By Mr. Suresh
Parthasarathy, Myassetsconsolidation.com
This story has a simple, yet important
message.
Sometimes its the simple stories that make us ponder the most…One day
a trainer entered training hall and
asked his participants to prepare for a surprise test. They all waited
anxiously at their desk for the exam to begin.
The trainer
handed out the exams with the text facing down, as usual. Once he had handed
them all out, he asked the participants to turn over the paper.
To everyones
surprise, there were no questions- just a black dot in the center of the sheet
of paper. The trainer seeing the expression on everyones faces, told them the
following: I want you to write about what you see there’ the participants,
confused, got started on the inexplicable task.
At the end
of the session, trainer took all the papers, and started reading each one of
them out loud, in front of all the participants.
All of them
with no exception defined the black dot, trying to explain its position in the
center of the sheet.
After all
had been read, the hall is silent, the trainer started to explain:
 |
Suresh Parthasarathy,
|
‘I am not
going to grade you on this, i just wanted to give you something to think about.
No one wrote about the white part of the paper. Everyone wrote about the black
dot – and the same happens in our lives.
We have a white piece of paper to
observe and enjoy, but we always focus on the dark spots.
In personal
finance, we experience the ‘dark spot phenomenon’ all the time. We love
statistics and look at periods (let’s say a specific 5 years period) when SIP
in a fund or the index had produced a negative or zero returns.
We use such
specific data to bolster a general argument against investing in equity
markets.
This to me
is a dark spot phenomena. Instead of looking at every other period where the
investor had made good returns: much like the large expanse of white paper, we
look at that one period when returns failed to show up; the lone dark spot. One
episode catches our attention but the majority occurrences continue to elude
us.
Understand
your aspiration & time period available to achieve the goal and monitor
your SIP returns once in 6 months.
Just ignore other noises such as market may
correct,US employment data poor,few banks in Europe may collapse.
SIP in
several of large cap and midcap funds over 10 year period have delivered 14 per
cent to 20% compounded returns and too tax free.
The writer is a SEBI registered investment advisor and founder at
Myassetsconsolidation.com
For any
doubt feel free to write to
suresh@myassetsconsolidation.com
info@myassetsconsolidation.com
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