“Risk comes from not knowing what we are doing”.
Warren Buffet quoted two rules of investing, Rule1. “Don’t lose your money”, and Rule 2. “Never forget Rule 1”.
People suffer losses in trading and investment. I believe, that most people lose money because they do not know where to invest, and if not this then when to invest and even if not these then how much to invest. Justifying this statement of Warren Buffet, “Risk comes from not knowing what we do”. In investment the only thing or way to earn money and protect it is; what to buy/sell? When to buy/sell? And how much to buy or sell? We invest so that we can get more returns from our savings and deposits so that we can fight with the inflation drainage.
Looking into the history, around 3800 years ago during the Mesopotamia era King of the Babylon H.H. Hammurabi 1810 BC to 1750 BC was the first to introduce investment as the source of income. During that era investment in Real Estate and Commodities was witnessed. King Hammurabi made some rules during that era to protect rights of investors so that their interest in investment should grow. Because of those rules made by King Hammurabi his fame grew and he was known as noble king of that era.
Investment in Real Estate and Commodities was already an avenue for investors and now the investment in Shares, Bonds, Mutual Funds, Crypto Currency and many more has evolved with the advent of time. Each day with the advancement of technologies new avenues of investment are also growing. Investment in Bonds, Shares, Commodities, Currencies etc., are full of risk if your selection is not right.
I will like to clear one more thing, those who think investment in fixed deposit or bank deposit is safe; current rules of RBI – Reserve Bank of India (The Central Bank of India – The Monetary Controller) is liable to pay only up-to maximum Rupees Five Lakhs (5,00,000/-) per person bearing fixed deposit of a bank gone bankrupt. I personally know a person; Mr. Bajaj who has invested Rupees 1 Crore in fixed deposit in a co-operative bank. But unfortunately the bank has gone bankrupt; and now at the age of 62 years he is asking court for help and justice for the above said damage. Also I am adding further if a person invest money in Government Securities and if the government/country defaults then no person, institution or organization of government is responsible for the damage caused to your investment so it is clear that there is risk in investment.
Also quoted by Acharya Chanakya “Our Money or Wealth with others cannot always help us when needed” So should we not invest? So, shall the ship remain at the sea shore? If the ship will not fight with the oceanic waves how it will reach its destination. It is often said “Not doing something is also a risk”. Profit is associated with risk factor. The more the profit, the more is the risk associated. We have to be more cautious. It is very important to invest to fight with the erosion called inflation. In the coming post we will see the various avenues of investment. If you like the posts please share the post to the needed one to help them prosper with knowledge and wisdom.