Scene: (A cozy coffee shop. Riya, a new investor, and Sam, a seasoned investor, are chatting over coffee.)
Riya: Sam, I feel like investing is all about finding the best product. Afterall, everyone keeps asking—“Which the best stock in the market that they should buy?” or “Which mutual fund will give me the best returns in the market?” But I always feel unsure. How do you stay confident?
Sam:Riya, let me ask you something—when you go for shopping, do you always look for the “best” product, or do you ask a few basic questions first?
Riya: Of course, I ask questions! Like, if I’m buying a phone, I check what features I need, my budget, and whether it’s reliable.
Sam:Exactly! You don’t just buy the most popular phone; you find the one that fits your needs. Investing works in a similar way. The key isn’t having the perfect answer—it’s about asking the right questions.
Riya: Hmm….What kind of questions?
Sam: Instead of asking, “Which stock will give me the highest return?” try asking:
- Why am I investing in this? (Like asking why you need a phone—for work, for gaming, for photography?)
- What can go wrong? (Like checking if a phone has overheating issues or a shortet battery life.)
- Under what circumstances am I going to sell my investments? (Like deciding when you’d upgrade your phone—when it slows down or a new model offers a big improvement?)
Riya:That makes so much sense! But what if I don’t have all the answers?
Sam:You don’t. Take restaurants, for example. If you see a long line outside a new place, do you immediately assume it’s the best food in the town?
Riya: Not really. I’d check reviews or ask people if it’s actually worth the wait.
Sam: Exactly! Just because an investment is popular doesn’t mean it’s the right option for you. Before investing, ask yourself the following questions:
- Do I really understand this company? (Like checking what cuisine the restaurant serves—do you even like it?)
- How does it make money? (Like seeing if the restaurant is running on quality food or just hype.)
- What’s the downside? (Like checking if the food is overpriced or the service is bad.)
Riya:I love this way of thinking! But when should I sell? People say, “I’ll sell when I make a good profit.”
Sam:That’s like saying, “I’ll stop going to the gym when I look fit.” Instead, wouldn’t it make more sense to decide upfront—“I’ll go to the gym until I reach my target weight or can run 5 kms. comfortably?”
Riya:Yeah, that makes sense! So I should have a clear exit plan for investments too?
Sam:Absolutely. Before buying, ask:
- Under what conditions will I sell? (Like when you’d trade in your phone—battery issues, slow performance?)
- What would make me change my mind about this investment? (Like if a restaurant you loved suddenly had terrible service—would you keep going just because you once enjoyed it?)
Simplified Money Talks 