10 Investment Lessons From Chanakya

10 Investment Lessons From Chanakya

When it comes to history, we have all heard about the great Chanakya or Chanakya Niti. Chanakya was a class act, strategy, managing an army of warriors, or taking political decisions. Chanakya Niti (Chanakya strategy) was instrumental in Chandragupta Maurya’s efforts to reign over the Nanda dynasty. Chanakya also played a pivotal role in making the Maurya Dynasty one of the greatest in Indian history.

In this article, we will understand how some of Chanakya’s lessons can help us in our investment plans.

  1. Plan your investment well in advanceBefore investing, always manage your risk. If you don’t have a risk-reward ratio in check, you might lose money. Plan your taxes, liquidity requirements and insurance before taking any investment decisions.
  2. Know your risk appetite – Never invest in companies just because your friend/relative is investing. Their risk appetite might be far more or less than yours. Do check your risk and psychological framework before you start investing.
  3. Buy value stocks – Don’t invest with a short term view. Buy with a long-term horizon and always see the long-term picture. Invest in Blue chip stocks, stocks that do not face high volatility for eg. Nifty 50 Stocks. Warren Buffett states, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”
  4. Be Opportunistic – Many traders start online trading and do it aggressively to make quick bucks. They don’t realise that had they invested in passive funds like ETFs or Index funds, they would have made the same returns and saved on transaction fees. Now that is a classic example of losing opportunity cost. Always invest wisely.
  5. Sync your actions and goals – As mentioned earlier, look at the long term goal. If you are looking for a stable compounding machine, invest in passive index funds or ETFs. Do not waste your time in active investing to make higher returns. Always plan your strategy according to the goals.
  6. Learn from others’ mistakes – Don’t burn your hands; observe. See the errors other investors and traders make and do not follow that philosophy. For example, investing in penny stocks might be risky, so do not burn your hands there if you are a risk-averse investor.
  7. Face your obstacles – You can not create wealth if you don’t take risks. Be greedy when others are fearful, and be fearful when others are greedy. You will get ample opportunities to invest in markets at lower valuations. Just be a good observer.
  8. Mr Market is your biggest teacher – Your biggest investment lessons won’t come from reading a book or talking to experts. It will come through experience and ‘Mr Market’ will constantly keep your investment philosophy in check.
  9. Always bet on the future – A couple of decades back, we did not know that the internet would become an integral part of our life. But those who understood the technology made big bucks. Always follow the latest trends and invest accordingly.
  10. Never take it lightly – Work hard, read a lot, pay attention to concall transcripts, make an informed decision, and start investing. Hard work always pays off.