Investment is an art as well as a science. It is an art because it needs lots of customization depends upon investor's risk appetite, investment capacity, age, job security, family liability etc. It is a science because we can narrow down the range of outcome using mathematical analysis. Two crucial parameters of investment are risk and return. These two parameters essentially puts in following four scenarios:
- Low Risk - Low Return: Fixed deposit is benchmark
- Low Risk - High Return: Doesn't exist
- High Risk - Low Return: Worst scenario (many mutual funds are in this category)
- High Risk - High Return: Equity market exposure with proven strategy
If you have need of your money in near future (less than 5 years) then it is advisible to stick with Low Risk - Low Return model (Fixed Deposit & Bond etc.). However, it is good to give exposure of your part of money to High Risk- High Return if you can afford to lock your money 5 years or more.
Following figure have very crucial piece of information.
Wealth Distribution Across Retail Investors in India
Above data is linked to retail investors only (not institutional or govt.). About figure is showing around 30% of total wealth in retail class is with stock market (directly). This 30% belongs to only 2% of population (because in India only 2% of population have demat account). It is not restricting the 2% people to have pie in rest of the asset class (Fixed Deposit, bond, insurance etc.). In nutshell 2% people have more than one third asset who are trusting on equity market. They are rich because they are taking right decisions about their investment otherwise they wouldn't be rich.
Another mind blowing piece of information is shown by following chart.
NIFTY 10 Years Growth Chart
NIFTY is average of Indian stock market growth, which is showing average 20% annual growth across 10 years. This growth rate is un-imaginable by most of the investors and no other asset class (Gold, Real Estate etc.) has beaten this growth.
Now coming to the part why majority of folks have loss making experience in the stock market in spite of such a good statistical supporting data?
Stock market requires proven strategy and persistent review. Most of the loss making stories have lacking either one of them or both. To realize how lack of periodic review turn investors experience bad read the case studies at following link.
Find the reasons behind losses of active investors but lacking proven strategy at following link under Common Pitfalls tab
You may also find following link interesting.
Indian retail investors tend to lose in stock markets: Study
Above link has summarized the findings of a study by Indian School of Business why retail investors loss money in the stock market.
How Does APS Mitigate the Issues Associated with Strategy & Review?
APS has broadly two sets of stratagies associated with investment. Details about the same is available at section Secret Behind. First strategy talk about how to select stocks and compose an ideal portfolio (see Rule-A & Rule-D at Secret Behind). Tool (Portfolio Builder) to compose an ideal portfolio and validate portfolio performance is available free at our website. Second part of the issue is review and how to review. We have formulated Rule-X for how to review and automated the process of review as paid service. Exact steps for for the same has been explained at following link
How It Works
To see how APS performs against other alternatives please visit the following link
How Can I Build Confidence?
We suggest to novice investors in stock market to subscribe our trial package of three months and do virtual trading. It means you do not need to invest your actual money. Just perform the transactions entry in our system at suggested point of time for buy and sell. It keeps all records and show the net result in term of profit and loss on dash board. You may get confidence in a month, 3 months or even a year.
Conclusion:Stock market is high risk and high return instrument. It is worth to give partly exposure of your investment money for long term (say 5 or more years). Most of the failure in stock market is due to lack of proven strategy or review. APS takes care of both issues and investors need to spent maximum time of 15 minutes in a week to manage the investment. APS also provides option to do virtual trading (also known as paper trading). Using virtual trading option. investors can gain confidenece about APS system without investing real money in the market.
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