Investment Returns Verses Investor Returns..!

Investment Returns Verses Investor Returns..!

by Mr. B. Padmanaban, CFPCM
Certified Financial Planner, Chennai

To talk about any investment you need to show cause how it was done in the past, though everybody knows that past performance may or may not guarantee in future.

All our future actions are the influence of our past experience whether it is small decision or the big decision, we can not ignore the past data or experience. 

The point is how to understand and take it to your advantage is the real success one can achieve.

Knowing is one thing & Doing is different thing. We know many things but hardly we do 5% of what we know which is good. 

Most of the times we need somebody to push in order to do few things in our life.

Imagine a situation, we are all grown up adult and we know the importance of our job as well. If the organization announces that you can come at any time and go at any time, hardly very few will be at 9 am in the morning. 

Our jobs are interconnected, so we adhere to certain timing to take collective efforts to grow.

Similarly walking and avoiding junk food will be enough for one to stay healthy, but still we prefer to go to GYM and do the work out after paying good amount of money apart from traveling all the way which costs good amount of our invaluable time.

US stock market study reveals that between the year 1994 and 2014 the S&P 500 benchmark has delivered 11.11%, but the average equity investor made only 3.69%. This is nothing but Investor behavior gap or Investor behavior penalty. 

On top of it, US market is more matured market and more than 70% of US citizens are investing in stock market.


In India, 3 Years before direct plan in mutual fund is introduced to address the informed investor who knows everything to get a less expense ratio of about 0.5% to 0.6% depending on the scheme they choose to invest. 

To enjoy this, you will not get any help from your professional adviser. Few investors immediately jumped into direct class, assuming they will stay for 20 years and 0.5% in 20 years is a good savings. 
The mutual fund data suggest that average investor does not stay for more than 3 years!!!

Unfortunately, mutual funds are long term but not the funds as such. You constantly monitor which one is doing well and which one is not, that is only possible by the professional adviser who dedicated their life to this profession. 






Assuming if someone is doing the same, by investing good amount of time still it’s not worth than concentrating in their own profession to grow multi fold.
If somebody invested through professional adviser they will bridge the gap to greater extent even they can supersede the average return by a good selection from the professional adviser.

Since, we do not have the Indian market data; I need to explain it with US. 
Having said that, investor’s behaviors are more or less common when it comes to behavior and emotions are concerned. The recent data which published yesterday Economic Times also clearly mentioned that many investor take decision based on the little data available. 

Unfortunately Self Medication Will Never Work...

Trust me, no investment is such a transparent, low cost and high liquidity, tax efficient combined with superlative returns. It is for us to understand and grab it to create huge wealth for the years to come.
B. Padmanaban, CFPCM
Certified Financial Planner

B. Padmanaban, CFPCM
Certified Financial Planner
98843 49173
padmanaban@fortuneplanners.com

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