1. There are some investors who are happy getting 5% returns. This bewildered other investors – why would people go for 5% when there are 50% options?
2. For example, I know there are investors who are happy sticking with dividend stocks and getting 5% yields.
3. It is rather common to see these investors who ‘aim low’ get bashed online, to a point that is belittling them – “I invest in high growth tech stocks / crypto and beat your returns by a mile.”
4. While it makes sense to chase for the best possible returns, it is only suitable for some investors and not all. There are other considerations.
5. One possible reason is that investors who are at wealth preservation mode would focus on risk more than returns. They don’t need to grow their wealth that fast anymore and getting 5% on $5m is $250,000. Enough to lead a comfortable life. Why take more risk and push the envelope of returns?
6. A second possible reason is that these investors may value cash flow more than paper gains. They may be living off their investments and need the cash to pay for living expenses. Getting $5,000 cold hard cash from their investments has higher utility than having $10,000 paper profits which they may not want to sell to get the proceeds or the hassle it brings.
7. The third reason could be that they just do not want to veer into investments that they do not understand. This is what Warren Buffett’s mantra on circle of competence means. They may not have the time or the interest to learn about a new investment and are fine in getting the returns from the investments they truly understand. They aren’t bothered about chasing the next shiny thing.
8. The fourth reason could be that they have strong beliefs in certain investments. They may not buy the idea of crypto for example and any high return potential is moot. Investing is a religion and everyone invests his belief in the markets.
9. There could be more reasons which I may not know. Ultimately it is important to understand that there are differences in the way we were born and raised, our situations and objectives, and our beliefs. Not everyone must chase for the highest possible return. Tolerance toward differences in investment ideologies should be practised, not just for race, language and religion.
10. Social media can be a toxic place because people who do not know you are liberal enough to slam you ‘publicly’ while hiding behind a screen. Don’t let them get into you. Understand your context and choose the most relevant way to invest for yourself. It is okay that you invest differently from others because you are different.
