1. Keep investing for a minimum of 10 years (by tracking investment for a year), do not invest to make a down payment to buy an asset.
I thought when a client says he will invest for 30 years, I believed the client Actually when a client says he will invest for a long time he means 4-5 years, or till he can use the money for making a down payment to buy an asset! Out of 59 clients that he has only 6 have SIPs running for more than 10 years…even though all of them had said ‘we are in it for the long term’.
He says he would have preferred a 30 year product with a 10 year lock-in!!!
4. Do not go to mutual fund only because it is Low Cost, Good Management Matters even though it can be of HIGH cost.
In the period 2003-8 I had also got carried away by low cost products! Only in 2008 – about 13 years of starting the business did I realize that good fund management is far, far more important than lower costs. Frankly Templeton India Growth fund at a HIGH cost is superior to many lower cost equity funds. After all the client is interested in total ABSOLUTE return, not comparative return or a Q on Q ranking as the media thinks.
http://www.subramoney.com/2013/01/personal-financial-planning-is-tough/
I thought when a client says he will invest for 30 years, I believed the client Actually when a client says he will invest for a long time he means 4-5 years, or till he can use the money for making a down payment to buy an asset! Out of 59 clients that he has only 6 have SIPs running for more than 10 years…even though all of them had said ‘we are in it for the long term’.
He says he would have preferred a 30 year product with a 10 year lock-in!!!
4. Do not go to mutual fund only because it is Low Cost, Good Management Matters even though it can be of HIGH cost.
In the period 2003-8 I had also got carried away by low cost products! Only in 2008 – about 13 years of starting the business did I realize that good fund management is far, far more important than lower costs. Frankly Templeton India Growth fund at a HIGH cost is superior to many lower cost equity funds. After all the client is interested in total ABSOLUTE return, not comparative return or a Q on Q ranking as the media thinks.
http://www.subramoney.com/2013/01/personal-financial-planning-is-tough/
