The other day, I was hanging out with friends, and the conversation shifted to investments and returns. One friend, eager to become a millionaire as quickly as possible, confidently claimed that trading was the only way to achieve this. He believed that trading could bring the kind of returns needed to fulfill such ambitious dreams.
However, the reality is far from this perception—and often much harsher. Many people share similar aspirations, seeking a magical solution, like Aladdin’s lamp, to make them overnight millionaires. (Read More | 5 bad money habits impacting your wealth, and what to do about it?)
I’ve been through this myself in the past—making money in F&O one day, only to lose double the next. The thrill of those winning trades, even though far beyond my risk appetite, had me convinced that I was on the path to becoming a full-time trader and, of course, a millionaire. But reality had other plans. It was only after connecting with a financial advisor that I truly understood the risks I was taking. Unfortunately, by that time, I had already lost a few things—lessons I’ll share in this article.
It’s time to wake up from such fantasies and understand the practical principles of wealth creation. Unfortunately, what we call “common sense” is becoming increasingly uncommon when it comes to investing and making money.
Let’s explore this with a more grounded perspective.
In the pursuit of wealth, many fall prey to the illusion of high returns from high-risk investments like Day Trading, Futures and Options (F&O), cryptocurrencies, or similar speculative avenues. It’s tempting to imagine doubling your money overnight or achieving consistent 10-20% returns, but let’s pause and reflect on the reality behind these seemingly lucrative opportunities. (Explore | Detoxify your Investments Product portfolio)
The High-Risk Gamble
If you’ve ever made a 10-20% profit in a single F&O trade, it’s natural to feel elated. However, consider this: how sustainable is this level of return over the long term? High-risk investments are a double-edged sword. The same instrument that boosts your portfolio by 20% one day can wipe out an equivalent amount the next. And here’s the harsh truth: recovering from a 20% loss requires more than a 20% gain. If your portfolio drops from ₹100,000 to ₹80,000, you now need a 25% return just to get back to square one. (Also Read | Signs you have unhealthy Relationship with Money)
This cycle often leads to increased risk-taking. With every loss, the urge to recoup pushes investors further into the high-risk trap, creating a vicious circle that can ultimately lead to a zero balance. While you gamble, governments collect taxes, brokers take their fees, and you—the investor—are often left with regret and financial strain.
The Illusion of Consistency
Even if you manage to achieve a 20-30% annual return through relentless trading, ask yourself: can this be repeated year after year? The market is unpredictable, and consistency in high-risk investments is rare. The emotional and physical toll of chasing these returns—stress, sleepless nights, and distraction from your primary job or personal life—adds a hidden cost. Meanwhile, time spent with family or pursuing meaningful activities becomes an opportunity lost.
The Rational Alternative
Investing wisely is not about chasing quick gains but about building wealth steadily and sustainably. Professional fund managers and financial advisors dedicate their careers to navigating the complexities of the market. They leverage years of experience and advanced research to achieve optimal returns while managing risk.
Mutual funds, for instance, offer diversification and professional management at a reasonable cost. Over time, they’ve proven to deliver returns aligned with market conditions, typically in the range of 10-15% annually. This may seem modest compared to the thrill of speculative gains, but it’s consistent, predictable, and, most importantly, sustainable. (Explore | Invest Smarter: Tips to Beat Mutual Fund Returns!)
The Cost of High-Risk Investments
Consider what’s at stake:
- Your Money: While others profit—brokers, the government, and seasoned traders—your portfolio bears the brunt of volatility.
- Your Health: Stress from constant monitoring and decision-making can take a toll on your physical and mental well-being.
- Your Time: Time spent chasing risky trades is time lost from building a stable career, nurturing relationships, or pursuing personal goals.
The Choice is Yours
At the end of the day, it’s your hard-earned money. You can either continue feeding the cycle of speculative greed or choose a path that aligns with your financial dreams. Investing is not about short-term thrills; it’s about long-term fulfilment. By working with a financial advisor and focusing on disciplined, goal-oriented investing, you can achieve your aspirations without unnecessary risks. (Read | Walking and Investing: Steps to Better Physical and Financial Health)
Conclusion
The promise of high returns often comes at a steep cost. It’s time to shift the narrative from speculation to strategy, from greed to growth. Make informed decisions, prioritize sustainability, and invest in a way that brings you closer to your financial goals without compromising your peace of mind. The choice is clear: chase fleeting gains or build lasting wealth.
This article is written by: Mr. Nishant Sharma, Associate Financial Planner, Good Moneying
