Investment Returns Verses Investor Returns..!
by Mr. B. Padmanaban, CFPCM
Certified Financial Planner, Chennai
To talk about any
investment you need to show cause how it was done in the past, though everybody
knows that past performance may or may not guarantee in future.
All our future
actions are the influence of our past experience whether it is small decision
or the big decision, we can not ignore the past data or experience.
The point is
how to understand and take it to your advantage is the real success one can
achieve.
Knowing is one thing & Doing is different thing. We know many things but hardly we do 5% of what
we know which is good.
Most of the times we need somebody to push in order to
do few things in our life.
Imagine a situation,
we are all grown up adult and we know the importance of our job as well. If the
organization announces that you can come at any time and go at any time, hardly
very few will be at 9 am in the morning.
Our jobs are
interconnected, so we adhere to certain timing to take collective efforts to
grow.
Similarly walking and
avoiding junk food will be enough for one to stay healthy, but still we prefer
to go to GYM and do the work out after paying good amount of money apart from
traveling all the way which costs good amount of our invaluable time.
US stock market study
reveals that between the year 1994 and 2014 the S&P 500 benchmark has
delivered 11.11%, but the average equity investor made only 3.69%. This is
nothing but Investor behavior gap or Investor behavior penalty.
On top of it,
US market is more matured market and more than 70% of US citizens are investing
in stock market.
In India, 3 Years
before direct plan in mutual fund is introduced to address the informed
investor who knows everything to get a less expense ratio of about 0.5% to 0.6%
depending on the scheme they choose to invest.
To enjoy this, you will not get
any help from your professional adviser. Few investors immediately jumped into
direct class, assuming they will stay for 20 years and 0.5% in
20 years
is a good savings.
The mutual fund data suggest that average investor does not
stay for more than 3 years!!!
Unfortunately, mutual
funds are long term but not the funds as such. You constantly monitor which one
is doing well and which one is not, that is only possible by the professional adviser
who dedicated their life to this profession.
Assuming if someone is doing the
same, by investing good amount of time still it’s not worth than concentrating
in their own profession to grow multi fold.
If somebody invested
through professional adviser they will bridge the gap to greater extent even
they can supersede the average return by a good selection from the professional
adviser.
Since, we do not have
the Indian market data; I need to explain it with US.
Having said that, investor’s
behaviors are more or less common when it comes to behavior and emotions are
concerned. The recent data which published yesterday Economic Times also
clearly mentioned that many investor take decision based on the little data
available.
Unfortunately Self Medication Will Never Work...
Trust me, no
investment is such a transparent, low cost and high liquidity, tax efficient
combined with superlative returns. It is for us to understand and grab it to
create huge wealth for the years to come.
 |
B. Padmanaban, CFPCM
Certified Financial Planner
|
B.
Padmanaban, CFPCM
Certified
Financial Planner
98843 49173
No comments:
Post a Comment