Role of an Advisor

When we make Investments, does we require an ADVISE. Definitely. But do we need an ADVISOR? Because, in today's times, we get all types of Information ready and its readily available in our hands. In such a time, does we require ADVISOR? If Advisor is needed, how do we select? Let's see how Important Advisor is? How does he helps in INVESTING FUNDS? 

Friends, you might have heard in India, and all over the world, especially in USA, the Financial Asset - Mutual Fund. Why I would like to share Picture of Mutual Fund of USA? Because since 100 years it has launched Mutual Funds, While India has completed almost 50 years in Mutual Funds. In USA, first Mutual Fund launched was in the year 1924. And in that Country, half of the population invests in Mutual Funds. So, it is important to share information about Mutual Fund. 

There is Dalbur Associates Firm in USA. This firm finds how investors achieved the Returns from Investments in Mutual Funds. The picture below is very Fearsome. Please see carefully. The picture is about whether you are a Successful Investor? The columns in picture figures it out about findings of 20 years. This means, if you see 1999 or 2000, it is 20 years before 1999 i.e. from 1980 to 1999 - how much market has given Return and how much Returns Investors have earned. This is about Equity Investments. From 1980 -1999, the Returns of S and P is 17%. But returns of Investors by Investments are 9-9.5%. You can see further till Years 2013. The Returns which Market has given is not equal to the returns of the Investors. 

Now let's see India's performance in Mutual Funds. CRISIL has shown that how Equity Diversified Mutual Funds has performed in India. CRISIL Index of AMFI has shown, if you had invested Rs.1000 in April 1997, so in Dec 2017, you would have earned Rs. 50,000/-. It's 50 times high. Its so wonderful. The sad thing is there is only 2% Earners - only 2% Investors have earned in Mutual Funds. Most of the people do not complete the journey. What difficulty arises on their paths. Why problems occurs? This is because of Fear, Envy, Jealousy and we thus make mistakes. Who can help us from making these mistakes? At this time, Advisor can play a vital role. There is myth that the job of Advisor is to inform Wonderful Schemes, Give Profitable Tips. This is not his work. This work is of  Media like TV, Magazines, Newspapers. You know why it happens. Many Investors oftenly asks What are Good Schemes, I have money to Invest. Let us see into Detail ....

Let's see Funny Example -------- Why there is Need of Advisor and Why Not? We work emotionally, humans get influenced emotionally. I have learned from somewhere, which I have brought forward for you. Below is an American Association code of Medical Ethics Opinion 1.89. Members of American Association suggests that Physicians should not treat their sons nor members of their family. One father doesn't do surgery of his son, nor a son does surgery of his father. Why? Does he forgotten the way to do surgery? This is not so. This is because we get Emotionally Hi- Jacked when we apply to ourselves. We oftenly do mistakes when emotions arise into our brains and mind. So, who is an ADVISOR? Advisor is he who protects ourselves. World's famous Economists says that "You are the only Enemy of your Investments". No one harms you or can harm you, except yourselves. Because, when other person tries to harm you, you try to Defeat him and when you yourself harms, you cannot understand. 

If Investments were so easy, all people would have succeeded. Many Investors cannot succeed, because its simple when we see Investments but its not easy because there exists emotions. Emotions decide your motions. Let us try to understand in the form of story. Many Investors say that there are lots of media like TV, Magazines, Newspapers which gives information and I can manage all my funds with the help of it. 

So, let us try to understand this story. Whenever we Do Invest, we Probably predict the Market.  Can we predict the Market? We can't. In market whatever ups and downs comes is similar to ups and downs we face in our lives. Let us see the Market of USA because it is from last 70-80 years as compared to India's Market history of 35 years. Lets see the graph of DOW JONES. 

There is rise in Index of Market in proportionate to the fall in the Market. This means there comes ups and downs in the Market. See How it influences and affects by reading below example.

 One person asked  a Mountaineer Tenzing Norgay whether you are Sherpa? Who are Sherpas? He immediately replied Sherpas are Advisors to climb the Mountains. They help us in climbing the Avalanche. So, the person asked -  Can we climb Mountain without Sherpas? Do we require Sherpas for climbing Mountain? He replied - No, Without Sherpas you can climb the mountain. The person asked - Whether any one has climbed the mountain without Sherpa? The Sherpa answered - Yes, 2% Mountaineers have climbed Mountain without taking the help of Sherpa. The person then asked - Then why there is need of Sherpa. The Sherpa kept silent for 2 minutes and he answered - When you are standing below the Mountain you are King. It's your wish - Whether you want to climb Mountain or not? But once, you climbed it, you lasts your wish and you have to come back. You can't stay on Mountain. And when you descend the Mountain, there comes a challenge. If 100 people have successfully climbed, 76 people have injured and lost their lives when descending the mountain. It's difficult to climb the mountain but it's very difficult to descend it. Many people do make Returns in the Upward Movement of Market but most of the People doesn't make money in Rise and Fall of Market. Many People collapse when market falls. In the rising Market even Donkeys win, runs fast than horses, but in the falling Markets we understand who are Donkeys and Horses. 

So, Friends, This Market does Falls and Rises. The sayings of Tenzing Norgay is exactly that - The story of Yudhishtira. See what happened in Mahabharat. In Mahabharat one moment came when Duryodhana said to Yudhishtira to play Dice Game with him. Yudhishtira challenged him, as he knew Duryodhana doesn't know well how to play Dice Game and he considered himself as a successful Gambler. He was very fond in Gambling. His weakeness was to do Gambling. He thought - whether to accept such kind of invitation or not. When you think - Whether to invest or not - What do you think? The market will rise, will fall or will remain neutral. The feelings of rise, fall and constant comes in our mind. When you will feel - the market will fall, you will not Invest. When you are neutral about the market, you will wait and when you hope the market will rise, you tend to Invest in the market. When Duryodhana invited Yudhishtira, Yudhishtira had three questions in his mind - To play, not to play, what to do? If Yudhishtira was uncertain, he was not able to decide, if  he was not certain that he would win, he wouldn't have played. When he played, it was assumed that he would definitely win. This is called Over - Confidence Buyers. Yudhishtira felt that he knows well to Play Dice Game, he is expert in the whole world, so not to fear. He thus accepts the Invitation. See the miraculous thing, You think the market will rise, but after Investing the market falls, because you can't predict. Yudhishtira also cannot predict. He thought he would win, but he started losing. When he started losing, what happened?  When you get stucked into such kind of incident which you are not prepared or not prepared mentally, what happens? You get tensed, stressed. When you get Tensed, you make wrong decisions. You have seen Gambler, as and when he starts losing money, his level of stress rises. He should leave the game when lost, but he doesn't do, instead he Pours more money into it because of stressed Emotions. In the same way, Yudhishtira does the same, who is called Religious by nature, he puts his wife at stake. Why does he do? Because he was not prepared. Why such kind of mistake happened with Yudhishtira? He was full of over - confidence. He felt he knows how to play, he is an expert. Such great mistake he made which Duryodhana never made. Duryodhana doesn't know how to play. Because he took Advisor - Shakuni with him, whether he is good or bad. But you have watched it carefully that Yudhishtira went alone without taking the help of Advisor. Imagine, if there would been Krishna, who was Advisor of Pandavas, has there been such kind of scene. There not would have been Mahabharat. We are the creatures of habit. Habit never changes. After putting his wife at Stake, after seeing his brothers loosing, again after 1 year, he plays Dice Game and that too without the help of Advisor Krishna. Because Habits doesn't easily change and again lose. After stumbling twice, when he realised, there arises War of Mahabharat, Arjun with folding hand invites Krishna as an Advisor. And Krishna gives him two options - Take my Military or Me as I would not fight. This is a wonderful thing. The Military which was never defeated, on which we can win any War, Kaurav took it with them. Duryodhana felt upset as Krishna firstly placed proposal in front of Arjuna to take Him or His Military Force. If Arjuna took Military Force, He would only have Krishna with him which is of no use. He felt happy as Arjuna took Krishna and not Military Force with him. Military Force means Portfolio - Even if there is a good Portfolio - never gives Return when Market falls. A War never wins without a Leader even if there is Strong Military Force. Duryodhana lost even if he took Strong Military Force. Krishna in the form of Advisor, never fought the war but only gave advise and thus Arjuna won. Arjuna moves one step back on seeing his loved ones and tells Krishna not to fight with his loved ones. If he would have taken Military force, he would not have won, he won only through Advise of Krishna. Thus the Role of Advisor plays an important role. 

Advisor is a friend, Teacher of yours. Advisor is one who saves us from Ourselves.