We have started the Fun & Finance series with an aim to make finance more fun and relatable via short 1 min stories by using fables or interaction with customers etc. We will try our best to help you learn something new in finance via these short stories.
It has been a week now since the lockdown. It’s not that difficult to stay home as we might have imagined at the start of it. Here is a short fable to help you learn another finance lesson in the meanwhile.
In ancient times, a poor Brahmin used to beg around the village for a living. One day he got a pot full of flour, which made him ecstatic. Upon reaching back home, he hung the pot near his bed and fell asleep soon.
He dreamt that famine struck and the prices of flour skyrocketed. He would sell the pot at a premium and buy two goats. Soon, he would have a herd of goats, which he would trade for cattle.
Later, he dreamt that he could sell milk, curd, butter in the market. Soon, he would become rich and build a huge house with gardens. Then he would start trading in precious gems.
After learning about his riches, the King would marry his daughter to him. With the beautiful princess, he would have children of his own. He even dreamt, he will beat his disobedient children with a stick.
Dreaming about beating his children, he started to kick his feet in the air. Suddenly, he struck the pot and it fell, spilling all the flour. He woke up to find, he had nothing.
Never build castles in the air.
Similarly, when investing in stock markets, investors can easily get ahead of themselves. A few good years and investors start imagining about their portfolio return going through the roof.
Some might even start thinking about their early retirement and then suddenly a shock comes and wipes out all the good years gain in a matter of months.
The current correction is a perfect example of how volatile stock markets can be. You should not completely rely on equity investments. Diversify your investments
If you park your money in pension plans, saving schemes, debt investments and equity investments. And also have term insurance, only then you can rest assured about your financial future. Through diversification, you can reduce your risk.
At RefreshMint, we have a holistic view of your personal finance. We cover all financial products to build your finances from a strong foundation up.