Today I was talking with a Trader who uses Profits out of it for buying Groceries!
Overall he is making around 10% Returns on 10 Lakh Capital per year!
I advised him to STOP Trading as the Opportunity Cost of Capital is 5 Lakh per year!
That means he is loosing Rs. 5 Lakh by choosing Trading!
What is Opportunity Cost of Capital?
Stock Market Investing which is Passive Method is up to 50% Returns every year through Long Term Investing. Proof
If you chose Trading instead, you are loosing 40% Returns per year.
CALCULATION
Trading Profits per year = 10%
Investing Profits per year = 50%
OPPORTUNITY COST OF CAPITAL = 40% = 4 LAKHS
Plus, if the Trader uses the Free Time into some other business activities – another 10% Gain is easily possible
So TOTAL GAIN = 4 LAKHS + 1 LAKHS = 5 LAKHS!
So a Trader is making 5 LAKH LOSS per year by choosing Trading. Instead he can chose Investing & Work on a Part-Time business for the Trading Time, he will get More Returns & Compounded too.
References
NO TRADING futurecaps.com/notrading
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