Aditya Birla Sun Life Mutual Fund

Why paying for an Expert should not pinch?

May 30, 2019
5 mins | Views 7240

Whenever you take the services of an expert or professional, there is a fee or charge involved. But there is a reason behind the same. Read on to understand why paying for an expert should not pinch.

Mr. A is a keen believer in the saying, “self-help is the best help”. He applies this principle even in his financial investments. He decided to invest in equity mutual funds via Systematic Investment Plans (SIPs). However, whenever market went down and his portfolio became negative he used to pause his investments. He thought this was a great way to remain in control of his finances. He continued this practice for over a period of ten years and but could not build much corpus.

Ms. B on the other hand sought the help of a financial expert. She was also advised the SIP route. But the difference was that she was told to make regular monthly deposits. The expert helped her remain invested in the markets even during turbulent times, because mutual funds have the potential to give reasonable returns in the long run. This led to generating a reasonable corpus over the ten years.

Luckily, people like Ms. B are in majority these days. As per the findings in a CFA study, 70% of the investors in our country take the help of financial advisors. Globally, this figure is 54%.

(Source: https://economictimes.indiatimes.com/wealth/plan/do-you-know-why-71-of-indian-investors-trust-their-financial-advisers/articleshow/63653888.cms?from=mdr)

A financial expert shares the vision with the investor – growing the wealth and corpus. There are numerous benefits of taking the help of an expert while taking investment decisions.

  • Expertise and focused attention

    There is a famous management principle that’s says that one should stick to their core competencies. This rationale applies to your Mutual Fund investments as well. When you take the help of investment or financial advisors, you may benefit greatly from their in-depth technical knowledge, market understanding and overall experience. They dedicate their time and expertise in optimizing their client’s portfolio.

  • Time

    Managing or growing one’s portfolio requires a lot of time, effort, research and above all persistence. However, all these can consume a substantial portion of your time. When you enlist the services of experts, they take over this responsibility from your shoulders, giving you the much-needed peace of mind.

  • Re-alignment of portfolio

    Unless you are a seasoned investor who proficiently understands the market trends, this aspect will remain alien to you. Financial advisors have in-depth research data available with them. They continuously monitor and scan the market for suitable opportunities. Hence, they are able to guide their clients to make changes in the portfolio as and when needed. These timely tweaks might seem small but have a huge impact on the returns in the long-run.

  • Stay strong and for long

    Most investors who choose to do it themselves, get deterred by the market fluctuations and volatility in the short-term. They end up withdrawing or stopping the SIPs when they see the markets nosedive for some time. However, those who are being guided by experts stay longer in the market. A report by Economic Times showed that SIPs started in 2011 for a period of three years earned a 11% annualized return. However, investors who decided to stick around for the five-year mark ended up with 19.8% return (annualized). This is also true during a bullish period, when investors get tempted by greed or become complacent. The guidance by financial experts helps them stay focused and make the right investment decisions.

So, don’t think twice before taking the help of an expert when it comes to your hard-earned money. And the small charge that you will incur for the specialized service, think of it as an investment and not a cost. And if you are also like Mr. A, who likes to do everything on his own, think of it like this. Every great sports player needed a coach to make him/her the great player he/she is today!

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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