Chanakya or Kautilya needs no introduction. Be it political strategy, governance or management skills, Chanakya excelled in all. Legend has it that Chandragupta Maurya annihilated the Nanda dynasty with the help of Chanakya’s advice. Chandragupta then founded the Maurya dynasty, which, along with emperors such as Ashoka, became one of the most prominent dynasties of ancient India.
Chanakya’s thoughts and principles (also known as Chanakya Niti) provide valuable insights for success in life. His principles are so influential that they are revered as principles of management even today. Chanakya Niti also contains lessons that can be very helpful in achieving financial success in life.
This blog will look at some of the wise words of Chanakya that provide valuable investing lessons. Let us see some of Chanakya’s policies which can help us to manage money better and become financially successful.
give your money to the deserving
Give your money only to deserving people, never to others. Sea water mixed with clouds is always sweet. – Chanakya:
Your investment grows at a healthy rate or declines rapidly depending on how you manage your money. As Chanakya explains, the sea water that meets the clouds is always sweet. But once it goes into the sea it becomes saline.
So, your money will work for you if you invest in well regulated asset classes like stocks, bonds, gold etc. And rely on products like mutual funds or NPS, where a team of qualified people manage your money. On the other hand, if you rely on hot-stock tips or unregulated risky asset classes, your hard-earned money will hardly help you when you need it most.
You can’t win if you can’t set your goal
Before starting any work, ask yourself three questions – why am I doing this, what are the consequences and will I be successful. Only when you think deeply and find satisfactory answers to these questions go ahead. A person who cannot set his goal simply cannot win. – Chanakya:
Like all aspects of life, having goals in investing is also the key to success. Otherwise, you will find it confusing to answer questions like where to invest, how much to invest and for how long.
However, when you link your investments with goals, it simplifies the whole investing process. Since you know your goals, you know how long you need to invest. A fair idea about your investment horizon helps you determine how much you need to invest and what type of investment product you need to reach your goal.
Moreover, setting investment goals also gives you a purpose to stay invested. And helps you fight your worst enemy – your impulsivity. To understand more about smart goal-setting strategies, you can read our blog on What is Goal-Based Investing and How It Helps in Wealth Building.
Don’t be afraid of reforms, keep investing
Once you start working on something, don’t be afraid of failure and don’t give up. People who do honest work are the happiest. – Chanakya:
The stock markets have fallen several times in the last 30 years. The reasons for these reforms include pandemics, scams, economic slowdown etc. But whatever the reason or no matter how sharp the fall, there has always been a boom in the equity markets over the next few years.
Many investors panic during phases of market correction. As a result, they redeem their investments in losses and convert their losses on paper into actual losses. But investors who have had enough patience to stay invested turned out to be the happiest.
For example, in the last 30 years, there have been 21 months when the Sensex fell more than 10%. Suppose there are two friends, Sudam and Suman. Both invested Rs 10,000 every month through SIP in Sensex for the last 30 years. While Sudam remained invested the whole time, Suman stopped investing whenever the Sensex fell by 10%.
| benefits of sustainable investment | ||
| Sudam’s Investment | Suman’s Investment | |
| Monthly SIP Amount | Rupee. 10,000 | Rupee. 10,000 |
| investment period | 30 years | 30 years |
| missed sip | 0 | 21 |
| principal investment | 36 lakh rupees | Rupee. 33.9 lakh |
| final fund | Rs 3.47 crore | Rs 3.17 crore |
| SIP missed = Rs 2.1 lakh; Difference in closing corpus = Rs. 30 million | ||
Suman earned Rs 30 lakh less than Sudam due to closure of SIP during market downturn. To put this in perspective, by not investing Rs 2.1 lakh during the market correction, Suman missed the opportunity to accumulate around 9.5% of his final corpus, up to Rs 30 lakh.
avoid overdoing anything
Too much beauty kidnapped Sita, too much arrogance killed Ravana and too much charity put King Bali in deep trouble. So too much of anything is bad. Too much should be avoided.”
The above quote from Chanakya highlights the importance of not overdoing with anything. This also applies to investments. Investing too much in any one asset class can be counterproductive. And that is why one of the key rules of investing is diversification.
The benefits of diversification are pretty straightforward. Not all investments do well all the time. Hence, you need to invest in different asset classes such as equities, fixed income products and gold. This will provide better downside protection and thus ensure a smooth investment journey.
Learn from the mistakes of others
“Learn from the mistakes of others… you can’t live long enough to make them yourself.”
We learn from our experiences, especially from mistakes. But time is a commodity which is available in limited quantity. Therefore, a better and faster way to learn is to learn from the mistakes of others.
Many veteran investors have documented their mistakes in their books or biographies. To start your learning journey, you can start by reading various books like Biographies of Successful Investors etc. You can also visit various videos and blogs of ETMONEY. We have a blog that explains 7 investing mistakes you can avoid.
Conclusion
Now on to you Hopefully, these quotes from the wisest political strategist ever helped you learn some investing lessons. Chanakya has many other lessons and we could not write them all. Share your favorite quotes and lessons from Chanakya Niti in the comment section.
