Challenge is the Key to Unlock Opportunities
Without Challenges the Rewards will not be as Satisfying
If we do not have challenges we will stop learning and if we stop learning we will stop growing and if we stop growing we will start dying
1) While we may all hope that we had less Challenges, the fact remains that if you look at Challenges as Opportunities, you will get that adrenaline Rush that will help you discover the Key to Unlock Life’s biggest Challenges
2) Let us look at a few examples
3) In Equity Investing, we have always believed that we have to tolerate the Volatile Moods of Stock Markets and have no options but to to live with it
4) This was the Challenge which led to the invention of the classic investment strategy of Diversification.
5) By using different asset classes like Equity, Debt, Gold etc which bore little or no correlation with each other, the Challenge of Market Volatility was absorbed like what shock absorbers do when the car goes over potholes
6) So while one asset class suffers during the Volatility Phase, the other Asset Classes perform well. This results in limiting the adverse affect of volatility on the Portfolio
7) Likewise we were also taught that Investing is only meant for the long term.
8) This Challenge led to the invention of the next Key which unlocked a new product called ‘Annuity’ that served short term, medium term and long term needs of an Investor
9) Investing in Gold had always been a challenge because of several reasons.
a) Where to store the Gold?
b) Where to get the high amount to buy the Gold?
c) How do we recover the “making charges” when we sell the ornaments
9) And this Challenge transformed into an Opportunity that led to the launch of Gold ETFs where Gold can be invested without the fear of loss by way of theft, no worries about making charge losses and with very little as initial payment
10) Then there was the Challenge that Investing is all about Earning Returns which requires a lot of Time & therefore Accumulation is the most optimal tried and tested strategy
11) And this Challenge led one to understand the ‘Power of Money’ by studying the Time Value of Money concept
12) This Knowledge gave us the Confidence to Spend besides Accumulating. Now we could Spend the Right Amount of Money at the Right Point in Time by Constructing an Architecture of Life Goals and a strategy to accomplish them. Thus the very Popular Goal Based Financial Planning was born
13) We were also told that come what may, “You just can’t Time the Market”. This was is the common wisdom that prevailed and in a manner of speaking was literally injected straight into our soul
14) This Challenge too was taken head on when the Asset Management Companies developed the Dynamic Asset Allocation Category of Funds
15) These funds responded to changing market valuations / market volatility, used algorithms that kept the Human Emotions at bay, bought Equities when Markets were Cheap and Sold Equities when Markets were Expensive
16) Volatility was always considered a Challenge and an Enemy of Investing. Then how was one to transform this Volatility into a friend and make the best out of it?
17) This Challenge led to the birth of perhaps the investment biggest ever investment invention popularly known as SIP which took advantage of Volatility & provided the investor the benefits of Rupee Cost Averaging where the fund purchased more units when markets were cheap and less units when they were expensive
18) But was SIP the best cure for Volatility??
19) This search for a more Optimal Solution than SIP led to the Invention of “Booster STP” that monitors Market Valuations and based on how attractive that markets are regulates the STP investment amount ranging from just 10% of the targeted STP value up to 10 times the targeted STP value
20) So till the time there are Challenges, there will be Opportunities and life will remain exciting and meaningful
I rest my case