Creating wealth base, increasing it and utilizing judiciously
In investment, there are three tasks - creating wealth base/foundation, increasing wealth qualitatively as well as quantitatively and utilizing wealth judiciously.
In share market also the same principal is applicable. When we buy shares some wealth has been created. We may be in loss, but the foundation will continue to be with us. We have now some basic learning about shares, we know about IPO or secondary market, we contact broker and get registered, we open Dmat account and gradually become familiar with the whole process of transaction. All this education is part of that wealth creation process and by now we have a foundation to take off.
If we survive the first stage, we will add wealth by mobilizing resources by equity finance or loans. We start to know about companies much better, worth of shares far better and learning goes on together with increase in profit in case of success or loss in case of part failure.
If we fail completely, we will not attain the third level and disappear from the market. If we succeed, we will have added wealth and we need to utilize it properly. I do not believe in all accumulation. Personally, I like to put reasonable percentage of added wealth in three baskets - a. consumption for improving quality of life of a person/family, b. savings for travel, medicals, old age, and emergencies and c. contribution in helping suffering humanities.
Hence, it is though driven by profit, businesses including investment/trading in shares has a complete package. We should have courage, wisdom, patience and energy while creating the wealth base, we should rightly educate ourselves. We should take calculated risk in investment while increasing wealth and should strive for excellence. And, finally while utilizing wealth, we should see entire package of consumption, saving and giving.
This sounds idealistic, but I think, this is what makes participation in business meaningful, provides broad operating framework and drives us around a mission to succeed, which may bring peace, wisdom and human values around that success.
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