Let me explain. Rakesh Jhunjhuwala and Vallabh Bhansali are the more famous names so I am naming them. Both are Chartered Accountants – Vallabh a rank holder at that. Both put in hours of hard work on company balance sheets at the start of their career. It is not just the hard work, but also the talent to understand numbers. Their success was not attained by sudden flight, but they while their competitors slept, where poring over the numbers. You could add Ramdeo Agarwal to that list. Of course there are many others.

Sure they have their own methods. One may only go long. One may not leverage. One may trade and do a disciplined leveraging. The METHODS do not matter UNLESS you can FULLY understand this (i have been screaming about UNDERSTANDING BUFFET, NOT just reading Buffet).

However people who only see the success of these people (or even a Sachin Tendulkar, Rahul Dravid, Aamir Khan or Vishwanathan Anand for that matter) should realise that reading a little bit about ‘Technical Analysis’, or ‘Fundamental Analysis’ , subscribing to a few websites (even the brilliant ones like www.motleyfool.com, www.wsj.com, www.investopedia.com is JUST A BEGINNING. Or the more relevant Indian ones like www.myiris.com, www.valueresearchonline.com, www.moneycontrol.com, www.moneylife.in,….you still need to be at a particular level to understand what they are saying.

Websites are here to inform, lead you to better sources, get you in touch with sensible people, BUT CANNOT BE A SUBSTITUTE for research. When we did equity research (2 reports were for one of the Gods mentioned above!) – the detailing was great. The discipline and detailing that we did for a Singapore based VC would put the CBI and FBI to shame. To me this was all learning – and humbling experience. The CA degree helped in learning things faster that is all.

So just because you have stumbled on a website whose owner knows 179 words about Fundamental Analysis (or Technical analysis, Asset allocation, retirement withdrawal techniques, or what have you) do not think you have reached the destination. You have perhaps started on your journey. And there are miles to go.

Getting rich is easy (a booming economy with a 9% growth where every donkey gets a horse’s job ensures that). Making that step to getting Wealthy is the challenge. Surely you know the difference between being Rich and Wealthy

I like to say Amuse, Excite, Entertain, Horrify,  - and perhaps Educate is what this blog can do. If I think that there are blogs which can do more than this, sorry I have not found them.

Even though there are books (Saraswati), we need teachers (Guru – Hanuman) who will ensure that we DO what we know (Wisdom does not come from libraries, you need the blessings of Uma the Goddess of Wisdom).

So do not confuse a map with the destination!

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Myth No. 1: I am too young to plan for retirement: This is a very very wrong statement. The earlier you start the sooner you reach the goal. What happens if you are not able to earn from the age of 54? You thought you will save very well in those 7 years did you not?

Myth No. 2: I can never be as good as Vallabh Bhansali or Rakesh Jhunjhunwala so why try? So stupid. Of course I cannot write as well a zillions of good to great writers, but I have been blogging, published a book…and till date nobody has called my blog lousy. So what if I cannot be as good as Vallabh in investing or Swaminathan Anklesharia Iyer in writing? Come on I can manage my own portfolio (lot of value copying from Warren and Vallabh, but my money does not know I have copied, does it?).

Myth No. 3: It is too late for me to start planning for retirement: same as point no. 1. Start today, of course yesterday would have been better. However today is still better than tomorrow.

Myth No. 4: Planning for retirement is very difficult. Not at all. Invest some time first – the rest of the pieces fall into place. Sorry to use this post as a plug – ‘Retire Rich Invest Rs. 40 a day’ is my book and a good place to start.

http://www.subramoney.com/book-written-by-me/

PS: there are only 3 myths – the 3rd one is just like point no. 1 and the 4th is a plug.

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The answer is very simple. Merchant bankers are a nice small clique who also run PMS schemes. So when the ‘Investment Bank’ goes to get a mandate they flaunt their strength in:

a. The retail brokerage network that they have built

b. The HNI clients that they cater to and

c. The PMS services that they run.

Now all these activities actually become some kind of a backward integration for their brokerage business. Thus these clients are told – here is L&T a great company and at an attractive rate of 8.5%. Gilt is not far away at 8% – and for senior citizens there is the senior citizen yojana at 9%. Of course their own executives were busy filling up forms of Mahindra Finance which was at 9% not very long ago.

So if your PMS provider runs a full fledged business in other finance areas, you are likely to buy some of those lemons or violently churn your portfolio. If you must go to a portfolio management service what you should be looking for is:

a non broking PMS provider – whose only income is PMS fees. There are 3-4 such providers in Mumbai and you would be better off with them. One name which immediately comes to mind is Chetan Parekh of Jeetay Investments. However like all sensible people he does not offer ‘PMS’ at Rs 5 lakhs. Parag Parikh is also a PMS provider – but he perhaps runs some brokerage business as well.

In fact the financial planning business does not conflict with thePMS business. However as a planner it makes sense to stick to Index etf as a recommendation instead of pretending tobe able to find the next WIPRO or the next INFOSYS.

Let us leave that job to Vallabh Bhansali of Enam or Rakesh Jhunjhunwala of RARE to do it. Amen.

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Many people know that Hanuman is the Guru according to Hindu mythology (for the very philosophically minded, Hanuman caused the Atma (Sita) to join the Parmatma (Ram) – and that is the essence of Ramayana. So you need a Guru to teach you from the learnings of all the great people mentioned above. However is that enough?

Many people know – and many others may not know – that Parvati (Uma) is the Hindu Goddess of Wisdom. Wisdom is about doing what you know. This is the crucial link. Training, Learning is all fine – but for it to translate into action, you need wisdom. That is the crux.

So knowing that compounding creates wealth, living a simple life gives peace, tobacco free, alcohol free, stress free living gives peace is not enough.

Seeking a simple life, doing a simple sip (and sitting tight during turbulent times), having a term insurance, one credit card, IS ABOUT DOING all that you know. That will give you nirvana. So as Nike says, Just Do it.

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In fund management too you can copy and the advantage is your money in the bank, is yours.

Your money does not tell you “Oh, so you copied Peter Lynch or Warren or Prashant Jain or a Vallabh Bhansali” – and that is a huge advantage. And since we are comfortable with this concept let us look at what we can learn from Warren Buffet – after all if you are copying, you might as well copy from the greatest business manager. Warren Buffet.

Think 10 years, rather than 10 minutes.

Not too many brokers who read this will like this post. Warren Buffet, luckily, is a business manager and not a fund manager. In case he were a fund manager he would be worried about soft dollar commissions, asset management expenses, etc. There would also be a brokerage firm breathing down his neck to transact!

Clearly when he says think 10 years, the main thing that he is saying is “Create wealth for yourself, not for your broker”.

So be an investor and have patience. Thanks to compounding, success will follow!

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