Most people who come to my blog or buy my book have an agenda to get rich. And many of us keep saying it is easy, you need patience. Now let me tell you what REALLY happens:

  • Almost all the people I meet are convinced that they should start an SIP
  • Many of them start, many of them procrastinate

Now let me give you examples….

  1. One school teacher started a sip of X amount per month. Her husband was earning very well (NRI) and she was here with her kids. She had absolutely no financial problems, and did her sip for 10 months. All this happened in 2013. Then suddenly she stopped and withdrew her money. No clue why. I heard this story from her IFA. I know the teacher, she attended my training, but I did not pick up the phone to ask her ‘why’. Clearly something happened, and she has fallen off the train.
  2. One Gym trainer was told that SIP is like Recurring deposit and he should keep doing it – AND REMOVE MONEY whenever he needed it. Poor guy did not understand the 1% penalty for withdrawing within one year. This was a National level distributor with many of the shops had told him about this awesome scheme! When I saw his sips – he had 5 of them for small amounts (he said it made sense because his income fluctuated and some times he could not honour all of them). All his sips were in micro and mid cap schemes.
  3. ‘I want to invest for 20 years’ is what people say, and the average sip lasts 2 years or 3 years max. Then suddenly the investor develops cold feet and removes the money.
  4. I agree with you Subra I should not have removed my money from Hdfc Top 200 and Euity, but now that I have removed it what should I do? – many people have asked me this in the past 2 years. Sorry, but I have no answer.
  5. Many people who made a lot of money in the markets are people who lost their statements and had forgotten about their investment. I met one such person yesterday. He had done a Rs. 50000 one time investment in an ELSS in 2008 and suddenly found his statement yesterday. He called me. He had a 10 bagger in his hand, and was now tempted !!
  6. Sadly many people believe that one should ‘book profit’ in mutual funds. So if it has gone from Rs. 5000o to say Rs. 200,000, YOU should remove it and invest it elsewhere.

Can go on and on..but I am more and more convinced that if you do not do Goal based Investing, you will never make money in the markets – sip or lumpsum does not matter.

I would encourage IFA to charge a fee – you cannot predict client behavior. If they stay along for say 5 years, you can even consider returning the fees -post tax – but thinking you will make money because the client will NOT interrupt the compounding is wrong theory. Do not see it work unless the Ifa HAS A mature client. After all, the IFA makes money on an investment ONLY after 14 months of a client remaining invested! So this is the reason that an IFA does not get rich!!

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