The solution  - The Equity mindset

1.Principal protection

Get prepared to see capital erode by 10-15% (perhaps more) in short term – Do not panic, this is not a calamity or a sign of misfortune, it is natural behaviour of equity, invest more in such times. Consider this, are you investing for short while? No! Then why get worried?

2.There is no guaranteed return

It can be difficult to accept but consider working under an unpredictable boss. Do you try to change your boss’s characteristics or yourself? Therefore introspect your ability to manage uncertainty and consciously learn the skill of dealing with unpredictability and lastly never seek guaranteed returns from any product linked to equity.

3.Linear returns

Markets might stay range bound for a couple of years, and then suddenly increase massively in a short span of time. Do not expect it to grow linearly like a fixed deposit or a bond.

4.Market timing 

There have been Nobel Laureates who have failed at developing models for precisely timing the markets, therefore asking this question to your wealth manager and listening to his creativity is only a false reassurance, deep down you know, if he knew it, he wouldn’t be sitting on the other side of the table.

5.Get ready for a roller coaster

Prices can increase and decrease crazily, one tends to feel the system is rigged, contrary to this Equity markets are well regulated and efficient in nature and that’s why prices move so much, Do not seek certainty, expect volatility.

Moving in the wrong direction

That’s using the same skill set to navigate through a completely different territory like equity. The odds of succeeding at equity investments with an incorrect skill set are as much as Sachin Tendulkar winning tennis match with a cricket bat.

Move in the right direction

The 5 points mentioned above are easier said than implemented, but looking retrospectively in our lives, we do have a skill set for a specific asset type, that was practised and learnt over time, therefore moving in the right direction, it shall only be a matter of time!