Great Indian Stock Market Myths

India is renowned globally for its rich culture and traditions. Here, mythology and folktales are passed down from one generation to the next unfailingly. Hearing these stories with utter fascination would be a distinct childhood memory for most Indian adults. In addition to the traditions, we also inherit certain unfounded beliefs which the elders of our family prescribe for good health, abundant wealth and all-round prosperity. 

Most of you reading this article must have heard one or more of the below instructions from someone in your family:

"Don't sweep floors in the evening as it drives away Goddess Lakshmi."

"Eat sweet curd before leaving for an important assignment, it brings good luck."

And the most common one, 

"Don't cross the path of a black cat if you are leaving for an important work."

Call it belief, myth or superstition, most of us are conditioned to follow them because someone, somewhere experienced the fallout of not adhering to these commandments. This tendency to follow old notions have spilled-over in our financial life as well. Based on the experience of our elders, we blindly adhere to certain beliefs even if they are not ideal for us. Let me show you how few traditional money myths are actually detrimental to your financial well-being.  

You will not get more than your luck and before your time 

This old Indian proverb is shared as a consolation when we do not fare well in an endeavor. Equally applicable to money matters, this proverb makes us believe that if we do not have enough money now, it is to do with our fate, which will change at some point of time in future. If you have accepted this belief and are not making all-out efforts to make your money grow, take this as a wake-up call. While it is an individual choice to believe in fate and wait for the right time, remember that success comes to only those who create opportunities rather than waiting for them. You can create right growth opportunities for your money by identifying the right investment options based on your goals. Chalk down your goals and consult a financial planner to ensure that your savings are channelized in growth options. Smart financial planning will burst this widely held myth by empowering you to write your own financial fate now rather than waiting for it to unfold in future. 

Money is the root cause of all evil

It is strongly believed that pursuit of money causes harm and takes us away from the path of spirituality. This thought process, which has been ingrained in our psyche, almost makes us apologetic about making money. We are taught to be satisfied with the money that we have as chasing more may adversely affect our life and our relationship with our loved ones. Hence, people seldom discuss their finances with others and even if they harbor the desire to earn more, they do not talk about it openly. Before this mindset becomes a hurdle in seeking advice about money matters, understand that you cannot truly discharge your responsibility towards your family and loved ones unless you earn enough money. In fact, the ancient Yoga Sutra says that we owe a duty towards self, family, work and society, in that order. We cannot possibly fulfill these duties if we do not take care of the financial aspect. Since we earn a limited sum of money, it is only through smart financial planning that we can make accumulate enough resources to take care of all our financial needs. Seek advice from experts to find effective ways of making your money grow and never be apologetic about harboring the desire to make more money. 

Gold coins bring good luck

It is a commonly held belief that gold attracts divine blessings, ushering prosperity in the home. What we do not realize is that we can create financial prosperity only when we optimally invest our savings instead of locking them up in options like gold. Gold offers us no income other than value appreciation. This value appreciation in itself is uncertain as the local gold price is determined cumulatively by the global gold price and the currency movement. The global price of gold is based on inflation trends in developed economies and the geopolitical risks while the currency exchange rate is a factor of local political, economic and financial stability of the concerned economy. Gold is regarded as a security in case of emergencies but with so many unpredictable components, it is difficult to ascertain appreciation we will get in the value of gold when faced with an emergency. If you are still keen on buying this precious metal, a smart alternative would be gold ETFs. Traded on the exchange, ETFs offer returns as per the price of physical gold. It will also save you the cost incurred to ensure that your gold jewelry is kept in safe custody. Remember, harder your money works, luckier you will get.   

Real estate is the best investment option 

After gold, real estate is regarded as the best option for investment. Every millennial must have been advised to buy property by a relative at some point, the logic being its value never goes down. Real estate is an income generating asset, but the yield differs from location to location. Since real estate demand differs from pocket to pocket, the appreciation and rentals vary in different cities and different parts of the same city. It also requires periodical maintenance and entails huge upfront investment. The exorbitant EMIs in many cases make a rented house look a more attractive option. In the current backdrop, where better investment options are available to earn higher returns, affinity to physical assets like property may make financial prosperity a distant dream for you. 

Stock market is for gamblers

‘Stay away from Stock Market!'- the cautionary advice we receive every time we mention about investing in shares. This belief is so strongly perpetuated because many investors burnt their fingers while ‘trying their luck' in the stock market. From one generation to next, this belief still holds a strong grip as a result of which equity participation in India is a bare minimum of around 5%. The truth is that equities are crucial to an investment portfolio for generating inflation beating results. If you identify the right equity investment options, your investment is likely to generate long-term wealth for you. To make sound equity investments conduct a thorough research of the sector, management quality, growth opportunities and longevity of the business. Equities have historically offered long-term returns of 15-16% CAGR over 15-20 years' time period, which is far higher than the average inflation of 5%, making equities the ideal investment vehicle for wealth creation. People lose money in the stock market when they invest indiscriminately without researching the stocks under consideration. By staying away from so-called friendly SMS/tips, you can enhance your financial wealth through mindful and long-term investment in the stock market. 

While beliefs are important to lead an upright life and are an inseparable part of individual existence, it is unfound beliefs that we must be cautious of. Strongly holding on to such beliefs may set you in the opposite direction, making attainment of peace, harmony and prosperity a distant possibility. With changing times, it is important that you adapt to new realities and seriously adopt a more structured and "Equities" oriented approach towards wealth creation.