How much money is needed to cover up your 100% investment loss?

 25^th April 2022

How much money is needed to cover up your 100% investment loss?

Dear Fellow Investor,

Namaste! Sometimes what we think is right and what is right in reality are opposite of each other. I have done one simple experiment with the normal investors – I asked them – If you have an investment of Rs.10 lakhs and if you want to recover that – who much money is needed? The immediate answer was Rs.10 lakhs. This is very logical and simple. If you also think about this line – you need to read this post.

How the investment corpus has come?

You are earning some amount every month/year and you are spending on your day-to-day expenses. Pay TAXES and Insurance/installments and things like that. If I look at the Government statistics – it says India has a 30% gross saving rate as of March 2019. Due to COVID in the last 2 years – it might have come down significantly for some or might have gone down negative for some affected people.

Let us assume you have a 20% savings rate. Rs.10 lakh which you invested was accumulated from this 20% of savings year after year. If Rs.10 lakh is 20% then the Rs.50 lakhs would be 100%.

So, you need to again earn Rs.50 lakhs to save Rs.10 lakhs to invest. It means if you lose 100% of your investments – you need to earn 500% again to allocate the same kind of funds to the investments.

Implications of wrong thought process: -

If you have read the above explanation – how many of you are thinking like this while you are investing? In fact, most respondents were surprised that Rs.10 lakh is equal to Rs.50 lakhs of earned income when I explained to them.

So, while you are investing Rs.10 lakhs or more – remember you are investing your earning potential of Rs.50 lakhs or more.

So, before you invest based on MEDIA TIPS or FREE ADVI
SE – think about your LOSS in terms of Rs.50 lakhs and not for just Rs.10 lakhs. (I have taken Rs.10 lakhs as an example. Your amount may be more or less).

This is about the POTENTIAL EARNED INCOME. The other factor is the TIME FACTOR.

Time to accumulate another Rs.10 lakhs.

You need to earn Rs.50 lakhs first to generate Rs.10 lakhs of investible funds. So, think how much time was needed to earn Rs.50 lakhs last time? How much time will be needed NOW? It is quite possible that with your job promotions or business expansion – you may earn new Rs.50 lakhs faster than the last Rs.50 lakhs. If you are RETIRED – you may not get any second opportunity to re-earn Rs.50 lakhs.

In any case – there will be a time-lag to earn back Rs.50 lakhs again.

The combined effect of the above two on the quality of your life?

You will have to start with ZERO again. By the time you catch up with the old amount, you would lose all the opportunities for that many years as you take to earn back Rs.10 lakhs of investible funds. Say you took 3 years to generate another Rs.10 lakhs – it means – you missed all the opportunities in the last 3 years.

What’s more – many may lose confidence in the investing and go for the sub-standard investment options like BANK FD or Mutual Funds. If you do the above 2 – your time to recover your losses of Rs.10 lakhs and to earn a decent return on the NEW Rs.10 lakhs will increase like anything. In most cases – you will spend the life of a FRUSTRATED INVESTOR, at least when it comes to equity investing.

I have seen many investors living mediocre life after their losses.

What are the solutions?

Buffett had given two simple rules of investing – 1. Never lose and 2. Always remember Rule number 1.

If you don’t want to LOSE – you need the expertise.

Just check the most experience and seasoned DOCTOR in your CIRCLE – he will never do an operation on his near and dear however expert he may be in that field. He will always take the services of the other doctor/s when the surgery is needed for their near and dear.

If you are not an investor 100% of the time – you need to follow the above practice. You must have your personal investment advisor. This will allow you to focus on your current job or profession and also make tons of money from the market.

Whatever are your investment funds – just multiply that by 5 and you will see the POTENTIAL LOSE if you lose all your capital. When you see it this way – the FEES you have to pay to your consultant will look PEANUTS.

What is the FEEDBACK of our SEASONED investor who joined in the MARCH 2022 second half?

Last month we had run a special campaign to invite new investors to join our services. The market was up and down as you know. But we made good money in the range of 5-7% in the month on our capital. However, our new investor made 8% thanks to his own expertise and sincerity along with our quality inputs. See his message. I have removed his name knowingly.

 

 

 

What NEXT?

On 3^rd May – AKSHAY TRUTIYA is coming. The best day to commit yourself to earning a wealth that never gets depleted. That’s why it is called AKSHAY – means never get DEPLETED.

If you want to create always increasing wealth – take advantage of our services.

Go Beyond OBVIOUS, my friend.

Follow me on Twitter @hiteshmparikh / WhatsApp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

Hitesh Parikh.