Investing with a borrowed conviction can ruin your wealth!

#investing with a borrowed conviction can ruin your wealth.

What is borrowed conviction? Making your investment decisions basis tips/news/social media/influencer, without doing your own research, and analysis.

I'll explain with an example. Bajaj Finance boasts of a strong legacy - creating enormous wealth for its shareholders - strong brand, immense cross-selling, good ROE, and growth.

Rewind a year, and everyone was positive on the stock. Let's say our gullible investor friend hears this and buys the stock at 4k. 3 months down the line, the pandemic hits, and the stock is sub-2k levels. Panic everywhere. Can our investor friend confidently hold? Or better, accumulate more? Highly unlikely because the conviction was borrowed by the news, which is not at all positive anymore, with some of them even quoting a 3-digit price target. He ends up selling.

7 months down, Bajaj Finance is back, stronger than ever, 3x the March lows. What'll our investor friend do? "Hmm... probably this stock is actually is good. I don't want to miss out. I'll buy it." And that's how the wealth erodes.

What's the solution?

Investing in individual stocks is risky, so, please do your own research and analysis. Internet is full of resources to learn. For the busier folks, MF products or services of a financial advisor would be helpful.

#invesment #financialfreedom #personalfinance

Created a video explaining the same in-depth: https://youtu.be/_JYU7965m9g