What makes an investor happy, unhappy or plain miserable…I have often wondered about this..and here are some common characteristics…of miserable investors:

  1. They Pay too much attention to detail: They are new in the field, they join a few groups, read all magazines, news papers and can throw a lot of jargon. It does not matter that they started at 54 for investing for their retirement. They want to make up for 30 years of not investing with all the ‘knowledge’ that they are gaining DAILY. So ‘Subra Sbi bluechip is performing better than Franklin India Bluechip for the past 2 quarters..should I shift a portion of my money?’ or ‘Is Icici Pru Bluechip better than Discovery?’ or ‘Why is Franklin India balanced fund not better than Icici Dynamic’. Apart from this they will also know that from past Tuesday till today their portfolio fell Rs. 5,00,343 – and ‘If I had just shifted from Hdfc Top 200 to Mirae Emerging bluchip I would not have lost so much’. They have a longish portfolio – say 15 schemes for a portfolio of 12 lakhs and an amazing justification for each and every scheme in which they have invested. They may even have a few shares of many shares and justify it as Value, dividend yield, good growth, …blah blah…so there is really not much I can do. I sympathize with their IFAs because I have to only reply to emails or phone calls – the IFA has to justify the choice of portfolio, justify the inaction (or worse, action), and there is so much of discontent all around. Check whether you are a Junkie for detail. Seriously, it does not help. Relax, all the above funds are good funds for the long run. Even Hdfc Top 200, even if their communication skills are zilch.
  2. They do not invest enough: They have no ability to increase their investment into equity! They will tell you “I and my husband save Rs. 150,000 p.a. in PPF and Rs. 50,000 in NPS” however their SIP in equity funds which was Rs. 5000 in 2010 has grown to just Rs. 7000 per month in an equity fund. Now if you want your target to feel easier, YOU need to save more money and INVEST the same in equity funds. If you are putting 33000 per month in debt schemes and Rs. 7000 in equity schemes..chances are that the weighted average return CANNOT exceed 9% p.a. at best…even assuming a great and fantastic bull run! Try telling them that they have to increase exposure to equity and they will look at you like you are from Mars. So it is a complete waste of MY time and YOURS if you are a debt oriented investor. Seriously I cannot increase your yield. If you invest in good equity or good equity schemes, you do not need me – the market makes your money grow, not bloggers or advisers.
  3. They are performance Junkies without a personal goal or target: they are the Hares in the hare and tortoise race. They are the typical male aggressive Alphas constantly seeking daily, weekly, monthly alphas. So if they are in a fund that has not given them alpha – as seen on Television or read in a wassup group, they panic. So immediately they will buy a Mirae, Sbi bluechip, Escorts growth fund, a very expensive bond fund, some direct equity in Sun Pharma or Biocon. Typically they feel that if they keep looking at their portfolio on a daily basis, they cannot lose much. They have high Portfolio Turnover, itchy hands and itchy fingers and mentally they know their DAILY gain or rise in their portfolio. If their friends have invested in schemes which have performed better, they immediately invest in those schemes also. This is to attend the next party and say “I have invested in XXXyyz fund which has done well over the last quarter”. Actually they have invested AFTER THE GOOD performance has been reported. Of course they know that they should not be investing in yesterday’s winners because they read it in Subramoney.
  4. They have an extremely long, wrong, over lapping and unfocused portfolio – this is actually a fall out of points 1 and 3.
  5. They usually under-perform the sensex by a mile.

I have found 3 graduates from the top most management institute, 4 Chartered Accountants, 14 peons /driver / security guards …among the most satisfied investors. They look at their portfolio maybe once a year…keep doing their SIP..occassionally top up the SIP..and know that they require the money a few years later – maybe a decade later..and those who can relax / meditate

 

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