Are you expecting too much out of your Investment in market?

A jaw dropping question in my AMA which read something like this.

I have removed all the identifiable information from the email because I am getting lot of such emails on regular basis where people are looking for being a full time trading and most of the time the investment amount is such that they plan to double their investments every few months.

Somehow I get a feeling that it is quite common phenomenon among Indian retail investors. So let us analyze the emails and see what we can learn out of it.

Analyzing the AMA

Let me point out what I think about this one para email.

1. Return on Investment or ROI

He wants to substitute his income from market and at the age of 58, his income has to be lot more than 8k per month but even if I assume 8k per month, he wants to double his income in a year.

2. Cumulative Investment

If you want to withdraw money from market regularly for day to day activities, your investment cannot provide a cumulative returns which means at any given month, your investment is always 1L because profit is always withdrawn for day to day activity.

3. Lack of knowledge

He neither had profit nor losses form market but in the bull run of 2014, if you did not make profit from market, suggesting you have very little experience investing in market and then expecting income from market to be able to substitute your income, you are asking for too much.

My Answer to the AMA

Really. You think investing one lakh in market can substitute your income source in a bumper way?

My answer to the question is not very important but what is important is to understand how one should approach the market.

How one should approach the market

According to me there is one thing that every Indian retail investor should keep in mind when approaching the market.

Expect Less, Educate More.

If you expect too much from the market, it will punish you for sure, if you expect very little from it and focus on educating yourself, it will reward you like anything.

I am not sure why it works but then I have done ample tests to conclude that it works. May be it has something to do with nerves or something else which I don’t know but then it just damn works.

Once you have very less expectation from market the next step is to understand both the processes of investing in market and trading in market and then opt for the one that best suits your kind of mindset.

As you identify the one that best suits you, give your time and money to educate yourself and apply the same on a very small scale. The scale should be so small that you are fine loosing it. Work on the process as you move along and once it starts working for you, scale it up to the level you are comfortable.

Finally …

My question to everyone is what is your expectation from the market? You can always share them in comments below but if you don’t feel like sharing them in in comments, you can always shoot me an AMA.