If someone were to ask me what is the best investment to do, my perpetual answer is and always will be, 'Invest in You'. That's right, you are your greatest asset and you are responsible for everything you do whether you create or destroy wealth.

The number of people who create wealth is much lower to people who destroy wealth. That is to say that amongst us there are more individuals who are more wealth destroyers than creators. There are 3 reasons for that:

• Majority of the people don't understand 'risk' and the inherent wealth creation within a calculated risk, hence they let their money stay in banks and bonds.
• The ones who understand the real concept of 'risk' start on the right track but often do not succeed because they simply lack the conviction in their own self.
• Most people have a fear, the fear of failure i.e. to say that people are not risk averse but loss averse. To explain further, if one could have a certainty of returns from a risky investment, one would have no problems to deploy money in that investment.

But in all the above situations, wealth is not created and this is more due to lack of knowledge and this lack of knowledge has its roots in investing in yourself, that's as simple as it is.

So what does 'Investing in you' mean? It means trusting your own conviction. Here is a diagram that will help you understand better.

How do you understand the correct concept of risk?

Risk means volatility and volatility is inherent to risky investments. You would be more worried if your capital fluctuates but you would not be so perturbed if your profits fluctuate. Having said this, you must first allow for profits to get created, which require time and patience. Then if profits fluctuate it is better than your capital fluctuating.

Risk of capital erosion diminishes as profits build up with time. Capital will fluctuate in the beginning but over time, say a couple of years then it's only the profit. You can still take home 14 per cent to 16 per cent average returns each year totally tax-free. Now tell me where is the risk here?

Gaining more conviction, how?

It is very important to come to your own conclusion. To give you an example if you did analysis of say some FMCG (fast moving consumer goods) company and came to the conclusion that this company has a great strategy and will continue to grow at 15 per cent for the next decade - in my view that is the safest, brilliant and a highly rewarding investment avenue that you have discovered.

So then why fear putting more than 50 per cent of your money? But this comes out of knowledge and research, which comes by investing in your own self, that is, investing in learning and building investment skills.

What is the greatest fear?

Not trusting your own self. Your greatest enemy is you, yourself and not the stock market. Don't sell when you see a good investment is down by 20 or 30 per cent. Don't be timid and act in panic.

Understand it is momentary and not perpetual. Taking the same example above, if you see prices down it's time to buy and not to fear and eject out of the investment. If you want more proof just rewind to May of 2006, the stock markets fell by 30 per cent or so and by now, much of that fall has been retraced. If you sold our earlier, you are probably still waiting to re-enter. Having fear is understandable but irrational behaviour happens due to lack of knowledge.

If you have to do something right, you got to have the learning and skills to do it right, else like they say don't play with fire that you don't understand.

Kartik Jhaveri, an expert at Financial Planning, is a Certified Financial Planner and a Chartered Wealth Manager. He may be reached at kartik.jhaveri@transcend-india.com