Yogic science has many lessons for investors
By Arun Thukral | Express News Service | Published: 19th June 2017 12:38 AM |
Yoga helps harmoniously develop your body, mind and spirit. In fact, Yoga is a way of life. With the declaration by United Nations General Assembly to celebrate June 21 as International Yoga Day, the world is catching attention towards Yoga and its benefits. While most people relate Yoga to asanas, it’s overwhelming to know the vastness of the Yogic principles, its philosophy and its literature.
Being a certified financial planner and a certified Yoga trainer, I must admit that I find a great connection between Yogic principles and investor psychology. Yogic principles explain in detail about Investor psychology and how it plays an important role in Investment decision making.
Maharishi Patanjali in YogaSutra describes five states of mind, which ranges from severely troubled to a completely mastered mind. Let’s understand how it affects our investing behavior:
Kshipta/disturbed This state of mind is disturbed, troubled and negative. This is the least desirable state of mind. The negative mindset can be because of lack of knowledge. In investing too, our decision is affected by the lack of knowledge and sub-optimal investing practices predominantly stem from this. We spend a lot of time to review and buy products online, but when it comes to investing we quickly park our hard earned money based on tips or hearsay. A large number of investors take decisions at the last moment e.g. tax planning. A comprehensive financial planning which includes goals, taxes and contingency should be envisaged with the help of an expert, to avoid impulsive investments.
It’s a dull and heavy state of mind where we don’t want to take efforts to invest our savings in high yield assets. We leave our savings idle, e.g, bank accounts or investments in other asset class which isn’t suitable as per risk or goal value. In investing, we see gold and real estate as a safe haven. But gold has only performed well in uncertain times and real estate hasn’t given better returns than equity in recent past. Considering home loan interests, the real estate returns when compared to equities will be much lesser. Be active towards equity investments and not consider only the traditional route of investments for optimum returns.
Vikshipta mind is occasionally steady and is distracted easily. If you invest for a shorter tenure the chances are more to make losses. If you see markets in the short term it may seem highly volatile, but if you see for longer horizon, it continues to build an upward trajectory. It’s advisable to remain invested for longer period and not get distracted by market news and noise, to create wealth.
The Ekagra mind is one-pointed, focused and concentrated. The chances of getting distracted in this state of mind are negligible. It is one of the desirable states of mind. In investing, you should be Ekagra, for instance, focused towards your financial goals. It includes knowing your goals, analysing your financial situation, risk profiling and asset allocation. Periodic monitoring and rebalancing of portfolio is also required for goal achievement.
The Nirruddah mind is highly mastered and controlled. It is the most desirable state of mind. In context of investments, you master the art of investing. It is easier said than done. To master this art, you should know how to choose stocks that the market has undervalued and they have high growth potential. The selection should be based on fundamentals like promoter’s background, commitment, vision, strengths of business and financials. Follow the principle of value investing and seek stocks that the market has undervalued. Out of these five states of mind, the last 2 stages are most desirable and one should avoid being in the first three states of mind. Identify your state of mind and apply these basic yogic principles to grow your wealth.
(The author is the MD & CEO of Axis Securities)