Once an old man who thought he would not live long, called his often quarrelling sons and asked them to bring some sticks. He then tied the sticks together and gave the bundle to his youngest son.
“Can you break that bundle of sticks?” he asked. The boy tried, but couldn’t. Then the other sons were told to break the bundles, but none could. The old man then, untied the bundle and gave one stick to each son and asked them to break it, and now, each one broke his stick. Then the father said, “If you are united, you will be stronger. Union is strength.” You may be wondering why this kid’s story is brought in the topic of “investing”…well, this is the reason for suggesting to invest in an index linked fund/ETF. Index is a basket of stocks, where diversification and consequent spreading of risk is already built in. Individual companies in an index will enter or exit, but the index goes on. But investing in only a single company stock, even though it may be the best as of the present, is definitely a “risk”. I prefer investing in an Index linked ETF just because of the “ease of doing business”. Does it mean that index linked funds/ETFs are the safest way to invest. NO. well…that’s the skeptical ME. If we are lucky, well and good. But if not? What shall we do? We have to be “conscious” of the fact that sudden emergence of risks is an inherent part of all aspects of life and be prepared to face any eventuality. That’s why intelligent diversification is crucial. LIFE IS EASY IF WE ARE SIMPLE. DO NOT COMPLICATE.
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