Avoid Gambling, Start Investing: How To Make Money In The Changing Landscape Of Wealth Management – Forbes India

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As you donot teach the paths of the forest to an old gorilla, these days you do not tell an investor how to make money. At least that is what many retail investors seem to say after a dream run in the stock market through 2020. Departing from we think, investors now typically say: we know. Is this confidence or overconfidence?

Rising mutual fund redemptions and increasing demat accountsFor eight consecutive months in the financial year 2021, equity funds have seen net outflowsmore money went out than came in. Where is all this money going?Well, some of it went towards profit booking and a lot of investors are flocking investing in the stock market directly.

Hundreds of new demat accounts are being opened every day. In the year, mutual fund investors either redeemed their portfolio out of panic or for the safety of their capital, which later shifted to profit booking or buying quality stocks at cheaper prices. The lastfew months' trends show that the same then converted into regular and full-time direct stock market investing.

Whats new?Thats what investors have been asking, and the constant search for the next big investment opportunity is on.

Changing landscape of wealth managementFrom investing in just the US markets, international funds now invest in economiessuch as China, Brazil, and the UK. Then come the Environment, Social, Governance (ESG) investing;momentum investing; IPO investments; bitcoin frenzy or the dogecoin mania in the current times. I have alsoheard many high-net-worth investors talk more about recent pre-IPOs or startup investments.

Changing behaviour and sentimentsLast year this time, equity markets were down in the dumps.The BSE Sensex had collapsed by nearly 40 percent in just under two monthsafter the Coronavirus pandemic was declared globally.

A year later, Sensex has crossed 50,000 and even though todayit is slightly below that mark,it is still flirting with the number. In 2020, investors were happy to get a bank fixed deposit rate of 6 percentbut that has changed in the past few monthsasmany of them claim that they make that kind of returns on a monthly basis from stock market investments. I also find a lot of people inquiring about penny stocks for intraday trading. They either have their own businesses and jobs, but somehow they find the temptation and time to do intraday trading.

Should you resist equity market temptation?No, you need not resist the equity market investing, rather I would encourage you to explore this market for long-term wealth creation. You should, however, resist the temptation of gambling in stocks markets and focus on investing instead. Follow these tips to avoid the temptation:

The writeris a personal finance expert, a Chartered Accountant by Profession and founder of NRP Capitals (erstwhile Money Plant Consultancy)

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Avoid Gambling, Start Investing: How To Make Money In The Changing Landscape Of Wealth Management - Forbes India