This is the story of Suresh, an employee with a Mumbai software firm for almost 5 years. Having spent his entire life in Mumbai, Suresh understands very less about life outside the city. However, for the past few months, Suresh has been experiencing an inexplicable fascination for farming. On his last trip, a short family vacation to Nasik, he fell in love with the idea of growing grapes and making money form the sale of grapes to processing units. So, Suresh with his limited knowledge and resources, bought some grape seeds and ventured into grape-farming. However, due to lack in expertise he suffered a huge loss. Having burnt his fingers, he told himself that farming is bad idea and no one can make money as a former........
........Going back to Suresh, had he involved some more people with similar interests, and hired a professional who understands farming, then they would have collectively realized their dream of earning good returns by using the professional's expertise. This could have been done by pooling in money form members of "collective" and handing it to professionals to manage the day-to-day activities. In fact, money could have been pooled as per the value of dream. Similarly, if some people are interested for long-term investment returns, then they could pool in money for, let's say, teak plantation or mango plantation. The thing to remember is, the choice will depend on the Goals and Time-Horizon.
Moral of the Story
Like Suresh, Many of us invest in financial markets with limited understanding of the truth. And then there are myths born out of failed experience and incomplete understanding which lead us into making investments through tools that may not suit our profile. This results in forming lifelong wrong perceptions about the financial markets.
........Going back to Suresh, had he involved some more people with similar interests, and hired a professional who understands farming, then they would have collectively realized their dream of earning good returns by using the professional's expertise. This could have been done by pooling in money form members of "collective" and handing it to professionals to manage the day-to-day activities. In fact, money could have been pooled as per the value of dream. Similarly, if some people are interested for long-term investment returns, then they could pool in money for, let's say, teak plantation or mango plantation. The thing to remember is, the choice will depend on the Goals and Time-Horizon.
Source:AMFI booklet Mutual Fund Saving Ka Naya Tareeka
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