Let me be honest . Long back i thought the most boring thing was to peer at financial newspapers . Years later i realised that it was pure ignorance that led me to that conclusion . For a person brought up loving biology and science peering into numbers which sways up and down seemingly without "scientific " basis made me conclude i will never pick up a finance related newspaper . This was more than a decade back .
These days i realise not only my investments even the price of the chicken i eat everyday( thats an exaggeration. i dont eat chicken everyday :) ) is dependent on financial markets and the national economy . And thanks to being exposed to this field for nearly a decade as a hobby the recent bloodbath in the stock market didnt shock me as much as it would have long back .
Just like everything in life stockmarkets also go through ups and downs . Especially markets of countries like india are volatile . Recently stock markets underwent drastic falls even upto 1000 points in a day . Of course for anyone invested in stocks , mutual funds , unit linked policies etc etc this will get reflected in their investment . For new investors they may even see their hard earned money running into negative territory . The reasons for the fluctuations over the past one year also makes it very interesting reading touching on politics and economy on international scale from China to Greece .
But over the "long term" if the fundamentals of investing are good markets give good returns . Studies have shown that in the long term markets and real estate are the two avenues which give positive returns after adjusting for inflation .Real estate cant be bought in thousand rupees units even in the most remotest of villages but market related investments can be . Similarly real estate cant be sold in microunits . Savings bank or even the safe haven fixed deposits dont give post inflation , post tax returns as much as markets in the long term .
This doesnt mean that markets are not risky . There are numerous products based on financial markets and depending on the product the risk varies . Most important is also the timeframe of investment . Since markets respond to human greed and panic too in addition to fundamentals like companies profitability etc , in the short term generally markets are risky be it a bear or a bull run . Because we never know when the bull becomes a bear or vice versa .
Most of the bad name for the markets is due to short term investors who lost lots of money in share related investments . But just like paracetamol and chemotherapeutic drugs are leagues apart anyone would be wise to know about the market , the various investment avenues and how to use the markets to our benefit .
This is especially important to people in the healthcare field who often i see investing based on advice without understanding where their money is going , Though busy with their work, learning the basics of finance is not rocket science ( still dont know why i use this rocket science example for everything :) ) . On a personal note , my first interest in this was piqued by a senior radiologist more than a decade back . And the knowledge search increased when faced with financial advisors who wanted my money to be invested in their way .
Though both he and me didnt become Warren Buffets , over the long run we could potentially prevent our hard earned money going in bloodbaths . And yes , in a small way microowners of IT and pharma companies including voting rights .
We offer Findamentals of personal finance and investing a half day program for healthcare professionals at our trivandrum centre . For details and appointments send us a mail at drharoonstraining@gmail.com or call 8589059190/9847259190
