Do I need an adviser?
Yesterday I was on The Money Show with Mubina Kapasi – on ETNow and as usual there were many people asking many questions. Of course this person did not even ask whether he needs an adviser. He was confident of investing this amount….here see his query:
Hi There, I am 54 years old. I have sold a real estate for 9.5 CR and would like to create corpus for my retirement. my investment horizon is 10+ years. my objective is not only some growth but also capital protection should there be a prolonged down turn in the equity markets. I have researched a little and would like to invest as follows into direct plans:-
2CR AXIS BLUE CHIP
2CR ICICI BALANCE ADVANTAGE
2CR NIPPON BALANCE ADVANTAGE
1.25 CR FRANKLIN ULTRA SHORT TERM
1.25 CR HDFC LIQUID FUND
1.00 CR SOVEREIGN GOLD BONDS
Obviously, he is smart enough to know that there are these options available. He must have been “advised” by somebody in some forum saying “you do not need a financial advisers, because advisers cost money”.
I wish this man knew the cost of investing without an adviser, before he compared it to investing with professional help.
Of course I could tell him “yes, all these funds are good and you should invest”. It is fairly obvious that he got Axis Bluechip – clearly he has seen the last few quarters performance. Does he have the maturity to know that he has to see pedigree of the fund, see how much is the benchmark hugging, the cash on hand….just too many factors.
How would I go about doing it? Well I would start by putting the whole amount in 3 liquid funds to start with. The whole process of investing need not be done in the next 2 hours, it could take 2 weeks or even 2 months. For a person who has not seen such an amount it could be traumatic. However he could be having this “lottery mentality” – this money came free so I can do what I want.
What if his retirement needs are only Rs. 3 crores – apart from the nice apartment that he has.
What if his wife wants to spend a little portion of this windfall and is not keen to leave so much in meaningless paper assets.
An IFA has to spend time with this man..and his wife…about their goals, etc.
Imagine giving some advice while on TV…and changing my mind ……next Wednesday!!
You must watch what I told Mubina Kapasi…as and when ETNOw puts it up…
Lalit Nair
Subra Dude , chill . don’t patronise yourself and with due respect ….for all you know this guy might be already in consultation with an advisor or 2 and he is just cross checking. How do you know he has not already subtracted the amount his wife wants to spend ? You need to give these tv show advises very generally and for once also , for heavens sake do you believe this guy Or for that matter anyone with this kind of money is likely to blindly follow what you say on these kind of TV shows ? Can’t blame him. Or anyone these days. what is the odds of finding the right advisor ? and what is the odds of that advisor given to you is unbiased and is good advise ? almost every one is trying to gyp someone these days hence you can’t blame anyone for being too careful with this kind of money.
Karan
Please share the link!
Anand Narayanan
As usual amazing, out-of-box thinking and examples. I hope the legacy of such quality blogs lives for ever. Very thought provoking points. Hats off!! I think the dynamics, government policies, interest rate, investment climate all being unpredictable, it is difficult to chose a very fixed path and follow-it. Like a ship (which doesnt travel straight) adjusts its sail and direction till it reaches its destination. In similar fashion, it is indeed very necessary to tweak the investments as per the changing investment climate. Few months back I was contemplating to keep a large chunk of money in liquid fund to milk monthly income. However, the drastic downward journey of the interest rate has now oscillated my thinking from pulling out whatever is in there to other better avenue, which provides inflated adjusted returns. Hence, as you have been rightly saying “I dont know”, I would like to rather say “it all depends”.