03 Apr Why going direct is hazardous
When we fly in an aeroplane, besides paying for the ticket we have hardly anything else to worry about. Isn’t it?
If the weather is too bad, we may perhaps decide not to fly. But this too isn’t such a big concern most of the times because the airline is the best judge to make this decision; to fly or not to fly.
There are several things which are vital for having a safe flight and we take these things for granted.
We take for granted that the airlines would have done due diligence in hiring the pilot and the crew.
We take it for granted that they would all be very courteous and helpful.
We take it for granted that the airlines will provide food in the aircraft and that the food would be healthy.
We also take it for granted that the engineers would have ensured that the air craft has been serviced regularly and maintained well.
We take it for granted that the air traffic controllers will guide the plane safely all through its path.
Investing in a mutual fund under professional advice is just like that.
No hassles for a small price and you can take several things for granted.
On the other hand imagine if it was your responsibility to ensure that the pilots were competent, the engineers were competent, the maintenance equipment was state of art and in good working condition, whether the maintenance was being done regularly as per standard operating procedure, whether the air traffic controllers were competent people and whether all their equipment was in good and sound working condition, whether the air traffic controller employees were well trained etc.
If you did all the above then perhaps you could land up saving some money and also perhaps fly in business class comfort at a lower cost.
But then how many of us are even capable of doing all of the above things.
Moreover, for most of us the risks would increase manifold because one blunder from our side and it is the end.
Now, this is like buying stocks or even buying mutual funds directly.
If you get it right you are likely to make better returns and save some money but if you make a blunder it is all over.
We all have our core competencies and will make maximum wealth by focussing on our competencies.
Can anybody else from a different field ever do our work?
Then why should we suppose that we can do the fund manager’s and the financial advisor’s work.
What is it that makes us believe we can beat these experts at their core competencies;
Let’s respect experience, let’s respect competence, let’s respect education and let’s pay a small price for getting these services.
Invest through mutual funds under guidance and stay away from stocks and direct investing.
It just does not work that way.