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Friends, do you know what is the fastest way to build wealth? Copying is just simple but people don't do it. His ego does not allow him. There is a guy whose name is Mohnis Babarai. He is an engineer by profession. He has openly said that he did not know anything about investing. One day, while passing time at an airport, he picked up a book and read something that changed his entire life.
He saw in that book that Warren Buffett, who is a legend in the world of investing, has been generating CAGR returns of 18 to 19% continuously for 40 years without stopping and Mohnish thought that this guy has already figured out how this investing game works, why should I do a new experiment here, this guy is already generating CAGR returns of 18 to 19% and that too continuously for 40 years, so I don't want to be smarter than him, I have to copy him and that is what he did.
He used all the techniques of Warren Buffett and today he is a millionaire. Now imagine that you also have a similar Buffett already existing in the ETF world and perhaps you are ignoring him. Look, do you know where the problem is? The problem is that we want to look smart. We want to do something new.
We want to beat the market. We feel that we are different from others. We are among the top 10% who are already earning returns from the market. Not among those 90% who are already losing. Imagine a new investor enters the market. He has little money. But he thinks that I will double this money. Then he looks for stock tips.
Watches videos of multibagger stories on YouTube. And then he goes after microcap or small cap stocks. But there is a guy who invests only in ETF and that too in broad best index, he is doing SIP quietly every month without any tip, without any excitement and after 10 years the first guy is under stress and there is maximum chance that he has left the market.
But the other guy over there has done it quietly 3x. This is not a coincidence. This is the result of the copy. Others copied the already proven formula used by the world's most successful investors. Warren Buffett himself says, put your money in an index fund and forget about it. And this has already been proved by broad based indices all over the world.
If you look at the returns of Nifty 50, Nifty has been giving a CAGR return of 12 to 13% for the last 25-30 years. This means that the money has doubled roughly every 5 1/2 to 6 years. But people call it boring because there are no 5% sudden 10% moves like stocks and then to catch this thrill they enter into small cap, micro cap or FAO and you know what happens there.
Friends, one thing you have to understand is that boring things work. The exciting thing is what kills the portfolio. Now , let us understand how we can use this copy formula in ETFs. Look, the first thing you need to do is find your warrant profit. There is already an answer in the ETF world. See, the expense ratio should be minimum.
Tracking error should be low. The liquidity should be decent and the underlying index, that is, the index working behind that ETF, should be product based and not any thematic or sectoral. This is already figured out. You just need to invest. Look, to make this easier, many types of indices have been created in India.
Like there is Nifty 50, Nifty Nex50, Nifty 500, Nifty Mid Cap, Nifty Small Cap 250 index. All these indexes have already been working for the last several years and their data is also freely available on the internet for you to study. Now while copying, you will have to understand one more thing that you should not copy only the surface.
The entire system will have to be copied. People think that in ETF, it means just buy it once and the work is done. No, Mohnish Babri has also said that he did not just copy the strategy. He also copied the entire thinking. So the same system will have to be created with ETFs also. Which ETF to buy, how much allocation to make, when to rebalance, whether to keep SIP automatic or how to keep manual tax under control, all this is a system.
And the third thing is not exciting, it is very boring. Everyone says that ETFs do wonders in the long term. But when the market falls by 20 to 30%, then people panic. We sell there or start booking profits. That's why I said that the entire system needs to be copied here and not just from the surface.
Here you will also have to copy the mindset and the mindset says that you will have to remain invested even during the correction period of the market and if needed, you will have to buy on dip and add more quantity. Let us understand with a real example. Suppose there is a guy who does monthly SIP of ₹10,000 in Nifi since 2014.
No research, no timing. Just copy method of Simple SIP which is already formula. By 2024, the invested amount in his portfolio has reached Rs 10 to 12 lakh. The value has reached around Rs 25 to 30 lakh depending on the exact timing. Now the thing to think about here is what did he do? Look, nothing.
No Stock Packing, No Timing, No Tips. He simply copied a proven system which we all know today as SIP. Now all these things are so easy then why don't people copy them? Look, here Mohnish had clearly told these things that people have a lot of ego. And this directly contradicts the EGO ETF. Here people feel that there is no thrill in ETF.
There is no major movement. Seems like a very boring system. But that's the beauty, friend. There is no need to be smarter than the market here. Just follow the system. The biggest investment mistake people make is trying to do something extra. ETF forces you to do nothing. Just stay invested here and this is your real edge with which you will create huge wealth in future.
Now let's talk about actionable steps. Look, find an ETF for yourself today which should be broad based and I have told you the methods, the system is already in place. Tracking and low should be. Volumes should be decent in that. The expense ratio should be low and once this figure is out, start a simple automatic SIP in ETF.
Already many brokers are offering this feature these days due to which your manual effort will be nullified and discipline will be maintained. all you have to do. But the most important thing is not to tamper with this system because once it is tampered with, the clock gets reset again and your game starts again and you destroy the entire power of compounding.
So don't make this mistake at all and keep your ego aside. If you liked the video, please like it and comment and let us know how you liked it.
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