Are You a 'Lost Investor'?

/ M. Pattabiraman / @pattufreefincal / 27 Comments

Published: October 20, 2014 at 9:39 am

Last Updated on September 6, 2019

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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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
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