(This column was first published on Value Research Online.)
Oh, yes! Investment-related stress is as real as any other kind of stress. And probably just like physical stress or emotional stress, it creeps into you unnoticed. But stress, of any kind, is never as innocuous as it seems.
What investment-related stress does is that it makes you take financial decisions injudiciously. It makes you take kneejerk reactions that might seem sound at that time, but would be detrimental to your overall investments.
So, yes, investment-related stress is real. That’s the bad news. The good news is that there are real ways to beat this stress as well.
Clear out the junk
Many investors believe that they need a large number of funds to build a diversified portfolio. This is not true. You can get adequate diversification even with a few number of funds. Different strategies, different fund managers, different exposures, is all you need and what you can get without piling on fund after fund. So, clear the junk and build a portfolio that’s easier to manage and track.
Keep a scrapbook
Maybe not exactly a scrapbook, but at least an account statement of your investments. Very often, we come across cases where investors know they’ve put their money in something, but have no idea about what that something is. That is a situation everyone needs to eschew. Keep a record of your investments as well as your insurance policies, and keep them handy so you don’t waste time searching for them when you need them.
Take a walk
Literally, take a walk. When you look at the markets falling and think about redeeming your long-term fund investments, take a walk. When you see the markets rising and think about betting on a particular stock a friend tipped you about, take a walk. Basically, take a walk before you jump into any investment decision. A walk will clear your head and you’ll make sure you don’t end up with a regrettable decision.
Eat small meals often
Meals, here, means SIPs. The best way to invest in mutual funds is by putting in a small amount regularly, rather than a big amount in one go. Systematic investment plans have proven to be extremely rewarding in the long run because they average out your investment cause and allow you to buy units across various market conditions. And over and above that, SIPs become a habit that’s worth holding onto.