Sorry this is just a click bait. In the investing world of today you surely do have a lot of choices.

You can invest in an AIF, A pms, Mutual fund, etf, …or of course you can invest in direct equities or even better you can fund start ups.

You can invest in mutual funds with the help of an IFA or an RIA or if you know how to invest you can go direct. You can smartly invest through an app or go by the sam app and invest in a Regular plan.

I keep telling people that investing is like walking into a restaurant and picking up the menu card. If you choose a dosa and I choose upma, it does not mean that the other dishes are bad. It is just that we were in a mood to eat dosa and upma.

Similarly in investing. I have friends and family who invest Rs. 5 crores in a start up and I know people who would place money only in psu banks. I do not think anything is “correct” or “wrong” about this. Some people are not keen to learn and understand how investing works. Indexing is a good product for such people. However, there are many people who will read, learn, experiment and therefore invest in direct equity. Fairly obviously such people will hope to create alpha – many will, but most will not. Direct investing is not as easy as it sounds. You need to have a philosophy statement, or have had the luxury of having started in the CCI era. For many of us the acquisition cost is so low that even mistakes can be easily kept under the carpet.

The more that people try to generate alpha the better it is for the index investors! Somebody using a high growth strategy will buy Hdfc bank. Somebody hoping that Namo will unshackle the PSU companies will buy Coal India. Some others may buy SBI. So each of these “alpha seekers” will make sure that the Index goes up. Suraj Kaeley recently did an article against Indexing https://surajkaeley.wordpress.com/2020/01/04/growth-mindset-the-key-to-multiplying-your-wealth/

You can find articles by (late) Parag Parikh, Chetan Parikh, Samir Arora – all saying that Indexing will not work. Actually they are saying that they can create alpha better than many others. SA of course runs a long short fund – and therefore strictly speaking not comparable to the index.

There are some people who will spend every minute of their spare time in analysing, reading, etc. and such people can do a DIY – Direct investing – the do it yourself model. Nothing rocket science but you need to have the discipline and the willingness to do all the paper work, and have a good understanding of investing and investing processes. I know one over enthusiastic lady who ended up paying a lot of capital gains tax because of a stupid switch done after 11 months of investing in an equity fund.

What if you invest Rs 5 crores with a person running a Venture capital fund? Well such a person surely does not need an adviser – he is capable of doing the analysis than what an ordinary IFA can do. So again here is a place where the IFA has no role to play…

So from my experience I feel that some people are capable of being a DIY investor, some need hand holding. Some will not accept the hand holding – Index investing is for them. Some of us will pretend that we can create alpha – but we may not even have a constant comparison mechanism. We may hide behind saying “hey this is enough to meet my goals.

Go make your own choice and please, use your brains.