Investment Strategies

Investment Strategies

Welcome to the Chapter on different investment strategies.

Here we take a broad look at three time-oriented investment strategies. 

There are said to be 2 investment and money-growing strategies: Slow and Steady, and Fast and Risky. If you look around, you will see books and other self-help media on both with each having a strong fan following.

Each group usually say that the other one does not work.

Unfortunately and fortunately both strategies work but they work in their own way. Saying one is good and the other bad is similar to looking at only one side of the coin and thinking it has to be the right way. This type of reasoning arises due to the cognitive biases we all have inside us, and something we should guard ourselves against when we invest.

In addition to these two strategies: Slow and Steady, and Fast and Risky, there is another one, that is a mix of both. You can call it the Middle Road.

Let us look at each of these investment and money-growing strategies one after another.

Slow and Steady

This is the simplest, easiest and most dependable method to grow your wealth.

All smart people will tell you to follow it.

It not only allows you to save for your retirement but also for major expenses on the way, including education of children, buying a home, international holiday expenses and so on.

This approach has 4 things that are fundamental to it:

  • The first is to start to save and invest early in your life. This allows you to magnify the power of compounding.
  • The second is to invest on a regular basis.
  • Third is to increase the amount you save and invest as your income or salary increases. Ideally, you should have a target to save 20% of your income.
  • Fourth is to go for a diversified portfolio of investments instead of just focusing on just one or two investments so the assets become less risky in the long run.

The Slow and Steady approach uses the power of compounding to its advantage.

Just to give an example of how this works:

If you start to save Rs. 1 per day when you are 35 years old and then increase this amount you save per day by Rs. 1 for every subsequent month – so you save Rs. 2 per day in month 2, Rs. 3 per day in month 3, and so on, then assuming an interest rate of 6% only you will have built up a corpus of Rs. 25,63,000 approx. when you are 60 years old.

But if you started to do this when you were 25 years old, you will have built up a corpus of Rs. 63,55,000 approx. by the time you are in your 60th year.

Guess how much you will have if you started at 15 years? You will have built up a corpus of Rs. 1 crore 37 lakh appox. at the end of your 60th year.

Let us now look at this Slow and Steady road and see what it comprises of.

Aspects of Slow and Steady

Maximise Savings

People who follow this road always maximise savings. They tend to spend considerable time thinking of their savings and looking at different options to grow their wealth. The ideal amount to save is around 20% of income so you can reach your goals sooner. If that is not possible, then starting with a minimum amount that you can save regularly each month is a good idea.

No Unwanted Expenses

People on the Slow and Steady road limit unwanted expenses. So eating out in fine dining restaurants is usually reduced to the extent possible. Watching movies at home is preferred to spending money in multiplexes. They also make sure that small things such as putting off the light and fan switch when moving out of a room, paying bills on time to not incur any penalty payments are a part and parcel of their lives.

Know Different Investment Options

Ask anyone who swears by this method about any investment option and they are usually able to give you a good introduction to each. They will also tell you what they prefer and don’t prefer and why. They have spent a considerable amount of time researching each option and will know what suits them and when. For instance, they may know that bank FDs may suit them now but they will be willing to try riskier options after they have saved a specific amount of money.

Regular Investments and Tracking

The people on this road make saving and investing a part of their routine. They also constantly track their investments to see how they are doing and rebalance them when needed.

They are Okay with the Long Haul

Focussing on Slow and Steady growth means it will be quite some time before they are able to see a sizable return on their investments. The people who prefer this method are okay with this long haul. Though they may feel a tinge of What-Ifs when they see the stories of people striking it rich by following the Fast and Risky road, this is something they usually take in stride. They realise they are lucky as they can spend time doing the things they love, spend time with family and friends and not live a stressful life.

Willing to Sacrifice for the Long-Term Goals

They are willing to make sacrifices of short-term goals. They realise that most of the dreams that people on the fast and risky road chase are media-fuelled and unrealistic and unnecessary. They also realise that they need to invest in themselves and learn new skills whether that is related to work or related to earning more money. You may see some people even taking a break from their work to pursue higher studies.

Fast and Risky

Financial expert Tom Corley undertook a study where he checked different wealthy people and how they got rich. One group was the one he calls Dreamers who got rich the fastest.

He discovered that this group of people were able to accumulate their wealth over a period of approx. 12 years.

These people, as the name suggests, pursue their dreams that may include starting their own business, becoming a successful actor, musician or a best-selling author. These individuals love what they do for a living and work hard at it. Their passion and hard work reflect in their bank accounts.

This road to wealth, however, is also the hardest, riskiest and most stressful one.

One person he interviewed called it a “…a daily walk through hell”. It is filled with challenges, disappointments, mistakes, rejections and financial worries.

Let us look at this Fast and Risky road and see what it comprises of.

Aspects of Fast and Risky

Long Work Hours

If you want to pursue your dreams to fast wealth, you will have to work anywhere from 70 to 80 hours every week before you achieve your goals. Elon Musk, the poster boy of this group, regularly talks of 100 hour work weeks. Respite from work is non-existent. There are usually no work-free weekends or vacations. And these long work hours will impact your nearest and dearest ones like family and friends since you will not be able to give them time.

Unparalleled Continuous Stress

There is significant mental, physical and financial stress until you are well off. And having a family to support makes it even more so. Steady income is usually not available when you are starting out. Taking loans and using the money saved for retirement are common. And this puts additional stress on the person.  This comes out as anger, irritation, restlessness, anxiety, insomnia, and so on

Continuous mental stress also takes a toll on your body. And physical side effects of stress like headaches, upset stomach like irritable bowel syndrome, diarrhoea, constipation, and nausea, low energy levels are very common.

High Risks

If you take your dreams as the only goals you have in life then you will tend to take big risks also. Using the retirement corpus to fund your business, taking high-interest loans, mortgaging property or taking out a second mortgage are common as are problems with repayment of loans.

What is problematic is that there is absolutely no guarantee of success. And failure is more common than you would think.

What we see as success stories in the media are just the tip of the proverbial iceberg. There are scores more of such people who have taken this road and failed.

And failure takes away everything.


Most people who pursue their dreams and fail begin to doubt themselves. They mix their personality and who they are with what they are trying to achieve and this can cause havoc when they fail. This may even break the person if they are not able to see the larger picture sometimes.


Most near and dear ones and well-wishers will tell the person to quit when they see the toll it has taken on them. Unfortunately, most people who chase their dreams take these well-meaning and heartfelt messages from the people who love them as telling them to fail. Which demotivates them.

This demotivation is more apparent when they deal with the outside world as they hear the word ‘No’ more often than not. This may make them quit or at least want to quit.

Failure after Failure

The people taking the Fast and Risky road will see more failure than others. Since they have big dreams that they want fulfilled, there are more chances of them failing than those who take the Slow and Steady road. Many give in after repeated failures as they realise this road is not the right one for them – at least not at that time, but maybe later.

Middle Road

The Middle Road is a mix of Slow and Steady and Fast and Risky approaches.

It tries to take the best of both worlds and minimise most of the negative aspects of each.

Aspects of the Middle Road

A Longer-Term Goal than Fast and Risky but Shorter than Slow and Steady

People in the Fast and Risky approach usually get wealthy in 12-15 years while those in the Slow and Steady approach may take anything from 25 to 30 years. Those who walk on the Middle Road have a timeline of 15-20 years on an average to become wealthy.

Do the Job but Focus on Growth and Other Income Opportunities

Middle Road people tend to stick to their jobs and even pursue career growth by taking on advanced degrees or gaining more expertise. They also look at other opportunities that allow them to earn more without having to spend too much time. Some of these opportunities may include real estate investments, taking on freelance work during the weekends and so on.

Saving and Investment Oriented

The Middle Road owes its success to a conservative mindset that focuses on savings and frugality. You need to stop wasting money on unnecessary items that you will not use after the initial fascination is over. The idea should be to save and grow one’s wealth brick by brick.

Goal-based Smart Investments

The Middle Path needs smart investments, which should be goal-driven. Some examples include owning a home and other real-estate investments, stock market investments, and so on. Instead of growing the investments slowly and steadily, the idea can be to invest as much as possible in the initial stages and then, if needed, taper it down. This need to reduce investment may be due to an increase in life expenses as children grow older, and so on.

To give an example, if you start to invest around Rs. 300 per day when you are 35 years old and then reduce this amount by Re. 1 for each day every subsequent month, then by the time you are in your 60th year, you will have saved around Rs. 42 lakh. Comparatively, if you start with saving Rs. 1 per day when you are 35 and then build it up by an additional rupee for every subsequent month, then by the time you are in your 60th year, you will have built a corpus of approx. Rs. 25,63,000 only – a difference of nearly Rs. 17 lakh.


Middle Road walkers are adaptable to the situation and are willing to change when needed. They realise that the world we live in and industry and economic trends are always fluid, and the best way to see new opportunities and take them up is to be adaptable. 

Touch-Proof Retirement Corpus

Unlike the Fast and Risky road, the Retirement Corpus remains sacrosanct in this approach. You do not touch it or dip into it. Knowing that your retirement corpus is safe allows you to take risks but not unnecessary risks. You are also more likely to approach new investments with a lean and agile mindset.