In an interview with ETMarkets, Nagda, who has over 20 years of professional experience in the financial service industry, said: “I strongly believe that meditation in any form, as well as yoga, can help a lot in mental fitness, managing emotions and bringing more self-awareness required to be a successful investor.” Edited excerpts:
When we say successful investing is more about managing yourself than managing money. Are we talking about personal biases?
Yes, it is true. Financial success depends a lot on our financial decisions, be it business or investing. Most of the time financial decisions are affected by cognitive and emotional biases resulting in losses, sub-par returns, or even destruction of wealth in some cases.
Some of the most common biases affecting investment decisions are seeking instant gratification, loss aversion and confirmation bias.
Fear, anxiety, and our belief systems are at the core of our behaviour impacting our decision-making process while managing money.
Which type of meditative techniques do you use to help calm your mind?
Vipassana mediation and Pranayam help me to reduce anxiety, remain calm, and feel in control of myself.
I strongly believe that meditation in any form as well as yoga can help a lot in mental fitness, managing emotions, and bringing more self-awareness required to be a successful investor.
There is always a debate on Investing vs. trading among new as well as existing investors. How do human psychology, behaviour, and emotions play a role in this?
Investing is boring, and trading is exciting as it gives you instant gratification. The biggest and the most common mistake people make is a short-term approach to investing as they want instant returns.
The temptation of doubling money fast is a surefire way of losing money. It is a natural human urge to want good things and want them now.
This eventually converts an investor into a trader, which may severely impact his/her wealth and financial goals.
A wiser behaviour could be “delayed gratification” which means putting off your urge for instant returns in order to achieve much bigger and more sustainable benefits in the future.
Another psychological trait we commonly observe is a reluctance to face uncertainty. People choose unhappiness over uncertainty.
You might be unhappy with something, but the fear or risk of change and uncertainty are stopping you from making the decision or taking a big leap.
Many investors in spite of their high-risk taking appetite chase guaranteed returns or fixed returns which are not sufficient to beat inflation, instead of choosing inflation-beating returns through equity investing due to uncertainty associated with equities.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
