Dear Friends,
We must definitely abandon the notion that the stock market is the only path to instant wealth for us.
True wealth is built by earning through one's own profession or business.
The stock market is about turning six into a hundred—but that transformation takes ten years; it does not happen overnight.
The goal of the stock market—and indeed all investments—is to grow our money beyond the rate of inflation and rising costs of living, not to make us rich instantly.
The "Active investing" is a major role to play. It generally involves sitting down and crunching numbers and analyzing on whether the IT sector will rise, how the FMCG sector will perform, or what the future holds for a company.
But this is not passive investing.
No matter how meticulously we calculate, if someone like Trump starts a war or imposes a new tariff, all those calculations can change in a single day.
Trump’s actions are beyond our control.
Investing in index funds represents a long-term bet—an act of faith—placed entirely in the Indian economy.
The objective of passive investing is the conviction that, come what may, the Indian economy will grow and outpace inflation over the next decade.
No one knows what will happen to specific sectors or individual companies; we rely merely on speculation.
Even the executives running those companies do not fully know the future. In fact, the more we think we understand a particular sector, the greater the risk that we might confidently pour money into it and lose it all.
People in the film industry know their field inside out, yet that is precisely where many of them lose money.
A hotel owner knows the hospitality business well; however, if they have ten million rupees, there is a real possibility they could start another restaurant and lose that money too.
That is why the concept of OPM comes into play. It means "Other People’s Money"—is so significant in business.
The true wealth is primarily generated through our profession, business, skills and income. That is where we should fully utilise our time and knowledge. However, we should not take unnecessary risks by sinking too much of our own capital into them; Instead, we should rely somewhere on OPM (Other People's Money) for investment whenever it is possible and worth investing.
In contrast, in the stock market investments generally involve using our own money. Therefore, rather than investing based on the confidence/overconfidence that "I know this sector well,". It is advised to be wiser to invest with the conviction that "the Indian economy will grow over the long term and outpace inflation."
If you want to become wealthy, focus on your business.
Regarding your investments, place your trust in the long-term growth of the economy rather than in your own predictions.
That is the best way for most people to build wealth—and, more importantly, to preserve it.
