holding period is. Most of us could not sustain this patience or discipline. But what if we consider these investments as Warren Buffet investments. Warren Buffet is known for being very lazy when it comes to selling his investments. He holds his shares for 30-35 years and above. This is the lazy elegance you need if you truly want to build a huge portfolio. He holds his shares for 30-35 years and above. This is the lazy elegance you need if you truly want to build a huge portfolio. A person who is let’s say 20 can hope to live till 80-85 years and more. If she starts investments then even at the age of 60, she would further have around 20-25 years and possibly more to enjoy the financial freedom years. In her earning years, she would do lot more things, but only if continues to invest and hold her investments, she would be able to enjoy her financial freedom and possibly a great wisdom to pass it on to other generations. And what if you are already 40 or even 50? Even then, you still have around 30-40 years and more till your life expectancy. So even you have a great deal of time left for magic of compounding to work for you. Moreover, you can invest higher amount to make up for the lost years. Stop too much thinking and start your SIP now. And once you do, forget about exiting whether the stock market booms or busts. Manoj Pandey CFP Mainstream Investments Services Pvt Ltd.