Are we making good returns from the stock market

We all have heard of a lot of people make money in the stock market and the return have always been more than what you would have got in any other class of asset. So we all want to get good returns to meet all our goals. So what do we do, looks for tips, read newspapers, watch TV and of course tips in our emails. We also try to be smart and see what the fund managers are buying and selling and then we try to mimic the same. All this in the hope to make more money. We always want to see the returns, before the performance. Everyone is focusing on returns and very few on the performance. Remember in our quest to make more money we forget all other basics i.e. risk taking ability or for the matter the reason for which we want to make the money or even the returns expectation.

The only thing we look at is making a lot of money. All this is nothing but putting the cart before the horse. We should always ensure that our investments are diversified, so that whatever the outcome our goal will be met. All this only impacts the performance of our portfolio as we are taking risks dis-propionate to what we need. We do not try to understand what the underlying reasons are for the fund managers buying or selling or the tips you see, read or hear. This uninformed choice is what leads us to the fear of the stock market. If you make an informed choice you have a lots to gain. Because of such choices we tend to miss actual opportunities.

Currently what is happening is the fund manager makes a call, we read it and we make a decision. But should it not be the other way, what I want as an investor, what is my risk tolerance and what are my return expectations, in the short, medium and long run. Based on this the call on where and what I need to invest needs to be taken. The focus should be on right investment, this is where the Financial Advisor comes in. There will be good times and bad times in the stock market, but some stocks will always give you returns, some in good times some in bad times. So you need to choose rightly. In investing emotions have to be kept aside. A good Financial Advisor will look at your risk taking ability and your goals before suggesting a stock or a portfolio for you. Want good returns from the stock market, focus on your risk appetite and goals before deciding on the stock. Ensure proper asset allocation and be ready to change your portfolio over time, based on the situation at that point of time.