Human beings are always in search of new things.
Humans’ risk-taking ability has led them to discover new lands, develop new civilizations, invent new technologies, and more.
We are exploring the mysteries of space with the help of technology.
The human-made International Space Station is 420 km above the earth’s surface and revolves around it at 28000 km/hr.
Hence, completing one revolution every 90 minutes.
Who would have imagined 100 years back that men would be sitting hundreds of km away from the Earth and exploring the mysteries of space?
Yes, there were failures and fatalities too.
The Human nature of risk-taking and reaping benefits
But the ever-questing human nature has made it possible with the help of technology.
It takes the appropriate angle, right speed, and the distance from the Earth which makes any satellite orbit around the Earth.
Any miscalculations can result in fatalities.
But humans have made it possible through their knowledge, understanding, experience, and the right calculations.
And they have not stopped till this. Humans are going deep into space and trying to find life on other planets.
The humans have taken risks and the returns were fabulous.
Artificial space satellites have helped humans in many ways:
- Global positioning systems are used for navigation in vehicles and aircraft
- Phone calls, radio signals, television signals, and internet signals can be transmitted over long distances.
- Satellites are used in weather forecasting like monitoring air pressure, temperature and humidity, and disaster management.
- Satellites are used in observing our Earth and other planets in the solar system.
We have been successful in the past and reaped the benefits.
The Finance Theory
This whole story tells that risk and return are the two aspects of the same coin.
The humans would have chosen a muted and fixed life.
They would have limited themselves to a single piece of land. The life would have still existed.
But he chose to explore the things and took the calculated risk.
And the results are in front of every one of us.
We have traveled a very long distance and the journey is full of triumphs and disasters.
Every new step taken is associated with the risk.
But
Every unit of risk taken must be backed by the right calculations, knowledge, and experience.
Uncalculated and reckless decisions result in disasters.
The same theory applies in the finance field.
People invest in companies through mutual funds to reap the benefits later.
Mutual funds can be a very good tool for an investor who wants to achieve his financial goals like:
- Education of children
- Their marriage when they grow up
- Buying home
- Planning a vacation abroad
- Retirement planning
But the ingredients of the fund should be solid and stable. These could be:
- The education, stability, knowledge, and experience of the fund manager.
- The returns generated by the fund in the past.
- How well it managed to provide consistent returns in the volatile markets.
- The trust and the credibility of the fund among investors.
A mutual fund is a tool that helps the investor diversify the risk and provides an option to spread his/her investment over a period of time.
This investment spread through SIP (Systematic Investment Plan) helps investors to invest small amounts in the market periodically.
Hence curtailing the short-term volatility in the prices and averaging his return.
The long-term horizon and the investing discipline eventually help the investor emerge as a winner with good returns.
Many of us search-fixed things in life where there is no risk.
Do these things really exist or are we simply confining ourselves in a shell?
Isn’t it against the basic human nature of exploring new things?
I am leaving this question to you. See you in the next post…
This is an educational post and not a recommendation for any investment in the Mutual funds. Kindly seek professional advice for making any investment in the mutual funds.
Mutual fund investments are subject to market risks, read all scheme-related documents carefully.