Lesson Learned the Hard Way

As Jaun Elia sahab says : "Kaun samjha hai sirf baaton se, Sabko ek haadsa zaroori hai."

I’ve realized the hard way that one should never get carried away by a bull run, no matter how promising it seems. During such periods, people often become greedy, assuming these high returns will last forever, and start pouring all their savings into mutual funds/stocks. However, most fail to consider the inevitability of a bear market until it actually hits.

This is why diversification is crucial. The market performed exceptionally well from mid-2023 to September 2024, but since then, it has been on a consistent decline. To safeguard your finances, avoid putting all your eggs in one basket. Instead, diversify across fixed deposits (FDs), debt instruments, and gold to feel more secure and confident.

Equity investments, while capable of delivering higher returns, are highly unpredictable and require a long-term perspective. Within equities, mutual funds are a safer option for those who lack the expertise to select fundamentally strong stocks. Diversification not only reduces risks but also ensures stability in uncertain times.

Keeping an emergency fund and near future expenses in FD or savings account is so essential that people realise it only when they are trapped and they don't have an emergency fund. That financial situation is worse than having no money because you are the reason for that situation to arise.