I know I might get lynched if I answer this with a straight, clear ‘yes’ or ‘no’ but that will mean I will be going away from my trademark style of just asking questions. So let me not answer this question at all. Let me just tell you things from my experience and why I love to disagree with the mathematical, excel guru who says ‘all of us can do all things’. I do not, and cannot.

Having spoken to many investors, money managers, advisers, and having read Behavioral finance, and of course William Bernstein, I think I want to look for the following in a person before he/she starts looking after their own money:

  1. Interest in the subject: a man/woman who does not like cooking cannot. He is better off marrying somebody interested in cooking, ordering food from a kitchen, hiring a cook, …he WILL NEVER EVER LEARN IT. So the first thing in any field is to like doing what you are doing. So answer honestly: Do you REALLY enjoy comparing fund performances, calculating the Income tax, switching funds, filling those really painful forms, download statements, etc. I MEAN THE PROCEDURAL part of investing. If the answer is no, you can stop right here. Many people like the intellectual part of fund selection, etc. but do not like the process. You need to like/love the process because you will have to do it for a very long period of your life.
  2. You need patience: By the tons. When the market goes down you are fearful. When you are fearful AND the market goes down say another 5%, you panic. When you panic you palpitate, heart rate increases, AND you make irrational, and stupid mistakes. Once the panic stops you might wonder how you did it, but it does happen, does it not? So can you stay calm and avoid FEAR – which leads to panic. Ditto for euphoria. In other words, what is your pulse rate?
  3. You need not be a professor of math or physics, but it is nice to have arithmetic skills above the ordinary. Compounding is simple to understand but about 99% of the worlds population has no clue about it. The fact that we have such a small equity investing population in this country is enough proof. Advisers cribbing about commissions is another proof. No mutual fund has started a SIP exclusively for IFAs asking them to do a sip out of their commissions is another amazing proof. Have the asset managers used compounding SENSIBLY in their communication ever? do you need more proof. Ask yourself have you stopped doing mental math? Oops bringing in some behavioral finance too..
  4. A lot of reading – especially of finance books – especially Financial fraud /Bubble / psychology. Amit Trivedi has done a good job in ‘Roller coaster…’ so go and make a beginning. There are other books on the financial bubble history, but for a starter Amit’s book is a good introduction to the bubbles. I am supposed to do a book review, but I am just being lazy.
  5. The emotionally stable environment. It is one thing to keep your cool, but if your parents, wife, children do not allow you to create the environment necessary to be a good investor, you need to sit and TALK with somebody who will understand you. Blogs, websites, fb groups help sure, but they cannot hold hand the way a ‘good’ adviser can / should.

I could keep going on…but to me these 5 are the most important…if you do not have ALL OF THIS, perish the thought of being  a DIY..IT SOUNDS nice but it is easier said than done. However when you are looking for an IFA now at least look for all the above characteristics. Also remember it is a partnership, and the ratio of the partnership will depend on the ratio of the effort…

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  1. While some points may be more imp than others..
    But would you mind considering a point that a family would be keen to manage the financial mess that one would create because of his passion ?

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