BASICS OF SHARE MARKET | MINDSET OF RICH PEOPLE | HOW TO ATTAIN REAL WEALTH | UNSHAKEABLE

How to be rich? Is there any strategy or formula for being rich? What are the basics of the share market? How do investors think? These are a few of the many questions we all have in our minds regarding wealth. And why shouldn’t we have these questions after all?? We all dream of achieving that tremendous inner peace, that comfort, that independence, that freedom. In short, we all dream of being UNSHAKEABLE. 

Well, I have found a book that addresses our questions with the perfect strategies and tools to make us wealthy. This book contains the strategies given by over 50 most reputed and wealthy legends of the financial universe. Including the most celebrated investor ever, Mr Warren Buffet.

The strategies will show us how the masters of the financial world prepare themselves for the market fall and earn profits by anticipating the fall and not just reacting to it. As a result, by knowing it, you and I both will benefit from the very thing that harms those who are unprepared.

TARGET AUDIENCE OF THIS BOOK

This book is for the people who are looking for directions of acquiring wealth. More specifically it is for the people who are interested in investing their money in the share market. For those who want to know what other successful investors think. What all strategies they use in order to be successful in spite of the market being so very unpredictable.

When reading this blog. I want you to read like an investor and not just like a reader. As when you do that, you will understand things in a better way. Here, you will learn to build a diversified portfolio so that your acquired wealth doesn’t get destroyed when a bear market finally comes. In fact, you’ll learn to profit massively from the opportunities that fear and turmoil create. To be specific, you will learn the skill of “Asset allocation”.

So, let’s begin.

THE LEARNINGS

Below is a list of all the topics and learnings that you will be going through. Trust me you will feel amazing reading it. A click on any of these links will take you to that specific topic.

• WHAT IT TAKES TO ATTAIN FINANCIAL FREEDOM??
• 7 FREEDOM FACTS THAT WILL FREE US FROM FINANCIAL FEARS.
• HOW DO SHARE MARKET FOOLS YOU INTO OVERPAYING FOR UNDERPERFORMANCE?
• WHY INDEX FUNDS?
• WHO CAN YOU REALLY TRUST WITH YOUR MONEY??
• HOW TO FIND THE BEST ADVISOR FOR YOUR NEEDS?
• THE 4 KEY PRINCIPLES TO HELP YOU IN EVERY INVESTMENT DECISION YOU MAKE.
• HOW TO REMAIN UNSHAKEABLE DURING A CRISIS?
• PREPARE FOR THE BEAR.
• HOW TO CREATE A PROPER ASSET ALLOCATION PLAN?
• SIX MONEY MISTAKES INVESTORS MAKE AND HOW YOU CAN AVOID THEM.
• HOW YOU CAN ACHIEVE ANYTHING IN LIFE?
• TO SUFFER OR NOT TO SUFFER – THAT IS THE QUESTION.
• IN THE END, IT’S ALL ABOUT THE POWER OF DECISIONS.
• THE 90-SECOND RULE.
• THE SECRET OF LIVING IS GIVING.
• CONCLUSION.

WHAT IT TAKES TO ATTAIN FINANCIAL FREEDOM??

To attain financial freedom, we strictly have to give up this belief that our earned income which we acquire at the end of the month will be enough.

As in truth, there are many stories of popular personalities who have attained millions but at the end of their life, they were the only ones who have been declared bankrupt.

For considering some examples, many famous Indian personalities have faced many financial issues in spite of their well-settled careers. Some of them are Amitabh Bachhan, Shahrukh Khan, etc. If we talk about International Celebrities, Michael Jackson who once signed a contract of about $1 billion ultimately owed about $300 million upon his death in 2009.  

Now, the question comes, how shall I attain it then?? For this, you should have a bit smaller target. The target to acquire wealth so much that your mortgage, food, utilities, transportation, and insurance all can be paid without ever working again. Usually, this amount is about 40% less than ultimate financial independence.

Once, you attain this target, the bigger target won’t be far away.  Now, to attain this target, you should start saving and investing. Become an owner, not just a consumer. Pay yourself first by taking a percentage of your income and having it deducted automatically from your bank account.

This saved income will allow you to further invest in more profitable income sources. This will actually help you attain Financial Freedom. We for now will focus on the stock market and its benefits and break all those myths and facts that you and I both should know.

These facts will make us realize that market ups and down is not the real danger. Being out of the market is the real danger.

7 FREEDOM FACTS THAT WILL FREE US FROM FINANCIAL FEARS.

These facts will give you more knowledge about the stock market and break all the myths. It will also make us realize the pattern that how the stock market actually works. Armed with all this knowledge, you can get in the game, stay in it and win it. Most importantly, these facts will free you from fear that dominate most people’s financial lives. That’s why it’s called Freedom facts.

FREEDOM FACT 1: ON AVERAGE, CORRECTIONS HAVE OCCURRED ABOUT ONCE A YEAR SINCE 1900.

It is said that if the market falls by 10% from its peak, it’s called a correction. And when it goes down by 20%, it’s called a bear market. And this correction is made almost every year. So, the fact is, it is not scary, it’s just the pattern which the market follows.

It’s noting that in spite of its fall every year, Sensex has given about 17%+ returns over the last 40 years.  So, the fact remains that it can feel uncomfortable when your assets are taking a blow for the corrections the market makes. We have to remember that if we hold tight, there is a huge potential for us to earn the profits that we all expect.

FREEDOM FACT 2: LESS THAN 20% OF ALL CORRECTIONS TURN INTO A BEAR MARKET.

When the market starts falling, especially when it’s down by more than 10%, many people out of worry starts selling because they’re scared that this drop is going to be a bear market.

But history shows that in 25 years India has faced just 04 bear markets including the recent due to coronavirus pandemic.

To put it another way, 80% of corrections don’t turn into bear markets. If we understand that the vast majority of corrections aren’t that bad, it will be easier to keep us calm and resist the temptation to hit the sell button at the very first sign of a downward market.

FREEDOM FACT 03: NOBODY CAN PREDICT CONSISTENTLY WHETHER THE MARKET WILL RISE OR FALL.

This is a hard raw truth. Nobody has and nobody can predict the market high and lows perfectly and that too consistently.

There are many forecasters of the market hoping that you and I get influenced and buy their product/services. Many of them in truth, predict the same predictions every year until they’re occasionally right. As anyone would be. After all, even a man with a broken watch can tell you the correct time twice a day.

As Jack C. Bogle, the founder of Vanguard, which has more than $3 trillion in assets under management also says, that in his 65 years of business, he has never met a person who can predict the market just as perfectly as it can be.

FREEDOM FACT 04: THE STOCK MARKET RISES OVER TIME DESPITE MANY SHORT-TERM SETBACKS.

The BSE Sensex has experienced a number of declines including the 2008-2009 recession stage. It gave about a return of -52.4% return, which is enough for many of us to get a heart attack thinking about investing in the stock market.

But there is a suitable table representation by stableinvestor.com which makes us understand that the stock market is not a very bad place to stay in.

As per the table, the 20 years long journey has been volatile. In the last 28 years, we have had 20 years of positive returns and just 8 years of negative returns. This means that to get a positive return from our investments we should always remember that the long-term plan is likely to be good, even when the short term looks disturbing.

This happens due to the simple fact that the Indian Stock market typically rises over time because the economy expands. Indian companies become more profitable, as Indian workers become more efficient and productive. As the population grows and as technology drives new innovation.

Of course, every company will not do well over time. Some companies will die and some stocks will fall to zero. But here comes the concept of INDEX FUNDS which helps investors manage their risks in their investment portfolio.

Index funds invest in a group of securities like the bond market or equity-oriented stocks. These bonds are of quality companies where you own a part of future cash flows of companies without taking a lot of risks.

This means Indian economy is making you money even when you sleep! Sounds interesting. Right?

FREEDOM FACT 05: BEAR MARKETS HAVE HAPPENED AND CANNOT BE AVOIDED.

When thinking of investing in the stock market, you should always invest for the long term and not for the short term. You know that corrections are bound to happen regularly and there is nothing to fear about it.

No one can predict the market accurately and the market generally rebounds after the correction is done. These are facts that the stock market will give us returns if we build up the patience.

There is another fact that is mentioned previously. That is India have faced 4 bear markets in the last 25 years. In other words, on average, they happened nearly once every 6 years.

As the saying goes, “History repeats itself.” Hence, we learn that bear markets are likely to continue whether we like it or not. So, we’d better get used to it and prepare.

But here’s the catch, bear markets don’t last. When you’re in the midst of the bear market, you will notice that people around us get consumed with negative thoughts about the market thinking that the market will never bounce back.

But the most successful investors take advantage of this period and avoid fear and gloom. They invest more money at bargain prices. As Warren Buffet said, “The best opportunities come in times of maximum pessimism.”

FREEDOM FACT 06: BEAR MARKETS BECOME BULL MARKETS, AND PESSIMISM BECOMES OPTIMISM.

We all would agree with the fact as per many market experts that during a bear market, the consumer spends less money, so companies make less money. And if companies make less money, it means that the stock market will not recover at any moment. Right?

Actually wrong. Here comes the difference between a consumer and an investor. A true investor finds these moments an ideal time to invest.

If we follow the picture above, it clearly shows that the market did bounce back strongly and that too when consumer spending was a lot less. As per the picture, during the 2000-2001 period when the Indian stock market gave returns of -18 to -20%, the next year of 2002-2003, the market did come back with a whopping +73% return.

The same went during the 2008 recession, during which the market gave a -52% return and bounced back with an 81% return the next year of 2009.

Now, the question should come how is it possible?? Because the stock market doesn’t look for today. The market always looks for tomorrow. What matters most isn’t where the economy is but where it’s headed.

So, it’s very important to stick around here and follow Warren Buffets quote,

“The stock market is a device for transferring money from the impatient to the patient.”

FREEDOM FACT 07: THE GREATEST DANGER IS BEING OUT OF THE MARKET.

By now you and I both know that it is impossible to predict accurately the timing regarding when to get in the market and when to be out, in order to gain maximum returns.

We all know now that intelligent investors wait for the stocks to fall in order to earn profits when the market again rises high. This may tempt you as well to play it safe when the market is at its high and wait at the sidelines.

But this waiting may result in losses as well, even if the wait is for as short as 10 days. To support this statement, JPMorgan found that 6 of the best 10 best days in the market over the last 20 years occurred within two weeks of the 10 worst days.

That means if you have sold at the wrong time, you actually missed out on the superb days that followed. This is where patient investors made almost all their profits.

Moral of the story is, you can’t win by sitting on the bench. You have to be in the game.

Always remember, “Fear isn’t rewarded. Courage is.”

The greatest danger to your financial health isn’t a market crash, it’s being out of the market. Moreover, if you stay long enough, compounding works its magic. And you end up with a healthy return. Even if your timing was poor in the first place.

HOW DO SHARE MARKET FOOLS YOU INTO OVERPAYING FOR UNDERPERFORMANCE?

Let’s assume that you bought a stock that gives 7% return each year. At this rate by compounding, one rupee you invested became 30 rupees in a 50-year period. Amazing right?

But here comes the tricky part, an average fund charges about 2% per year in costs, which drops your return from 7% to 5% per year. This drop results in what you receive as compared to what you should get. You get now only Rs. 10/- instead of Rs. 30/-. Saw the difference? It’s huge.

And this is not the end, the stock you invested in doesn’t necessarily guarantee you a good return, you can only predict. And if your stock is handled by an active fund manager, there are plenty of chances that the prediction to buy or sell can be wrong.

Things become worse, when you realize that all this buying and selling happens, incurs a cost, the brokerage firm charges a commission to execute the transaction and which has to be given by you only. Is it so difficult? No, it’s even more actually, you have to pay more tax even when your stock price rise.

All these transaction costs and all cost you about 30% of your income. This percentage is enough to rethink your decision to invest in an actively managed fund.

This is what happens when you enter the share market, these are the facts, this is how this market has produced many billionaires’ work.

So, how do people who really want to invest can grow? And people do become rich, we all know it. Many experts will advise you to invest in Index funds. Index funds take a passive approach on this which we will discuss in the next topic. 

WHY INDEX FUNDS?

Index funds consist of stocks of reputed companies on whose performance the economy of India depends. These stocks come in namely Nifty30 and Sensex50. These stocks take a passive approach that eliminates all trading activity, thus saving on hefty transaction charges.

Index funds are almost kept on auto-pilot and moreover, the amount you invest in Index funds are completely invested, unlike the actively managed funds in which a part of the money is kept reserved for further any requirement such as market crash or investing in new stocks. This reserved money doesn’t actually give you any sought of return.

But in Index funds, you get the complete return. Index funds make few trades and so their transaction cost is also low. Thus, saving a huge sum that is lost or charged by the brokerage firm.

Another important tip, to pick any stock or mutual fund or any Index fund. It’s very important to look for stocks/funds which have the potential to grow, irrespective of their star rating. As the ones who own a four-five-star rating are the ones who have performed well, not the ones that WILL perform well.

Now, why Index funds? For this let’s imagine your index fund which is risk-free outperforms your actively managed funds by 1% annually, and you save about another 1% on transaction cost investing in Index funds. You ultimately save 2% a year on your returns. This alone can give you 20 years of extra retirement income.

Now, this 20 year extra will give immense confidence to take charge upon your financial future.

WHO CAN YOU REALLY TRUST WITH YOUR MONEY??

As per many surveys, it shows that people trust only 10% of financial institutions. This is not their problem, of course, There have been many groundbreaking frauds/scams in India itself that has resulted in huge monetary losses of the clients.

Some of them are like the Ketan Parekh Scam of 2001, Harshad Mehta Scam of 1990s.

Another question that should come in mind, that what all benefits we will have when we find a good, honest advisor?

A Vanguard study explored how much monetary value does we can get from him/her.

• Lowering expense ratio: 0.45% back in our pocket.
• Rebalancing portfolio: 0.35% of increased performance.
• Asset Allocation: 0.75% of increased performance.
• Withdrawing the right investments in retirement: 0.70% in savings
• Behavioural Coaching: 1.5% for practical psychologist.

The Total? It’s about 3.75% of added value. Feels completely justified about why we should look for good advisors and not any other available in the market.

HOW TO FIND THE BEST ADVISOR FOR YOUR NEEDS?

Probably the most important question which we should have an answer to. Especially when we are looking to invest in the market.

And for the answer, you can apply the following four criteria: –

• Check out the Advisor’s Credentials. Here, you should be looking for certified experts. For example, if you are looking for planning help, then the advisor should be a certified financial planner (CFP). If looking for tax, the advisory team should have CAs or CPAs in it.
• You should be getting more than just someone to design your investment strategy. Here what you should really look for is someone who can help you as the years go by to grow your overall wealth by showing you how to save money on your mortgage, insurance, taxes, and so on. Someone who can help you protect your legacy.
• The Advisor should have experience handling clients like you. It’s about analysing his/her track record. For example, if you are looking for wealth management advice so that you can retire rich, the advisor should have that expertise. It should not be like, the advisor himself/herself doesn’t have a retirement plan and he is just advising.
• Finally, it’s important to find an advisor you can relate to on a Personal Level. A good advisor will be a partner for many years to come. And when it comes to money, the trust should be very high as money is tied up with our hopes and dreams. It consists of the desire to take care of the next generation.

THE 4 KEY PRINCIPLES TO HELP YOU IN EVERY INVESTMENT DECISION YOU MAKE.

Individuals who have attained financial success in this complicated market have been lucky no doubt. But there is something more to it. As is said “Fortune favours the brave”, these people have a different set of beliefs and principles which makes them stand out from everyone else. And we will discuss those principles here.

PRINCIPLE CORE 01: DON’T LOSE

This principle comes from the famous quote by Warren Buffet, “Rule Number one: never lose money. Rule Number two: never forget rule number one.”

But this doesn’t mean we should hide away from investing. It’s about prioritizing on designing an asset allocation framework that consists of the right mix of different types of investments, diversifying among them in such a way that you reduce your risks and maximize your rewards.

This is done simply to be safe from the nasty surprises which makes the market so very uncertain. And it’s very important to expect the unexpected. Long-time winners like Rakesh Jhunjhunwala, Warren Buffet, etc never forget considering the downside of any investment.

Thus, they protect themselves by investing in different types of assets, some which will rise while others may fall.

PRINCIPLE CORE 02: ASYMMETRIC RISK/REWARD

You must have heard that for high returns, you should take high risks. Don’t you? But the successful investors do not believe in this theory. They hunt for investments that have asymmetric risk/reward, that is investments that would have returns so much that the losses will become negligible. Surprised??

But it is true. This is how it works.

Suppose you invest about Rs. 1,00,000/- each in 5 stocks. Out of the 5, your 4 stocks go to zero, you have lost a total of Rs. 4,00,000/-. But if the 5^th investment is a jackpot and makes Rs. 5,00,000/-, you’ve earned back your Rs. 5,00,000/- investment. Saw the benefit?

Now let’s assume out of 5, only 2 stocks benefitted like this, you earned Rs. 10,00,000/- with an investment of Rs. 5,00,000/-. That’s double.

This principle is followed by the famous Businessman Sir Richard Branson too, the founder of Virgin Group. The world knows him for his risk-taking ability. But in terms of finance, he is a master in minimizing that risk.

Even when starting the airline company, he made sure to make a deal to return the planes if the business didn’t pan out.

The point is, different opportunities will always come your way, you just have to be a little more careful regarding the returns you get and the losses you will make if things don’t work out.

PRINCIPLE CORE 03: TAX EFFICIENCY.

The subject tax becomes more important when we come to know that about 30% of investment returns can be wiped out if we’re not careful. Yet mutual fund companies focus on pre-tax returns only, whereas what truly matters is the net amount that we actually get to keep.

Taxes do matter. Thus, we all are aware of many tax-advantaged vehicles such as the Public Provident fund (PPF), National Pension Scheme (NPS), ELSS Fund, Medical Insurance, that can help us reach our goals quicker. If you are taking the advantage of these funds already then it’s time to invest in them more.

So, the blueprint to analyse an investment is simple, first, you have to start with the focus on not losing money, then on getting asymmetric risk/reward, then the question of how tax-efficient the investment is.

There will be questions that why it is so much problem in giving our share of income to the government. The simple answer to it is if I can make a greater impact on the world by keeping the income to myself then saving it becomes more logical and correct. If the extra money earned can be used in the correct way, you and I both can make many others life beautiful and liveable, which the government may or may not do.

PRINCIPLE CORE 04: DIVERSIFICATION.

Just imagine one fine day, all the money you invested in a particular area of your choice just blows off, and all your money vanishes.

Feeling terrified right now, correct? To avoid this pathetic situation Diversification becomes so very important. This market is very unpredictable. What’s hot currently can suddenly turn to ice.

Now the question comes how to diversify. There are 4 different ways for Diversification:

• Across Different Asset Classes. Avoid putting all in one like real estate, stocks or bonds, etc.
• Within classes. Don’t put all your money in favourite and famous stocks like TATA, Reliance, or Mahindra & Mahindra.
• Across markets, countries, and currencies around the world.
• Across Time. You’re never going to know the right time to invest. But if you keep adding to your investments systematically over months and years, you’ll reduce your risk and increase your returns over time.

HOW TO REMAIN UNSHAKEABLE DURING A CRISIS?

Here I would like to quote the great Nelson Mandela, “I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.”

And how you do it that’s the real thing. You and I both can be unshakeable, but that is a gift that only you can give to yourself. Achieve this by educating yourself, by knowing what to do and how it will be done.

You can be fearful but that fear should channelize into knowing the way to come out of the fear. If you keep the fear, you’ll never stand a chance of achieving financial freedom. Fear will let you lose the game before it ever begins.

You have to take the initiative to educate yourself, learning the market’s long-term patterns, modelling the best investors, and making decisions understanding what worked for them for decades. This education takes away the risk factor to a large extent. As Warren Buffet says, “Risk comes from not knowing what you’re doing.”

Thus, when the next bear market comes and others are overwhelmed with fear. You and I after reading this blog, should have the knowledge which will enable us to fear less. This fearlessness in the face of uncertainty will bring us tremendous financial rewards.

PREPARE FOR THE BEAR.

None of us knows when a bear market will come, how bad it will be or how long it will last. As stated above in the blog, there have been about 4 bear markets in the last 25 years in India. But that’s not a reason to hide in terror. It’s a reason to ensure that your ship is safe and seaworthy, regardless of the conditions.

Warren Buffet has his say on this, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread.”

To be prepared for the bear market, you need to follow two primary ways.

First is that you need the right asset allocation or in other words, your portfolio should be diversified in a perfect ratio of stocks, bonds, and real estate, etc.

Second, you should have a backup regarding your finances just to be very sure that you’re equipped with safety precautions when the bear hits the market.

Following this, you can well say that you are about 90% ready to survive any bear market that will come in the future.

But why not 100%? The other 10% will come from your mindset. It’s about how you react emotionally in the midst of the storm. It’s easy to say you will remain cool. But we all know it’s harder to do then to say. One thing that can save us from freaking out is by educating ourselves about the investments we do. It’s about knowing why you invested and how it will go after the crash recovers.

This thing will not reduce your risk, but proper asset allocation can give you strength to remain calm during the crash.

HOW TO CREATE A PROPER ASSET ALLOCATION PLAN?

The truth regarding this question is that there is no single method to answer it. As every individual’s needs determine their asset allocation, not their age.

A 55-year-old man who is saving for his child’s college tuition will have different priorities than a 55-year-old entrepreneur who has just sold his million-dollar business to build a career in a completely new way.

So, how to do it? For this question to be answered your financial advisor will first need to answer that what asset classes will give you the highest probability of getting from where you are today to where you need to be?

The allocation should start by getting a clear picture of where you’re today, how much you’re willing and able to save, how much money you’ll need, and when you’ll need it.

When this is cleared, your financial advisor should be able to provide you the right asset allocation suitable for you.

Not only this, the asset you will be investing in should be a long term one, otherwise if selling them becomes a frequent habit, then a lot of your wealth will be gone with the high taxes. Hence, fulfilment of all these requirements will take a lot of your time and the advisor as well. But the end result will be very peaceful and financial wealth.

SIX MONEY MISTAKES INVESTORS MAKE AND HOW YOU CAN AVOID THEM.

Along with the barriers in attaining Financial Independence that also should be avoided, here are the 6 money mistakes :-

MISTAKE 1: SEEKING CONFIRMATION OF THEIR BELIEFS AND AVOIDING ANY CONTRADICTING OPINIONS.

This is also known as “confirmation bias”, which is the human tendency to seek out and value information that confirms his/her own perceptions. This tendency leads to avoid or undervalue any information that conflicts with their beliefs.

This confirmation bias also gets included in investing also, where investors place greater value on something they already own, regardless of its current value which can be negative but is avoided. But the truth is, your love can be blind, but you can’t be blind when investing.

THE SOLUTION. FIND QUALIFIED PEOPLE WHO WILL DISAGREE WITH YOU, ASK QUESTIONS TO THEM.

The best investors know their confirmation bias problem and have developed a way to counter this tendency. The key is to actively seek out qualified disagreeing opinions and by discussing with them the pros and cons, they finally reach a decision.

The questions regarding the decision should be, ‘Where can I go wrong? What am I not seeing? What’s the downside? And who else should I speak with to deepen my knowledge?’

MISTAKE 2: BUYING AND SELLING THE WRONG THING AT EXACTLY THE WRONG MOMENT.

This happens due to another bias that we humans inherit, which is the recency bias. Here we carry more weight on the recent experiences in our minds when we’re evaluating the odds of something happening in future.

For example, when the market performs well, we get convinced that the good times will keep rolling! Likewise, when it falls, we start to believe that it will never recover.

How does it effect financially? When expectations made on recent experiences don’t meet, investors like you and me often overreact and sell the stock which can be disastrous.

THE SOLUTION. DON’T SELL OUT. REBALANCE.

This mistake is rectified by many top investors by creating a list of simple rules which guides them especially when things get too emotional like the above. This helps them to stay on course and remain on target for the long term.

Another thing that is important for you to do is decide in advance how you’re going to diversify your portfolio. How much ratio of investment you will do in stocks, bonds, or any other investment and lock it down. If it’s not locked, then circumstances will change and your mood will also change and make bad decisions.

MISTAKE 3: OVERCONFIDENCE. OVERESTIMATING OUR ABILITIES AND OUR KNOWLEDGE IS A RECIPE FOR DISASTER.

As per a survey on stock investments of more than 35 thousand households over five years. It’s found that men are especially prone to overconfidence when it comes to investing. In fact, men traded 45% more than women, reducing their net return by 3% a year. 

This means a total of about 15% gets lost in 5 years by trading and the sole reason, overconfidence. In the stock market when you don’t know something, it is much better to accept it rather than predicting the future. Accepting it will make you learn as well as earn in a much better way.

THE SOLUTION. GET REAL, GET HONEST.

When you get real and accept the fact that you are just a normal investor who needs to learn a lot before getting the edge, you give yourself a special advantage. The advantage is that you’ll do much better than all those overconfident investors who give themselves false beliefs that they can outperform.

Moreover, being a learner, you can simply focus on minimizing your cost, or in other words, you can just invest in an index. Index funds can also give you broad diversification, and many learning opportunities while growing your money in a healthy environment.

MISTAKE 4: GREED, GAMBLING, AND THE QUEST FOR HOME RUNS.

Greed and impatience are dangerous traits when it comes to investing. We all want to get rich, that’s fine, but to achieve it, many look for getting rich quick schemes. But being rich happens by focusing on small incremental changes that compound over time. The best way to win the game of investing is to achieve sustainable long-term returns.

But the desire to gamble is built on us. Remember, either you win a gamble or you win, in both cases, the other one ultimately wins. Here the other one is the stock market. It’s like a big casino, where you win or lose you have to pay them.

THE SOLUTION: IT’S A MARATHON, NOT A SPRINT.

Warren Buffet is an inspiration for many investors in the market, and all of them follow one suggestion from him, to check their portfolio only once a year. Not only this, it’s important to stop following any business news channel suggesting things that increases your endorphin level and which further pushes you to take abrupt decisions regarding your portfolio.

The vast majority of what is said to be analysis and information about the stock market is actually just designed to generate activity, to get us to pull the trigger because by pulling it, somebody, somewhere will get benefit out of it.

Whatever research you have to do, you do it before investing. Once you invest, it’s about keeping it and patiently observe it. By this only your money will get compounded more. And ultimately, your road towards richness will be fulfilled.

MISTAKE 5: HOME BIAS TENDENCY EVEN IN INVESTING.

Humans have a natural tendency to stay within their comfort zone. When it comes to investing, people also want to be there where they know best. Hence, they only invest in their own country’s market.

Omitting the fact, that in this generation of Internet and speed. We all can get to explore the global market. This exploration has its own benefit. For example, if your country goes into a rough patch, the other country may of course have a good patch, and this good can do you better financially.

THE SOLUTION. EXPAND YOUR HORIZONS.

Here, diversification broadly comes into play, not only in different asset classes but also in different countries. You should discuss about global asset allocation with a financial advisor and decide what percentage of your investment you need to keep at home and abroad.

Diversifying internationally, you not only reduce your overall risk, but also increase your returns.

But once you have invested, it is also important to write it down about the reasons why you own what you own. This will remind you of the reasons whenever the asset does not do well and will help in sticking to it.

MISTAKE 6: YOUR BRAIN WANTS YOU TO BE FEARFUL IN TIMES OF TURMOIL – DON’T LISTEN TO IT.

By now, you know that the best investors relish corrections and bear markets because that’s when everything goes on sale. At this point, I am sure your conscious mind knows that market crashes are a wonderful opportunity to build long term wealth and not something to fear.

But there is a tragedy here, in spite of knowing all this, you and I both will succumb to immense fear. Fear of losing money when the market goes down even a little bit. Why? Because we are humans. And humans do have a natural tendency to recall negative experiences more clearly than they do positive ones. This is known as “negativity bias”.

This negativity bias will trigger our negative memories even in a minor market correction that will try to make you believe that the end is near now. This has caused many investors to overact and exit from the market.

But again, the reminder, great investors keep this bias under check every time and control their negative emotions during these crucial money-making periods.

THE SOLUTION: PREPARATION IS THE KEY.

Being self-aware is the key to counter these psychological tendencies. After all, you can’t change something if you’re not aware of it.

Now the next question comes what measures should we take to counter it. One way is to keep learning about the performance of the asset classes you invest in the previous bear market. Just to be prepared about what to expect when the bear market actually comes.

Another way is to have the right asset allocation. Writing down the reasons for your investments in a particular asset class can also help since there will be times when the particular asset class will perform poorly. And you will be tempted to exit seeing your money losing its value. That will be the time when your reason will work and will motivate you to stick there till the good times come again.

These are simple processes which can take away much of your stress during a market turmoil.

Remember, as long as your needs haven’t changed and your assets are still aligned with your goals, you can sit tight and give your investments the time they need to prove their value.

HOW YOU CAN ACHIEVE ANYTHING IN LIFE?

This is an important section as if we only talk about financial wealth without considering anything about mental health, then this book would have incomplete and this blog too.

Real Wealth is emotional, psychological, and spiritual. If you’re financially free, but you’re still suffering emotionally, then you have not achieved anything in the real sense.

Every one of us craves an extraordinary quality of life. Every Individuals’ definition of extraordinary quality might be different but all in all, it’s about living a magnificent life on your own terms. But the question is, Is it really possible?

The answer is a definite yes, but you need to master or rather you need to take certain steps. The steps are :-

THE FIRST STEP IS FOCUS.

This is the most common thing you will hear when you want to achieve anything, and it is true. Wherever you focus goes, your energy flows. When you put your entire focus on something that really matters to you, this intense focus will bring a burning desire that can help you obtain what might otherwise be out of reach.

THE SECOND STEP IS TO GO BEYOND HUNGER, DRIVE, AND TO CONSISTENTLY TAKE MASSIVE ACTION.

To succeed, beyond any desire, hunger, etc. what is more important is to take continuous massive actions. Taking regular actions will ultimately let you know what actually will work for you and what will not. This will help you plan your proceedings accordingly.

THE THIRD STEP IS GRACE.

This can seem to be too much but it is a fact. The more you acknowledge grace in your life, the more you seem to have it. The deep sense of appreciation will bring more and more grace into our lives.

Acknowledging grace becomes more important when you realize that you can do everything in your power to achieve your goals, but there will be still things over which you have no control. And you have no other option than to accept it. And this acceptance should be with grace and not with frustration or anything negative.

THE FOURTH STEP IS LEARNING THE ART OF GIVING.

“You make a living by what you get. You make a life by what you give”. Winston Churchill.

The true nature of human beings isn’t selfish. We’re driven by our desire to contribute. It’s that we have stopped contributing. This is the main reason we do not feel truly fulfilled.

Human life should have a little bit of giving, contributing. This is where the true sense of fulfillment lies. 

TO SUFFER OR NOT TO SUFFER – THAT IS THE QUESTION.

Just ask yourself, how many times in a day you become frustrated, overwhelmed, worried or stressed? The answer would be many times of course. We reckon these emotions as pretty natural and part of life. But the fact is something different. I too came to know the real fact reading this only.

The fact is our mind plays tricks on us. The trouble is, the human brain isn’t designed to make us happy or fulfilled. But it is always in search of faults and survives us from dangers. If this brain is left to its own potential then it may never let us go beyond its comfort zone. And we all know the actual success lies beyond this comfort zone.

An undirected mind operates naturally in survival mode, constantly identifying potential threats. The result: a life filled with stress and anxiety. Most people live like this, they make unconscious decisions, based on habit and conditioning, and are at the mercy of their own minds.

But the secret to living an extraordinary life is to take control of the mind. It should be you who should make the decisions and not the other way around. If you decide to be happy, your mind has to follow it.

This alone decision to take control of your mind will determine whether you live in a suffering state or a beautiful state of mind.

IN THE END, IT’S ALL ABOUT THE POWER OF DECISIONS.

“I am done with suffering. I’m going to live every day to the fullest and find juice in every moment, including the ones I don’t like because life is just too short to suffer.”

This is what we need to say to ourselves every single day. And when we do it, trust me your words will be your commitment and with this, you can live a fulfilled life.

To put this in another way, will you commit to enjoying life not only when everything goes right, but also when you lose something or someone you love, or when nobody seems to understand you?

Unless the answer to this question is a big YES, our survival mind will keep creating suffering whenever our desires, expectations, are not met. Trust me, this will just be a waste of so much of our lives.

You have to decide that you’re 100% responsible for your state of mind and for your experience in this life. When you take this decision, your life will start to change and in a more positive and fulfilled direction.

THE 90-SECOND RULE.

This rule is nothing but a technique to take control of your mind and achieve a beautiful state of mind. In this technique whenever you feel the tension rising, you need to catch yourself. Take 90 seconds to stop whatever you are doing and retain yourself to be normal.

How to do it?

By gently breathing and slowing things down. Step out of the situation and distance yourself from the destructive thoughts that your brain is generating. 

Why is this helpful? Because these destructive and negative thoughts are of no use to you. These thoughts just limit your potential to actually solve the problem. Slowing things down for 90 seconds will make you realize that you don’t need to believe these thoughts as they are just natural and should be ignored.

When you shift your focus from being tense to being free, you’ll find that you’re much more present for other people important to you. You can give so much more to your loved ones.

Shifting your focus from the survival mode of your mind to appreciation, love, and giving will create more space for your spirit to move freely. And when you do this consistently, you will rewire your nervous system. You will find the good in every situation.

The best part of all this is you can do these things now; this decision is entirely in your hands. You alone can give yourself this happiness edge.

THE SECRET OF LIVING IS GIVING

We all know by now that real wealth is not the one, we achieve financially. It’s something more great and noble. It’s those moments of helping people to break through their limits and achieve new heights in life.

It’s the delight of seeing their lives become a celebration instead of a battle. It’s this magical feeling that somehow you have played your part in making others life a bit sweeter and more positive.

Helping people when they desperately need one will make you feel something eternal and invincible inside you. In fact, there can be no greater gift than for your life to have meaning beyond yourself.

This is the game changer. Find something to serve, and this will make you wealthy.

Hearing all these amazing thoughts, many people will say I’ll contribute when I will become rich. But remember, if a person can’t give a rupee when he has 100, he will never give 1000 when he will have 100000.

The moral is to start now with whatever you have, and it’s a promise that you will feel amazing. There will be a psychological shift from scarcity to abundance which will make you wealthy and will bring a glorious sense of freedom.

CONCLUSION.

With this, we come to the end of this blog. An informational blog that has helped me know the share market in a very different way. A way where I can see that I too can succeed in this market and earn money by applying the patterns and change in my mindset of being patient, and gathering adequate knowledge before taking any step.

This blog does contain principles that will help us in taking every investment decision, how to create a proper asset allocation plan, the mistakes that we do with money and how we can rectify them, and many more.

In the end, we discuss real wealth that doesn’t require financial help. A wealth that will make you complete as a human being and your human birth a success.

This blog will assist you in being truly unshakeable in times of turmoil, when everything seems finished.

Happy reading.