Investing in equity shares is, as you
all know, risky. But so also is the
fact that equity is probably the only other asset class—apart from
real estate—which can give high inflation-adjusted returns. Therefore, from
the point of view of creating real wealth, equity is a must in any investor's portfolio.
However, a vast majority of people (especially in India) avoid investing
in equity altogether. They fear this risk of losing money in shares. As such,
even after an excellent performance delivered by the equity markets in India
in the last 15-20 years, less than 5% of the available surplus is invested in
equity. This is indeed sad. Investors are missing out on a golden opportunity.
They still prefer the safety of bank FDs and post-office schemes.
So the problem that needs to be addressed is…risk. It is a myth that
one should `avoid' risk. No, that's not going to help! Be it any aspect of life, a
certain amount of risk-taking is necessary to make the best of what we possess.
Risk is supposed to be `managed' not evaded. This is one very
important change that you have to bring about in your mindset. You have to first
accept risk as a part and parcel of investing. Only then can you begin to
understand risk and take suitable steps to contain the damage that such risks could
cause. (In fact, not investing or keeping money in FDs is also risky as inflation
will surely eat away its purchasing power). Therefore, risk management and
not risk aversion should be everyone's mantra. Of course, risk apart, the history
of numerous scams at the stock market acts as a deterrent for many who
would otherwise like to participate in this wealth-creating process.
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