We know that a small percentage of Indians invest in the equity market compared to other nations. There are many reasons for it, and we are not going there in this article. We want to stress on equity investment importance before getting on the topic. The inflation is high and has been over 7% for months now. The government is trying its best to reduce inflation. India is a growing economy. Hence inflation will continue to be high in India. Other fixed income financial instruments can deliver a return that will beat inflation only marginally. Sadly, not all will beat inflation – only a few will. If you want to create wealth, you need to invest in equity.
Before starting your investment journey, you need to self-check yourself and understand your weakness and shortcomings in the market. You need to understand what kind of investor you are. It will help you become a successful investor. So let us get started.
Types of Investors in India
We have worked with investors for years and have met with possibly all kinds of investors. Based on our experience and interaction with investors, we can classify them into seven different categories:
TOUCH ME NOT investors: As a child, you would have definitely played with TOUCH ME NOT plant. When you touch the plant’s leaves, it shows its resistance by shrinking its leaves. These categories of investors do the same with equity. They have nothing to do with equity. The majority of investors fall in this category.
If someone asks them to invest in equity, they will avoid the discussion. Equity is a Risky – they chant this mantra whenever someone talks about equity. They are happy with their fixed deposits and long-term fixed-income schemes that fetch them 6 to 7% returns.
Strong Market Believers: You will definitely have someone in your network who trusts God entirely. No matter what is going on in their life currently, they know that in the end, God will take care of them, and good will come to them. Investors from this category feel the same about the equity market. They are not bothered by increasing inflation or the Russia-Ukraine war. They trust the market and are convinced – in the long run, equity investment will give them the best returns.
Window Shoppers: We all have a friend in our circle who knows all the latest offers on all the brands. They would know everything about the brands, the discounts, and the latest trends. How do they know everything? They love window shopping – they spend hours in different showrooms. They will have an opinion on every brand. However, they will never buy anything. There are many such investors in the stock market – they track the market, and follow the latest development but never invest. In most cases, the reason is FEAR. They are too afraid to lose their money.
SHOWOFF Investors: These are investors in their 30s and 40s who would talk about money and the market as if they have made a fortune in their investment. The reality is that they have not made anything from their investments. These are people whose relatives work in a trading company or other similar profession. They believe every big financial news will come to them. They tell other investors around them that they are waiting for the right moment, and once it comes, they will make a fortune out of it. They do less and show more. Do you know any such investors?
9 to 5 Investors: A common retail investor is busy with his 9 to 5 job and then has to spend time with his family. He does not have the time to invest in the market. But he invests. He takes advice from everyone – directly or indirectly. If two people are talking positively about company X in the office lift, he goes and buys stock X. He takes advice from colleagues, cab drivers, financial advisor friends, experts on TV shows, and everyone else. There is no discrimination – he believes everyone is giving the best advice to him.
I KNOW EVERYTHING Investor: These are investors who are successful at work and in general in life. They think they can replicate the same in investing too. They won’t take advice from anyone, and whatever discussion you have with them – they would say, ‘Don’t tell the boss.’ For example, if you tell them to buy stock A at Rs 2500, they will say they are invested in it when the price was Rs 10. They are basically RJ of your circle – on papers.
Investor NEXT DOOR: These are investors who spend hours researching the stocks. They listen to others’ advice and offer theirs whenever asked. These investors follow the disciplined approach and do not invest in high-risk stocks.
They make their investment decisions on their own and stick to them. You may want to be in the company of such investors as they give genuine information and guidance to you. Do you have any friends in this category?
Do let us know which type of investor you are? If you have problems getting returns on your equity investment, you need to change your strategy or you need to change your guide. Instead of taking advice from other investors, take it from Jarvis. It is an AI-driven platform that is 100% data-driven and removes every bias from your investment journey. Visit our website and get started with your investment.
P.S – This is a lighthearted article and does not intend to hurt anyone’s sentiments.