Right approach to stocks - hand wash or machine wash?

Sridevi Ganesh

Washing clothes during childhood days needed plenty of patience. We had to put our hands to work for long duration. We were asked to understand the techniques of washing with help from parents and elders. Collecting clothes for washing, preparing for washing and learning to use detergents and brushing of clothes were taught to us by our parents. Not that all of a sudden you would take over the washing duties of the entire family. It would have started small and gradually the washing duties would have become your portfolio, once the parent felt that you were doing a good job, isn't it? Washing is a skill that all of us would have learnt over a period of time by practicing regularly. It was essential in those days especially in middle class families.

What this has to do with investing?

With Nifty and Sensex touching new 'till date' (not all time) highs regularly, I am receiving many calls from retail clients asking me to suggest a few stocks to invest. With no prediction on where the market is headed, my question to investors (is that the right word for these individuals?) like these is "Do you have at least a couple of hours a day ?" If yes, then maybe you can take the plunge. Not because the market is euphoric but because there is the luxury of time at their hands.

Having said that, it is neither all rosy nor as easy as it appears to be. Like how a young one is trained to wash clothes gradually, taking baby steps initially and taking full charge of washing over a period of time, investors willing to buy businesses (stocks) have a wonderful lesson to be learnt from hand washing. It requires, understanding the nitty gritty of stock market investing, hand holding of a mentor during the initial phase (like how a parent guides the children in washing), starting off small and gradually moving with bigger investments (like how an individual gets transformed over a period of time taking charge of washing for the entire family), gathering more information and improving the domain knowledge and finally staying with patience to allow for the investments to grow (like leaving the clothes soaked in detergents for ample time).

So, as I always keep emphasizing, time, knowledge and patience are the three key pillars to successful investing, especially in the stock market. All these were taught to us patiently by our parents. Those fruitful lessons have to be applied to stock market investing too. If you are willing, then any time is the right time.

What I taught my son?
It is very unfortunate that all the lessons that I had learnt during my young days, could not be passed on to my son, as the scenario is completely different now. I find that this new generation has lot of challenges with regard to time and patience. They are either restless or lazy in this competitive world. With the entry of washing machines in our homes, things have become easier too! I never had to take the pain of putting my child's mind to the long and strenuous process of learning hand washing. All I did was to show him how to use our washing machine, like adding washing powder, opening the door for squeezing clothes inside the machine and setting the right configuration. The rest is taken care by the machine and once it is done, it even calls you for attention!

So simple and my son would sit in front of his PC or gadget during the entire phase to carry on with his work or entertainment. It was just a matter of a day for me to teach him washing! Once he gets the discipline part right, the others are automatic and does not require further action from my end.

Likewise, investing also offers you such a luxury these days! And it comes to you in the form of 'Mutual Funds'. If you would like to invest in stocks, all you have to do is buy a diversified equity scheme from a reputed fund house. Decide how you want to buy, whether monthly or once in a while! Then get the act of discipline in force and you are done with. Just like how you spend on your washing machine, you need to pay a small sum to the fund Managers and your job of investing in stocks is taken care of. So, why bother about learning the art of hand washing (read 'art of investing in stocks') and strain yourself?

Decide which is right for you and take the right choice! Both forms are part art and part science and both require patience. Once decided stick on with that decision and reap the benefits. Wishing you a successful investing year in 2015!