We are culturally and socially conditioned to have more wealth. But depending on our life situation, how much money we may actually need, and the risk we can take, we should know where to draw the line.

Let me share real-life cases of three of our clients to show how greed can easily seep into our financial lives, and cause ruin later.

Target reached, but investments unsold

One of our clients is 45 years old and works at a private company. His net worth has grown exponentially in the last seven years. Having seen the gains in his portfolio, he recently expressed a desire to take more risks to achieve bigger goals in the next five years. We explained to him that his investment portfolio can grow without taking higher risks and that it takes time to compound wealth. We told him that the same goals could be met over 15 years and can be spread over this longer period.

Another of our clients is a 46-year-old techie. We have been working on his investment plan for the past four years. He is a patient investor. We planned for his daughter’s education goals and retirement corpus. His investment is in conservative funds to help achieve these goals.

About 10 percent of his basic salary goes towards buying his own (international) company’s stocks, which is listed outside India. During the last 20 years, he has accumulated a sizeable portfolio of these stocks. During a recent review, I suggested de-risking. I suggested that he sell some of his international shares, now that he had made significant money in it, and park the money in a safe investment. He refused and wants to let the stocks appreciate even more. I got reminded of a quote by Andy Stanley: "Greed is not a financial issue. It is a heart issue."

Another couple of clients of mine came to us 10 years ago to plan their financial future. We started planning for their retirement. At the time, they were a little under 50 years old. Their target was to accumulate Rs 7 crore in eight years. They began by investing a lump sum amount and then continued with systematic investment plans.

After eight years, they have accumulated in excess of Rs 7 crore. So, we asked them to reduce the risk levels in their portfolio. But, they wanted the corpus to grow even more and were not ready to bring down risks in their portfolio even after meeting their target.

These cases should help us in understanding the importance of emotional discipline in investment behavior. Warren Buffett has rightly said, "Only when you combine sound intellect with emotional discipline do you get rational behavior.”

When must investments be stopped?

Knowing where to stop is crucial to your investment journey.

-Values and habits don’t allow us to spend extravagantly, but the heart wants more and more. Challenge the stereotype that more is better. Live as per your values.

-Money is emotional. Changing your goal-post has consequences. It is not easy to be logical with money all the time, but it helps to be rational when it comes to money. Engage with a trusted financial professional to guide and handhold you.

-No one can catch the highs of the stock market. It is essential for you to stick to your target. If the target return or goal is achieved, start living that wealth.

Culturally, Indians are savers. There is always a save-more-for-the-future attitude. With the COVID-19 pandemic still around, we know how things are still uncertain.

Market-linked instruments can decline

While you can remain invested after reaching your goal, be rational about it. Question the logic behind the need for risk. Try and diversify your investments in such a manner that you comfortably beat inflation, and also allow the wealth to compound.