The stupidest question that MOST investors ask their IFA HAS to be this question has to be “what return will I get” or “kitna return milega” ?

Most IFA struggle with this question. It takes a very mature IFA and mature investor combination to hear the truth. The truth is “I do not know”. Any other answer is a guess, and keeps both the parties happy.

INVESTOR’S DILEMMA:

Imagine if his colleagues, wife, boss….somebody asks him can he say “I do not know”? His ego is impacted, is it not? So he has to ask.

IFA’s DILEMMA:

The IFA does not really care, but he has to answer this question. He feels (the lesser ones) “If I can’t answer this simple question do I deserve my fees?”. Sounds stupid? well, welcome to the IFA world. Seriously that is what they think. There is one IFA who told me “If i cannot create an advisor’s alpha why should I ask for fees…how is it justified”.

THE TRUTH is slightly different. Nobody knows in 2019 how much the fund will give in returns in 2029! Taking a punt on that number is no purpose. More important is that you understand the importance of putting a lot of money for a much longer period is you are clear about your goals.

If you hear an IFA telling you that if you invest Rs. 5000 per month for 10 years you will have Rs. 12L for your goal in 2029 at 15% return, and another Ifa telling you that investing Rs 8000 per month for 10 years you will have your Rs. 12 L at the end of 10 years…(Just some numbers, not calculated) – listen to the second guy. Investing more and for a longer time is far more sensible.

Take a different example. To reduce weight you need to eat LESS and eat SENSIBLY. If you get a trainer who tells you “eat whatever you want…I give you an exercise plan that will burn all the calories” vs a Trainer who says “eat sensibly, go for a walk in the morning, and do gymming for 3 days in a month doing some moderate exercises, you will reduce your weight and will be healthy….Even here it is the second Trainer who is giving you correct, and doable advice.

When you plant a tree do you ask the seed “How many mangoes will you provide 4 years from now?” . We just plant a seed and look after the plant till it becomes big enough to look after itself.

Like Aamir khan says when a kid is born we decide “he will become a doctor…or engineer”. The truth is WE DO NOT KNOW.

We invest in equity, we save in debt instruments, and gold. We buy RealEstate to use – as a house, garage, office, godown….whatever. Sometimes we earn rent, but this is not an investment, it is just a chance.

So before you ask your IFa “kitna milega” at least do enough home work to know how much returns you are getting on your existing investments, then ask.

Till then, keep your mouth shut.