Suppose you are hungry while roaming around in a mall (or a road), what do you do? Largely you eat at the nearest attractive joint. Correct?

Well if you had a ‘food planner’ he would advise you –

See your Goal statement. You are hoping to lose weight, so curb the hunger. This hunger is psychological, not physiological.

If you insist he would say ‘Paani puri has too many calories’ ‘Gulab Jamun, OMG!, …he would make you check the calorific value of the food, then compare the impact of the calories on the overall gain of weight. Then compare prices of similar food available nearby – and decide to walk 0.6 km to a different hotel and have a salad.

Similarly if you wanted to buy a car what do you do? Your HR guy just walked to you with a letter and said ‘You are now entitled to a car where your EMI is Rs. 24,000. So you go to a Toyota or Merc dealer (ok pre-owned Rolls will also work). Then you call up a couple of friends who say ‘Honda Civic is a good car at this EMI’ – then you go and buy this car. Perhaps your HR guy has a cut with the dealer so suddenly he calls and says 22 CDs are thrown in free with the player, you succumb. Most of those songs you cannot hear more than once!

When your HR guy calls you in the month of Dec and says ‘You have given a commitment of investing Rs. 84,000 – what have you done? The immediate reaction is to find the friendly neighborhood agent and ask him for some form. ULIP, MF, …kuch bhi chalega..tax bachna chahiye – so there goes Rs. 84,000 in 2-3 schemes of ‘tax-saving’. The questions are simple ‘Achha hai na? Aap ko kya lagta hai? Where should I sign? Here is my cheque, here is my pancard….and ha everybody is happy. However there are some ‘informed’ investors who like to ‘diversify’ so they ‘know what to do’. They put Rs. 10,000 in 8 funds or Rs. 40,000 in ULIP (full equity) and Rs. 44,000 in 3 or 4 ELSS schemes. Wov.

As a finance professional you feel that clients should read blogs, magazines, use their own brain, understand over-diversification, ..blah blah….blah. So boring, and also followed by ‘Past performance is not an indicator of future performance’. Like my friend says about a fund manager ‘His past NON performance is not an indicator of his future NON performance, but he surely tries hard’. In fact this friend did a long study of hedge funds and said “There are 20 good hedge fund managers but there are 1000 schemes, and no scientific basis to judge whether there is any co-relation of past performance and future performance”. His study on wealth destruction by some of our ULIP schemes and terrible mutual fund managers was shocking but not available for public discussion.