The Economic Times - Mumbai, 2/17/2020 Cropped page Page: W11

Investors often prefer to sell those assets andstocks which are in profit rather than

selling the ones in which they haveincurred losses. Investors also tend toremember their losses more vividlythan their profits, even if the lossesare less than their profits.

Investors often try to hear those adviceswhich are in sync with their own views even

if those views affect their investment decisions. Soby not caring to hear the differing views they maymiss out on winning investment ideas.

INVESTOR CONNECT INITIATIVE

Sridhar Gaddam

Every individual wants hismoney to grow. In today’stime mutual fund

investment is the best way tomultiply wealth. However,knowledge and time is veryimportant when it comes toinvesting in mutual funds. Oneshould have the knowledgeabout how mutual funds work and enough time tomonitor the fund performance.Long-term planning isimportant when it comes tomutual fund investments toearn huge returns.

An investor should also beaware of the regulatory changesand accordingly has toincorporate changes to hisportfolio. If you have theexperience and expertise forfund selection, that’s great. Else,it is wise to consult a qualifiedfinancial advisor.A financialadviser will help you set yourfinancial goals, the timeframe foreach goal and can then guideyou if those are realistic,measurable and achievable. Forfirst-time investors, investingthrough SIPs is the best medium.Even investing a small amountcan help build a large corpus. It isthe most disciplined way to savemoney and earn returns.

One should remember toinvest in all three major assetcategories — stocks, bonds andcash. If an individual is investingin more than one asset category,then the risk of losing money isquite less as market conditionsthat cause one asset category todo well, often cause anothercategory to give poor returns,and vice versa.Also, the idealway is to diversify by investing inmiscellaneous schemes toachieve a balance. One caninvest in large-cap mutual fundswhere hundreds of stocks arecombined in one place.The riskof losing money in such aninvestment is extremely low,making it a worthwhileopportunity.

— The writ er is an IFA

‘INVEST INDIVERSIFIEDFUNDS TO KEEPTHE BALANCE’

GURU SPEAK

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Scan this QR codeto calculate theamount you need toinvest to achieve allthe milestones youhave set for yourself

Scan this QR codeto know how tocontrol youremotions whileinvesting.

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Research, analysis andgood advicenotwithstanding, most

investors are impacted by someunique psychological factorsrelating to their portfolio and

investments. Here we deal withsome of those behaviouralaspects of investors thateveryone should try to avoidwhen there’s a tug-of-warbetween reason and emotion.

WIN THE TUG-OF-WAR

BETWEEN REASON AND

EMOTION

INVESTORS OFTEN BANK ONBEHAVIOURAL BIASES OVER

SAGE ADVICE

LOSS AVERSIONBIAS

CONFIRMATIONBIAS

A large number of investors feel they couldspot winning stock or investment ideas even

if the reality is that they are not trained orexperienced enough to spot such stocks or ideas.They feel by being in control of their investmentsthey can beat even the best of fund managers.

CONTROL BIAS

Often investors invest in those funds, stocks or investmentideas that have just recently outperformed most the peers.

Such behaviour often lead to herd mentality with a large number ofinvestors chasing the winners of recent past. Research, however,show that such a strategy rarely works in favour of investors.

RECENCY BIAS

THE ECONOMIC TIMES WEALTH, FEBRUARY 17-23, 2020 >> pg 11

Wee kend Inveshnant Plan (NIP) is only a communicationapproach from UU MF designed to encourage a disciplinedinvestmen t fdce a Systematic Investment Men (SIP) , of a certainamount an a pcoddecided doh in s specific muM1d Fund scheme,e

- - regularly over o period a( time.

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MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

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