In life we buy many things. Most of the products we do not understand the cost or the benefits, so we just go along and buy them.

List it down. Toothpaste. Vegetables. Fruits. Clothes. Electricity. Soap. Timeshare. White goods. House. Travel. Car. Doctor’s services. …..let us assume that the list runs to about 100 items. Or say 500. Does not matter.

However one thing WE THINK WE UNDERSTAND is the financial products that we buy. So a few of us (say about 1% of the investing population) – they over analyze the cost of mutual funds, life insurance policies, pension plans, …and come to some good, and many times dangerous conclusion. OBVIOUSLY WRONG.

Not all decisions (even in finance!!) can always be reduced to money terms. For me a good and competent fund manager is worth paying an extra price.

Then we hit a website that makes an attempt to teach us about mutual funds, insurance, banking, financial planning, et al. Great.

So we spend 2-3 hours a day for a week and promise ourselves that we will spend 2-3 hours a week on our personal finance. Great.

Let us now twist the tale. You meet my friend Siddarth and he tells you that the vegetables that you eat are loaded with pesticides. So please grow your own vegetables in YOUR own house. If you have a terrace, great, you can really get going.

So if you do spend about 3 hours a day for the next week, and then about 3 hours a week for the next 52 weeks the following will happen:

– you will grow spinach, coriander, ginger, lady’s finger, tomato, ….et al in your OWN HOUSE.

– you will decide to use ONLY need as a pesticide

– you will eat nice vegetables – and your children will not waste them (they are involved in the growing, no? )

– your health with improve

– you will surely fee more invigorated

– you will attend ‘Urban farmer’ seminars, read websites, etc. and IMPROVE AS A FARMER

– I can assure you you will SAVE MUCH MORE THAN WHAT you saved in trying to select the right financial plan for yourself.

Er…what about finances? do not break into a sweat, just put money in an index fund. Take a term insurance. Period.

THEN START SAYING NO.

HA!!

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  1. Last Line is real punch for many Financial Planners and Agents. You will be getting their curse for simplifying peoples financial plan. LOL.

    One of my Friend who has basic knowledge on MF and Equity. He pinged me that somebody is trying to sell Make in India Fund from Birla very hard. Is it worth buying? I said ” No NFO at this moment and Increase your SIP in existing performing fund rather than ” Unknown Angel”. Agents are very specialized in selling , nobody escapes from it. Otherwise, we should say “No” very easily.

  2. i still remember a funny incident when i bought my lic term plan 5-6 yrs back before all these online things became famous.

    the sales agent eagerly explained benefit illustration of some great product with tables and lot of graphs.

    when i told i want term plan only he got shocked. he called his boss on mobile and told this fellow wants only table 190.

    i could clearly hear his boss shouting did you tell about plan so and so…show the returns table say he wont get any returns in 190 etc etc.

    the guy finished the call and said sir i checked with my boss term plan is waste. what i am suggesting is best. please listen to me.

  3. quote – You meet my friend Siddarth and he tells you that the vegetables that you eat are loaded with pesticides. So please grow your own vegetables in YOUR own house

    I met my friend Buddha and he told me all cows are injected with oxytocin and milk is loaded with harmful hormones especially to young girls and ladies. So please buy a cow and maintain it on the terrace of your high-rise apartment in the heart of the city. They can feed on Siddarth gardens.

    quote – Not all decisions (even in finance!!) can always be reduced to money terms

    personal finance blogger – a person who knows the price of everything and value of nothing.

  4. Apparently you do not have much expertise in growing vegetable at your OWN HOME for your DAILY consumption. Yours estimates, expectations and feasibility are way off.

  5. “For me a good and competent fund manager is worth paying an extra price”
    or
    “just put money in an index fund”

    Historically Index Funds have out performed Mutual Funds right? Subra Sir are you still saying it’s better to pay extra for competent fund manager?

    Also how can a common man find a competent Fund manager?

  6. @Ravi.. In India, historically index funds have not given as much returns as active funds.. So it is better to go for actively managed funds.

  7. @Anshuk Jain, Index funds are NOT supposed to give as much returns as active funds. They are called index funds because they passively track the index (with tracking errors).

    The idea of index funds is that since they are passive they don’t involve decisions taken by fund managers which could be right or wrong. But it’s almost guaranteed that the index will go up in the long run and so you will outperform most active funds over the long term (at least in developed markets).

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