Earning money is the ultimate goal for many people, and they have different ways to achieve it. Many opt to work hard and rake in a substantial income, while others like to wait and watch what is doing good before digging into the opportunity for reaping benefits. In this current scenario, people are more likely to follow others for investment strategies as it seems to be the easiest way of avoiding the intensive work and research.
But is this any better? Is it beneficial? Can there be any side effects of copying others? What are the risks associated? What if your friend opens an account with a full-service broker? Is it a good choice for you? Or should you consider investing through discount brokers in India? Your friend invests a big amount, is it wise for you to do so?
These are just a few of the numerous questions that pop up when you try to copy someone else’s investment strategies. But should you do it? Let’s find out.
Not to Copy Others’ Investment Decisions
“One man’s meat is another man’s poison.” The saying sums up perfectly as to why you shouldn’t copy someone else’s investment ideas. All the investments made are based on individuals’ earnings, disposable income, and investment returns. Every investor makes calculated investments to meet their expectations. Replicating the same for another person can be disastrous.
In layman’s terms, “A” is earning one lakh rupees a month, and “B” earns 75,000 rupees a month. However, “A” is a sound investor making investments of about 50,000 rupees per month for his retirement fund as he is nearing his retirement age. But “B” is still young and makes the same investment and ends up with 25,000 rupees per month, whereas “A” has calculated his expenditures and knows what he is doing.
From the above-given example, it’s clear that “A” has an excess amount per month to live a proper livelihood. Things aren’t looking great for “B” as he’s investing a considerable amount that affects his livelihood immensely with no returns whatsoever. It’s just one of the many examples of why you might want to stay clear from copying someone else’s investment ideas.
Factors to Keep in Mind
We are not saying that copying other investors’ ideas and their decisions is terrible. Yes, it’s a starting point for many where they can learn and relearn things. You will have to analyze in detail before making any irreversible investment decisions.
1.Period of Investment Made
Investing is the easy part! You move funds from one place to another. But a period for which you invest is also crucial. It’s the deciding factor that will help understand the returns and the longevity of those returns to be feasible. Moreover, if you’re looking into someone else’s investment portfolio, you will have to consider this pointer and blatantly not copy it.
2.Time of Returns
Seeing your money grow is the whole point of making any investment. Well, the time it takes for this investment to grow vital. It’s not financially healthy to see your money taking years together to grow after investing substantial amounts.
Moreover, any investment you make should meet your return expectations impeccably such that you regard it as a good investment. If you are looking into the diversification of your portfolio, this factor is of utmost importance.
3.Investment Money
Another crucial pointer is the investment amount that you’re willing to put in. How much can you invest? What’s the extra amount you have after meeting all your expenses? Not everyone has the luxury of having surplus money. Think twice before you decide to put your savings into investments.
4.The Necessity of an Investment
Do you need to invest? Is it that obvious for you to take your money and give it to someone to make your money grow? All such questions spark some thoughts where you have to decide the benefits you reap out of an investment. Well, the obvious is the profits, but then what if the investment tanks?
Such questions give weightage to the question of investment. If you have surplus money, then instead of investing in the stock market or any other company, you could put it in a bank or mutual funds. They are safe places (however variable to change with time). It’s a decision that would differ significantly from one person to another.
Bottom Line
There is no need to copy anyone’s investment style. Every person differs significantly, and even the thought process of making investments is variable. There is no need to follow a particular person’s strategy. It all comes down to you and your ability to make those investments.
Add to your financial knowledge, regularly follow the markets, learn how to react in a bullish or bearish market and then only go with risky investing.
If you are scared of it, then don’t do it. Save it in banks, and you will get great interest rates per annum.
But if you want to go ahead with investments, then learn things, put in the hard work of researching and finding out promising investment ideas, and then pull the trigger. So, are you ready to invest? Do share your thoughts.
