When you set a financial investment goal on the ROI, it has to be realistic. Unrealistic expectations can be bad on your finances. For example, you desire to save Rs.10 lakh in 5 years, which means you need to invest Rs.11000 every month in schemes that offer 17% returns.
First reality……you can lose!
Now, due to some fluctuations and circumstances the portfolio generates only 12%. Thus, you fall significantly short of your target. This vast deficit can hamper your goal-based investment. Therefore, it is crucial to engage in realistic expectations with hope for lovely surprises later instead of shock. So, the first reality for you to understand about the stock market is that you can also lose money if the trade goes in the wrong direction.
Be prepared…..mentally and physically!
You might have heard of people earning a lot of money in the Indian stock market and you might also be interested in doing the same. However, it is important for you to understand the difference between expectations and realities in the stock market, so you can prepare yourself technically and psychologically to do what exactly is needed.
If you did not understand the reality and go only with your expectations, there are chances of you ending up making the wrong trading decisions. The idea is to learn the analytical skills so that you make more of winning trades when compared to the losing trades.
Maintain a balanced view
Expectations are based on what is in your portfolio. Generally, higher risk accompanies higher expected returns. Therefore, equity is anticipated to generate more than the fixed deposits in a bank and fixed-income securities. Over the last 5 to 6 years gold and real estate sector has been giving double-digit returns, which has attracted many investors.
When you make a financial investment plan, bear in mind that your expectation must not be based on the performance of the potential asset across the past 4 to 5 years, but you can choose an asset on its long-term performance [12 to 15 years].
Avoid high expectations
Investor tends to look at the best-performing stocks or funds, which creates unrealistic expectations. According to studies, if long-term stock trade returns are 12% then choose it instead of taking high short-term returns. Often, high expectations have left investors disappointed. Ultimately, they may lose their asset altogether, which can dent their overall portfolio.
For long-term success have patience and realistic expectations. Watch your investment grow in a disciplined way!