After Sandy was coming back from sky diving, he happened to meet his friend’s acquaintance (Harish). The three of them sat in a restaurant to have snacks. In the midst of all this, they started discussing stuff regarding their experiences. The discussion made Sandy realize that equity investments and sky diving are very similar. How? Read on to see how Sandy gained a new perspective on risk that day.
Harish was someone who had never done sky diving before. Moreover, Harish is also scared of heights. So, he was not even sure if he would complete this task successfully.
After knowing all this, Sandy wanted to know how he completed this difficult task. So, Harish told Sandy that he had prepared for this in advance by reading a few books. Further, he discussed things related to sky diving with few experts who had done it before. He also understood that doing sky diving in a group would be beneficial. He decided to follow the expertise of the guide during this extreme sports adventure.
Most importantly, he found out the ideal month to do sky diving. He understood well about managing the risks. He also prepared himself by carrying necessary equipment required during the adventure.
Also read: How can you manage your equity investments?
Whatever research Harish had done before starting this journey was all theory. When he faced the situation practically, it was very different than his expectations. The reality seemed to be a lot more difficult. However, before he dived, his guide and other fellow friends were useful.They taught him tricks and also ways to stay focused only on flying. Thus, with this guidance, he was able to overcome his fear and just let go. Harish was then able to do sky diving successfully.
He explained that with the help of the people around him, he was able to do it and felt like a free bird.
He was feeling a lot more confident now. Harish said the trip taught him life lessons, risk management and facing different circumstances.
Comparison between equity investor and sky diver:
So, post this discussion Sandy compared the experience Harish gained to that of an equity investor. Both of them are quite similar. When it comes to equity markets, individuals always feel that the markets are risky, volatile and unpredictable. Individuals say this without any prior knowledge and research regarding the equity market. If you plan to invest in equity, you should know your purpose. You should also see the time duration and your expectations as well. Thus, you need to prepare accordingly and conduct research.
You can consult a financial advisor or a good stockbroker. You need to prepare yourself to face risk and know your risk appetite. As a beginner, you may decide to either enter this market through mutual funds or choose to purchase stocks directly.
If you decide to go for sky diving, you need to prepare beforehand. You know that it is a risky venture. Similarly, the equity market also requires preparation in advance and planning so that you become successful. Do not just have a perception towards the equity markets as being risky. You need to prepare well and be able to face the risk. Without risk, there are no returns.