One of the most common Myth in investing is the idea that you must work with a financial advisor in order to make good investments.
Perhaps this myth has persisted for so long, kudos to marketing endeavor of financial advisory firms.
However, the reality is that investors who manage their own money are often able to perform better than those who work with a financial advisor.
If you’re still in the dilemma about whether or not you need a financial advisor to be a successful investor or reach your financial goals, consider these points.
Advisor Never Try to Beat the Market Performance
Financial advisors act more as a mentor, consistent guide, counselor helping each one of us set our financials goals, guiding us through tough times and persuading not to make emotional decisions.
Beating market is not actually advisor job.
You need to decide yourself if this mentoring service is worth paying 1% of the portfolio for every year.
Financial Advisors Charge irrespective of They Make You Money or Not
Advisory charges are not based on the returns they deliver on our portfolio but on the money we invest.
This means that we still need to pay him even if they lose the money you entrust with them.
While they will earn more if they are able to grow your wealth, at the end of the day, they get paid regardless.
Putting your Money in Index Fund will make you More Money
Simply putting all your money in Nifty-50 Index ETF, Bank Nifty Index ETF and forgetting about it for a long time will always give higher returns than paying a financial advisor for the advice.
Nifty-50 Index fund beats most of the financial advisor’s portfolio most of the time.
See below the Nifty bees & Sensex Performance through line chart since 2002 till date.
(Image taken from investing.com)
You can Make Better Returns by choosing individual company and investing for Long Term
Investing your money in index fund can be more beneficial and rewarding than hiring an advisor. Nevertheless, according to some of the world’s best investor, there is still an even better option.
you can wisely choose a small number of individual companies and buy them when they are deeply discounted by normal fluctuation of the market prices.
Choosing high-quality individual companies and waiting to get them in huge discount is by far the most effective investment strategy available.
This strategy is responsible for creating more millionaires and billionaires than any other investing strategy.
Learn How to Invest
I am sharing my learning from The Book called “Coffee Can Investing” by SAURABH MUKHERJEA, you can follow if it suits your investment plan.
Note – Do not consider this any recommendation.
Apply below filters to identify 10-20 High Quality Stocks and invest in them for long term.
1. Return on capital Employed (ROCE) should be greater or equal to 15 % at least.
2. Revenue growth Year on Year should be at least 10%.
3. ROE of 15 %
4. Sales growth should be greater than 10 % at least.
5. Market cap should be at least 1000 Cr.
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