When I posted a checklist for DIY investors: What it takes to do your own financial planning, Ashal Jauhari had the following to say. I would like to think he gave vent to his frustrations (about time too!):
“Dear Pattu Sir, I’m in DIY mode. Please tell me the BEST Term plan and the BEST Health Plan to purchase. Please suggest should I invest in HDFC Top 200 or not. How about keeping money in FDs under wife’s name? I want to crorepati in next 20Y………………..”
I don’t think, even after this open invitation from you (the above post) many ‘ll try to look into the deeper meaning of your post.
Thanks
Ashal
This is the sad reality of wannabe DIY investors. They either want the best solution or want ratification from a group of 'experts' for free.
Call it free lunch* and they are bound to get insulted.
- free now. The 'expert' will not be held responsible for post-dated repercussions.
1) If a financial planner or IFA says DIY investing is time-consuming, it is quite understandable. You don't expect barbers to admit that people can cut their own hair. It is sad to see that even neutrals in the financial services believe this nonsense.
Until a term life insurance, health insurance, goal planning and alignment of investments are in place, DIY investing will take no more than 2 hours a week.
Lost investors are those who take longer because they are busy seeking tertiary opinions.
Once the basics are in place, there is literally nothing to be done unless you are a direct equity investor. For the mutual fund investor, an annual review in the initial stages (would take about an hour) and a quarterly review after several years is all that one needs.
If that is time consuming, then I am lost for words ... parliamentary ones that is.
Note: these are exaggerated figures. I take much less time than this. I get extremely irritated when people tell me that I am able to manage my finances on my own because I have time. Wrong!
I am able to write a blog, because I manage to make the time. DIY investing takes so little time that I don't event account for it. It is part of normal routine like eating and sleeping.
2) DIY investing requires neither intelligence nor analytical skills
All it requires is a maturity to focus on personal needs - one at a time. Sure, DIY investors pick up a bit of jargon and a bit of math down the line. This is incidental and not a requirement.
Lost investors are those who over-analyze a problem
Example: 'Where do I invest my emergency fund?'!
3) DIY investors need not, rather should not, be personal finance enthusiasts.
This is utter nonsenses and often the root of all evil. All a DIY investor need to do is to take one step at a time. Identify one action item and work on it.
See more about this: Personal Finance Essential for Young Earners.
You don't need to read books like inedible investor, rich step-mother, poor step-mother. You don't need to read newspapers, TV, blogs, join forums etc. etc.
All this activity will only distract you from your goal: taking meaningful action
Lost investors are those who do not recognise the importance between knowledge and information.
4) I completely agree when someone from financial services says, most investors need hand-holding. These are the investors who get confused about product selection (among other things).
Thanks to the friendly neighbourhood insurance agent and the banks relationship manager, investors are wary of seeking professional help.
Therefore, unfortunately for the IFA or financial planner, the investor needs hand-holding to seek professional help - they don't know which hand to hold and when!
I can definitely afford to say that 'I don't trust anyone with my money' provided I can trust myself with my money.
Lost investors are those who neither trust themselves nor professionals to get the job done.
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Pattu sirs, first article where no maths is involved and no calculators attached :-).. Just kidding sir... I am an eternal optimist.. Migration will happen but will take time with the help of blogs like subramoney, free fincal and AIFW.
Pattu sirs, first article where no maths is involved and no calculators attached :-).. Just kidding sir... I am an eternal optimist.. Migration will happen but will take time with the help of blogs like subramoney, free fincal and AIFW.
The comparison with the barber reminded me of a faint memory, where you had a plan to learn trimming your own hair. Indeed a very good example.
The conflict of interest doesn't let them to encourage DIY investment. Certainly the breed might have a little better understanding of the terms but not everyone need to know all in detail before investing. Off course we don't hire an electronics and communication Engg to understand whether we need a CDMA phone or a GSM phone. I think a DIY inveator is self sufficient as long as he is able to define his goals and find a vehicle which is fairly suitable to reach the destination. A travel agent doest drive the vehicle in any scenario and accidents can happen with or without an agent
Yes I fully agree. Thanks
The comparison with the barber reminded me of a faint memory, where you had a plan to learn trimming your own hair. Indeed a very good example.
The conflict of interest doesn't let them to encourage DIY investment. Certainly the breed might have a little better understanding of the terms but not everyone need to know all in detail before investing. Off course we don't hire an electronics and communication Engg to understand whether we need a CDMA phone or a GSM phone. I think a DIY inveator is self sufficient as long as he is able to define his goals and find a vehicle which is fairly suitable to reach the destination. A travel agent doest drive the vehicle in any scenario and accidents can happen with or without an agent
Yes I fully agree. Thanks
I like because i did not read much , though you may mean otherwise :"You don’t need to read books like inedible investor, rich step-mother, poor step-mother. You don’t need to read newspapers, TV, blogs, join forums etc. etc.". i feel , i am not 'not lost investor' at least till now!
I like because i did not read much , though you may mean otherwise :"You don’t need to read books like inedible investor, rich step-mother, poor step-mother. You don’t need to read newspapers, TV, blogs, join forums etc. etc.". i feel , i am not 'not lost investor' at least till now!
Hahahaha, "books like inedible investor, rich step-mother, poor step-mother".
This line is amazing sir. Very rare to find comic side of you in the posts.
And in my view DIY should always be backed by CIJ (Continuous Improvement Journey) !!!
Hahahaha, "books like inedible investor, rich step-mother, poor step-mother".
This line is amazing sir. Very rare to find comic side of you in the posts.
And in my view DIY should always be backed by CIJ (Continuous Improvement Journey) !!!
Hi Pattu, am asking a question unrelated to the current topic. I have recently invested in Quantum Tax saving Fund. Within a few days of investing I got a call from them asking me to sign the FATCA form and send it to them. According to them this has been introduced in September this year and only for new investors .I have not got calls from any other mutual fund in which I am investing. I am a resident Indian .Do I need to sign the form? I think India is yet to sign the tax agreement with USA .Please advice. Thanks.
Sorry. I can't help in this regard. I am not aware of this rule.
Dr. Uma Shashikant confirmed that RI do not need to sign the FATCA.
Thanks a lot for this information pattu!
Hi Pattu, am asking a question unrelated to the current topic. I have recently invested in Quantum Tax saving Fund. Within a few days of investing I got a call from them asking me to sign the FATCA form and send it to them. According to them this has been introduced in September this year and only for new investors .I have not got calls from any other mutual fund in which I am investing. I am a resident Indian .Do I need to sign the form? I think India is yet to sign the tax agreement with USA .Please advice. Thanks.
Sorry. I can't help in this regard. I am not aware of this rule.
Dr. Uma Shashikant confirmed that RI do not need to sign the FATCA.
Thanks a lot for this information pattu!
Thanks Krishna
Thanks Krishna
Not the first, Guru, but yes there are many of them!
Not the first, Guru, but yes there are many of them!
HI Pattu - agree wholeheartedly. More so BECAUSE i have waded through those inedible investor and rich stepmom poor stepmom books (and many more of the same ilk).
But there was a reason.
Till I came across these books (in early 2000) neither my parents nor relatives nor school nor college nor TV had told me about why understanding finance is critical. The only 'investment' I had heard about from parents and relatives were FD, PF, KVP, NSC and LIC. I was told we couldn't afford to buy any real estate. I was also told, only greedy people go to stock market and lose money there. In school there were sums on 'profit and loss' or'shares and debentures' in math syllabus but to pass exams we just had to memorize the formulae. In engineering we had one course in Economics (in only one of eight semesters) where the prof talked about 'means of production', some curves and equations.
These books showed me 'why should I care to understand about finance'.
On the DIY side, I have found it to be very difficult to stand in front of my family and say - I screwed up by taking wrong calls; as a result you will not be able to do this and that....much better if there is another person to blame - "My advisor/broker/agent/RM screwed us up".
I found that it takes a lot of courage to DIY.
Thanks for sharing your experience. You are spot on. DIY requires courage.
HI Pattu - agree wholeheartedly. More so BECAUSE i have waded through those inedible investor and rich stepmom poor stepmom books (and many more of the same ilk).
But there was a reason.
Till I came across these books (in early 2000) neither my parents nor relatives nor school nor college nor TV had told me about why understanding finance is critical. The only 'investment' I had heard about from parents and relatives were FD, PF, KVP, NSC and LIC. I was told we couldn't afford to buy any real estate. I was also told, only greedy people go to stock market and lose money there. In school there were sums on 'profit and loss' or'shares and debentures' in math syllabus but to pass exams we just had to memorize the formulae. In engineering we had one course in Economics (in only one of eight semesters) where the prof talked about 'means of production', some curves and equations.
These books showed me 'why should I care to understand about finance'.
On the DIY side, I have found it to be very difficult to stand in front of my family and say - I screwed up by taking wrong calls; as a result you will not be able to do this and that....much better if there is another person to blame - "My advisor/broker/agent/RM screwed us up".
I found that it takes a lot of courage to DIY.
Thanks for sharing your experience. You are spot on. DIY requires courage.
Its time to answer queries where someone has done initial analysis and asking for feedback of the analysis. Not just, can you give me 1 KG fish for this week, will come again next week. All along you have been teaching how to catch fish & no most are not learning that!