I recently came across an interesting and ancient Chinese fable of the deaf frog written by Hsien-Sheng Liang.
The story goes like this...
A group of frogs were travelling through the forest when suddenly two of them fell into a deep pit!
All the other frogs gathered around the pit. When they saw how deep the pit was, they told the two frogs in the hole that, for practical purposes, they were taken for dead.
The two frogs ignored the comments of their friends and kept trying to jump out of the pit with all their might. The others continued to insist that their efforts would be futile.
Finally, one of the frogs took heed of what the others were saying and gave up. She collapsed and died. The other frog continued to jump as hard as he could.
Once again, the crowd of frogs yelled and beckoned him to stop suffering because, simply, he was about to die; it was in vain to keep fighting.
But the frog jumped with increasing force until finally he managed to get out of the hole.
When he came out, the other frogs said to him, “we are glad that you made it out, despite what we screamed.” The frog explained to them that he was deaf, and he thought they were encouraging them to try harder and get out of the hole. - ACADEMIA DISCOVER BLOG
The above story highlights the immense power of words when delivered emotionally, they can save lives or kill as well...
If you are wondering, what this has to do with financial success, here comes the investment lesson...
To succeed with our financial goals, we have to imitate the deaf frog.
Once you have made your investment decision based on your financial goals, risk appetite and investment horizon you should not heed to the market rumours, free advice from friends, colleagues or family.
In the short run, markets may go up or down sharply making you nervous. During these sharp movements, you may hear a lot of gloom predictions on TV, internet and newspaper. Learn to ignore them.
Your actions must be guided by your financial plan and not short-term movements in the market or the noise around it. When investing for long-term financial goals there is no need to react to every correction or upswing.
In fact, you will do more harm to your portfolio by constant switching and churning of investments.
Bear in mind, that short-term profits and losses have a very little impact on long-term wealth creation.
You should learn to trust your decisions and stick with them. A good financial advisor and a Holistic Financial Plan can be very handy in such situations. They can help you remain calm and refrain from taking unnecessary action.
Much like the deaf frog who was able to reach to the top of the pit by ignoring the discouragement of his friends, you will also be able to reach your financial goals by ignoring the noise.
Keep Calm and Stay Invested...