Bonsai vs. Banyan: A Metaphor for Investment Growth.
Imagine your investments as trees: The Bonsai Investor : Frequently withdraws or redeems investments, which limits their growth potential. While short-term gains may seem appealing, this approach sacrifices the opportunity for substantial long-term returns. The Banyan Investor : Remains invested, allowing the compounding effect to work over time. This disciplined approach cultivates a strong, growing financial portfolio, capable of achieving meaningful long-term goals. The Power of Staying Invested: A Comparative Example Here’s how staying invested can significantly impact your portfolio: Scenario 1: Redeeming Too Soon – Mahesh invests ₹10,000 per month in a mutual fund with an assumed 12% annual return. After three years, he withdraws ₹50,000 for an unplanned expense. Over 10 years, his portfolio grows to ₹15.5 lakhs. Scenario 2: Staying the Course – Sunita invests the same ₹10,000 per month in the same fund with a 1...
