As we draw closer to Gandhi Jayanti (152nd birth anniversary) this October 2nd, it would be good to remind ourselves of the virtue of patience manifested by the Father of the nation. Patience that led him to initiate a 390 km or a 24 day long walk from Sabarmati Ashram in Ahmedabad to Dandi, a small village near Navsari to abolish the salt tax, which was later infamously known as the Salt March or the Dandi March. This later triggered the Civil Disobedience Movement, eventually culminating in the independence of India.
Thus, to reach the ultimate goal of independence, Gandhiji had to persevere & wait patiently through many struggles to lead India to Independence. A similar rule applies when chalking out one’s financial plan. Let’s explore the five key ways how exercising patience can lead to financial freedom:
Exercising Patience as a mindset in the equity markets
Patience is the realization that achieving success or riches demands patience and perseverance. In the bull run that we are experiencing, it is easy to lose foresight, leading many to enter the equity markets to earn quick profits. Focusing on the short-term may impede one’s progress toward their long-term investing objectives, limiting the potential of the investment portfolio.
Stay for the long term
Investors who can exercise patience and stay calm even during market ups and downs are indeed on the path to financial freedom. While forecasts and macro analysis may tell you the future value of an investment with a certain amount of accuracy. However, it is not easy to know with certainty how long it will take for your investment to profit. This is where patience plays a key role in portfolio management. Therefore, investors should invest for the long term and wait patiently for their investments to rise to fair value.
Avoid market noise
There would be many such instances where investors have exited or redeemed investments as a knee-jerk reaction to negative news only to have regretted these actions later. Instead, investors should avoid getting influenced by the market conditions and choose to exercise patience & stay committed to their investments through troughs and peaks. Over time, it becomes easier to ride out the movements in the market.
Stick to a sound financial plan
One should not abandon a well-thought-out investment plan in these testing times. The Pandemic was a hard realization to investors who did not have a sound financial plan and ended up losing out a sizeable portion of their corpus during the equity market crash. Investing in just one asset class could hamper one’s financial goals. Hence, it becomes essential to have an asset allocation strategy by diversifying across asset classes such as equities, debt and gold to generate risk-adjusted returns. Investors should create and stick to a financial plan that best reflects their goals and risk-return requirements.
Looking beyond rankings and star ratings
Patience should be exercised not only when invested but also when looking for good investment opportunities that adhere to the financial plan.
Over the longer term, exercising patience and staying tethered to our investment philosophy will likely pay off and enable investors to achieve their long-term goals.
As Mahatma Gandhi said, “If patience is worth anything, it must endure to the end of time. And a living faith will last in the midst of the blackest storm.”
(The writer is the MD & CEO, Qunatum Mutual Fund.)
