Life Lesson from Stock Markets - Systemetic Investment

Stock market is both irresistible as well as cruel. There are days when it gives you a happy surprise by a sudden rise and then it may choose to remain steady on a plateau for a long time, and then there are times when it may bring disaster and misery by a sudden crash. We hear horror stories about people loosing everything in stocks, and there are also cases of people getting super rich quickly. Many of us have burnt our fingers in stock market, getting carried away when it is going up and then ending up with losses when it crashes.  

It is due to this reason, I have been very skeptical of Stock Markets. However, it is a common wisdom that it gives you the best possible returns on investment in the long term, though it carries a risk with it as well. Ideally, for maximum gain, you should buy when the market is low and sell when it is high, but it is almost impossible to accurately time the market. In a falling market, you may buy thinking its a low level, while it may sink further, similarly, in a rising market, you may sell to book profit, and the market may go further up. If you buy at a very high point hoping for a further rise, a crash can wipe out all your money. How do we realize the returns from the market without getting bankrupt?

Several years back, A wise investment counselor explained me about Systematic Investment Plan (SIP) to get the most out of Stock Market. He said it is best not to time the market, but invest a small sum of money regularly into it, e.g. once every month. That way your purchase price due to the market fluctuation will average out. I tried this approach, and it worked really well. I also discovered another pleasant fact. Once you build up a portfolio with regular investment over time, you become less susceptible to day-to-day market fluctuations due to the inertia of your portfolio.  I discovered that even when the market crashed, my portfolio took a hit of only about 20% - not really a major disaster, since eventually the market recovers. So, being regular with SIP gave me the strength to bear the ups and down of stock market.

Am I telling you all this to encourage you to invest in stocks? Not really. There is a vital lesson for life hidden in this story. Stock Market very closely resembles life with its unpredictable ups and downs. We can use Systematic Investment in life as well to prepare ourselves better for ups and downs in life. To prepare ourselves, let us build up a portfolio in life by regular small investment in ourselves, by exercising every now and then, by eating healthy diet, by reading, learning new things, investing time to strengthen relationships, spending time on things that we love to do, focusing on our studies, getting into a habit of healthy saving, praying etc. If we do it regularly, it will build up our 'portfolio' with time, and we will be able to face even the most adverse situation in life without going emotionally broke.

Another key lesson is, keep on track with your Systematic Investment Plan despite what you are going through in life. Often, when we have a high or low in life, we tend to use it as a excuse to not spend effort on our SIP. But that's the time when we need to apply all the focus on it. In fact, when the going is not too good, it may be an opportunity to re-build yourself.

Bottom-line? Let us not wait for ideal time to invest in ourselves. Let us do it now, and on a regular basis.The following popular couplet captures this thought very well:

दुःख में सुमरन सब करें सुख में करे न कोय
जो सुख में सुमरन करे तो दुःख काहे को होए