Cab Driver and his 10 Yrs 15% Equity Returns – What we can learn?

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I want to share with you the real story of Cab Driver and his 10 Yrs 15% Equity Returns. What we can learn from him? It is unbelievable mainly because we feel equity is meant only for educated or highly qualified or high IQ investors.

I always stress on simplicity and patience as the wonders of the investment. However, as a human, we tend to deviate from these approaches. Mainly because we doubt ourselves or we are bombarded with strategies, investment options, or the best products on this earth.

Cab Driver and his 10 Yrs 15% Equity Returns – What we can learn?

It all started when I was working in BPO and also started my Mutual Fund Advisory business. One guy always used to come for pick and drop. He was recently married and had a year old baby girl too. During the conversation, he asked me where to invest for his daughter’s future.

At that time, as I was also new to MF industry and unaware of goal-based investing, asset allocation, or great strategies, I asked him how much he can invest per month. He replied that he can afford Rs.4,000 a month. But I took one promise from him that no matter whatever may happen in the future, he will not touch this investment for another 15+ years. With emotion and affection towards his daughter, he promised.

I suggested two funds. One was HDFC Top 200 Fund (now HDFC Top 100) and Reliance Growth Fund (now Nippon Growth Fund). These two funds were top-rated and many used to invest in these funds at that time like today’s Mirae Asset Emerging Bluechip Fund or Axis Bluechip Fund 🙂

Remember here one thing that I suggested 100% equity (which I am not suggesting currently) and both were based on star ratings and a little bit of my gut feelings towards these two funds.

The second thing to notice that this cab driver never knew that his money is going to be invested in the equity market (even though I explained him to what is equity market). His only intention is that he has to save for his daughter’s future and a great belief on my recommendations!!

So he started his investment of Rs.4,000 a month in the year of around 2011. In middle, he used to knock me once a year or once in 2-3 years to know what is his invested amount and its value as on the date.

I used to simply share the total amount with him. Post-2018, when I registered as SEBI RIA and started my fee-only financial planning service, I have to surrender my MF code. Hence, his investment was moved to some other distributor (who is known to me) and currently, he is satisfied with the new distributor and investing in the same funds.

The journey of these 10 years may be filled with so many ups and downs in the market. So many regulatory changes happened with respect to the fund or rules. However, he stuck to these two funds. If you check the star ratings of these two funds, then valueresearch is providing TWO STARS and for Nippon Growth its THREE STARS. Hence, any new investor will obviously stay away from these two funds for investing.

His ignorance of volatility about the equity, staying away from noise or news what these experts bombard us on daily basis about the strategy and all, is actually WORKED wonders to his investment.

Let me share with you his real profits which he shared with me recently.

Cab Driver and his 10 Yrs 15% Equity Returns

He is currently sitting on around 15% returns. Many may question that it all happened mainly because the market is an all-time high. However, I attribute this to his IGNORANCE about the NOISE, NEWS and EXPERT STRATEGIES and STICKING to what he decided for almost around 10 years.

By sharing this, I am not suggesting these two funds are best to invest in now. Also, I am not suggesting you to invest all your 100% into equity. However, the idea of sharing this real-life story is that no matter whatever may be your expertise, IQ, product selection or strategy when it comes to wealth creation, its your PATIENCE that matters the lot than anything else.

Dear Educated, highly qualified experts, highly IQ individuals or media and social media, LET US FIRST LEARN PATIENCE FROM THIS CAB DRIVER!!

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17 Responses

  1. Absolutely agree with you. most of the times , ignorance is bliss and good luck to this cab driver. This story reminds me of a story of one my friend, in 2011 , he invested (insurance cant be investment), sorry pays premium of a 20 year insurance policy of premium 12500 p.a (S.A of 3L) instead of my suggestion to do a SIP of Rs 1000 pm (1000 rupees per SIP) in Birla Frontline Equity fund and take a term insurance. The result today is out for us to see..the MF though not a strong performer as it used to be still delivered ~13.8 percent annualized return……10 yrs fast forward, he called me for suggestion on a term insurance and some good MFs. Guess what, the 10 yrs of time lost cannot be travelled again and 10 yrs from now, there are lot of if’s and but with your risk portfolio….the more sooner you realize the better it will be. Happy Investing!

  2. Great Article!
    I think in the current environment when Nifty keeps flashing in our mobile ,laptop and tv ,the temptation to not stick to the plan is very tough. I guess most people get so obsessed to find the best fund that they pay not attention to just buy and hold!

  3. HELLO SIR, I AM NEW TO SHARES/STOCKS! NOT INTERESTED IN TRADING BUT AS A INVESTMENT… I RECENTLY GOT ‘ONLY DEMAT ACCOUNT’ OF NSDL through PRIVATE SECTOR BANK BUT NOT A TRADING ACCOUNT ; RECENTLY I GOT MY 1st IPO SHARES of a Small Finance Bank ;

    SIR AS & WHEN IF I WANT TO SELL MY SHARES CAN I GET/apply for ‘ONLY TRADING ACCOUNT’ FROM A DIFFERENT BROKERAGE FIRM say ZERODHA or 5paisa or Religare etc any other? ..or is it Compulsory to Buy BOTH TRADING & Demat accounts from the Same Brokerage Firm?

    ….. ALSO AS & When IF I WANT TO SELL THE SHARES DOES ‘SHORT TERM CAPITAL GAIN TAX’ DEDUCTED AT SOURCE(TDS)? ..WHILE SELLING THEM(shares)

  4. Ignorance at your side also helped the cab driver. What if some cab driver asked you now , because you have learned so many things , you might also give guidance beyond simplicity , (what is your goal , risk appetite, equity debt mix etc,,,,) the cab driver might even thought not to invest with all these jargons.
    Patience is the key for investor , simplicity is key for advisors

  5. Very nice and informative post. The main thing is to stay invested instead of switching every 1 or 2 years and if opted for SIP, continue the SIP without stopping halfway AND above all be patient. Many thanks Basu Sir !!

  6. Thats true … i also switched couple of times then learned there is no use of the same…. It’s like one year one student will top the class .. another year some one else can top the class…. now if i have to switch the fund i wait for atleast 6-8 quarters …. might be it is also low

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