'This is the difference between...': Edelweiss CEO Radhika Gupta compares new investors to toddlers taking a tumble

Radhika Gupta, CEO of Edelweiss Asset Management took an example of her son to explain the difference between new and experienced investors.

She likened new investors to toddlers learning to climb down from a bed. Just as a young child might impulsively try to dive head-first, a new investor might jump into risky investments without fully understanding the potential dangers, she said in a post on X.

"Like many children, when my son was less than 1, he attempted to dive off the bed, head first, until we ran to stop him.  At 2, he is much wiser and carefully climbs down, feet first.  Because he has heard our warnings, experienced injury, and just grown up. This is the difference between new and experienced investors," Radhika wrote in the post.

According to Gupta, this recklessness often stems from a lack of awareness about investment risks. New investors might be enticed by the potential for high returns without considering the possibility of losing money, she added.

However, just as a toddler eventually learns to climb down safely after some bumps and bruises, investors become more cautious with experience. They learn from their mistakes, witness market cycles, and become more attuned to the advice of experienced investors.

"The new investor is unaware of risk, often, and dives into scary territory.  With mistakes made and cycles seen, we listen and learn.  Like many things, investing is a process of growing up.   Getting hurt is the most effective teacher, listening to good advice the less painful one," Edeilweiss CEO concluded the post.

Gupta emphasizes that while getting hurt (making investment mistakes) can be a harsh teacher, listening to sound financial advice can be a much less painful way to gain knowledge.