I have always wondered why people do a lot of comparative study while buying a fridge or a car but not too much effort is put before signing up on a ULIP for Rs. 50,000 a month for 30 years! You are giving up a big, big chunk of your life’e earnings to a product like this without applying your mind? You gotta be kidding, right?

How much could this be worth at the end of 30 years? well it could be worth Rs. 9 crore if you got a 6% return, Rs. 50 crores if you got a 12% return and Rs. 300 crores if you got a 18% return (which some advisers promise!).

WELL an IIT and IIM educated person working in India whose father used to be a pseudo banker (he did a lot of non core banking during his life time) told me when I asked them the logic of signing up for a ULIP. If anyone knows why people will give more time and thought to the purchase of a Rs. 30,000 fridge than a Rs. 300 crore retirement plan, please inbox me…please speak up.

Confidence and control would seem an important reason. Researching an appliance and buying it at a fair price brings a feeling of accomplishment, its fun doing it and it is a family activity. And if you did really make a mistake you can always use the Warranty. Even worse you can rationalise and use the warranty card !  But breaking down a mutual fund or analyzing a ULIP according to cost, portfolio, etc. will take some time, effort and has to be LEARNT. Listed shares? OMG thats the worst!

Instead, we hand investment decision-making to professionals — and that may be the biggest, costliest mistake of all. Especially when it comes to doing valuation when the market is in a bad shape.

The problem is not the markets. The problem is not the investment professional. The problem is the INVESTOR. You cannot be completely disengaged with the whole process. You need to know and understand what is happening. You should not be rattled when the SIP return is negative for a whole 1 year. You should not be surprised that the SIP investments have not grown for 3 years. You should be ready for volatility. You should be ready to understand that INVESTING does not really make you RICH unless ‘n’ is huge.

YOU need to be engaged, active investors, asking the RIGHT things and fully aware of what is going on and have clear and SMART GOALS and objectives.

YOU tend to forget that investment professionals are just managers. You are the owner. They are consultants, nothing more — and you don’t have to take their advice. It’s your money.

You have to be active and involved. That doesn’t mean you need to look at your portfolio daily and call the adviser. It JUST means creating a meaningful investing life, creating friends in the investing business, joining FB and real time real life groups and understand what is happening. Give it the ATTENTION and dedication you give your personal life.

We work hard, play hard, take initiative, move forward. We listen, question, communicate, trust – in our personal life. Start doing this in your investment life too.

If in doubt, ASK. Simple, is it not?

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  1. Well said subra. Especially middle class people are targeted and sold unnecessary product buy trapping them with high returns , death coverage blah blah by agents and insurance…

  2. Rs50000 per month for 30 years on 6% grows to 5crore, @ 9% grows to 9 crores, @ 12% grows to 17 crore, @ 18% grows to 70 crore.

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