Dreams and Investments: Lessons from "The Alchemist"

"The Alchemist" by Paulo Coelho, I know you certainly would have heard the name of this book and if you have even a tiny interest in reading books you would probably read this masterpiece. Three years back, I read this book for the first time, and ever since then I have been reading this book whenever I want to remind myself about my dreams.

This book is about a boy name Santiago who lives in Andalusia. He is a shepherd even though he knows how to read and write but he wanted to travel the world which is why he chooses to become a shepherd. The real story of the boy starts when he gets the same dream again and again in which he gets the treasure before the pyramids. One day he goes to a lady to understand his dream in detail. The lady tells him to go to Egypt for the treasure. The boy thinks it was a joke. But after some time, He meets an old king who knows everything about the boy, he tells the boy to sell all his Sheep and go to the pyramids to find his treasure. The boy accepted the king's advice and sold all of his sheep and start his journey for his treasure. In between, there were a lot of difficulties such as the boy lost all of his money three times and he had the thought of giving up many times, but somehow he sticks to his dream to find the treasure. In the end, he ultimately got his treasure.

What are the investing Lessons we can learn from this book?

Do not lose HOPE!

In investing, there will come a time when you feel that investing is not for you. There will be a time when you see no returns on your investment. But always remind yourself why you bought this investment, if the company or investment still has the same thing you invest for, have patience. You will find your treasure soon. For instance, in the book, the boy lost his money just after a few days of the journey, and he lost his hope to reach the pyramids for his treasure. Then, he thought about working in a Crystal shop and saving some money to return to their home and buy his sheep again. After working for a few months, he had saved enough money to return, and he somehow reminded himself about his dream and started his journey towards it again.

It is not ENOUGH!

Sometimes in investing, you will get an immediate return just after buying up the stock or company. Please do not think this 20% or 40% gain is enough for you if you can make a 10 or 20-fold return in the long term. For example, in the book, after saving some money and restarting his journey, the boy meet a woman name Fatima, He falls in love with her. Then he thinks, she is enough for him and she is the treasure for him. But Fatima reminds him about his dream. After that boy come across with the alchemist, who tell him that if he stops and becomes comfortable in life, he will regret it after some time and this regret won't let him sleep at night. Just like that if you believe that your investment would give you a multi-bagger return in the future, do not sell that for a small profit. If you do sell and never enter back at the right price. You will regret that and your children would say that if my dad would not have sold that investment we would be multi-millionaires.

Always plan for FUTURE UNCERTAINTIES....

In the story, when the boy is about to reach the pyramids, the alchemist ( a person who knows how to turn some material into gold) makes some gold for the boy to complete his journey, and he divides the whole amount of gold into three part, the first part he gives to the boy and the second he keeps for himself and the third part he buries that into the ground for the future use but the boy does not understand at that time why this man is burying the 1/3rd of the gold. Ultimately, the boy reaches the pyramids and start to dig the ground for his treasure all of a sudden some man come and think that the boy is hiding something in the ground and they start to beat the boy and they left him on the ground and take the gold from him that alchemist gave him. At last, out of these man, one comes and hints the boy about the treasure. Then the boy uses the hidden 1/3rd of gold to reach his final destiny and find his treasure.

Always Pay your TAXES!

After booking the profits in the investments like selling shares, mutual funds, real estate, or any other investments, always pay your taxes on time. I do not want to tell you why it is important to do it. In the book, the boy gives the 10% of the treasure to the lady he went to for the interpretation of the dream because he promised her to pay 10% share out of the whole treasure.