We as a Parent are any day smarter than we as an Investor. No matter how good we are professionally, but we fail as a long term investor. Though we can get some bounties on few of our investments in short term like a sudden surge in the price of the stock or land we are holding. But here what’s more important is to know; Are we able to keep good returns on whole of our investment portfolio throughout our life? It happens not because we are not intelligent, but it happens because when it comes to money we tend to become emotional. No matter how hard you try to be emotionally balanced you will never be able to manage your emotions, it’s inevitable. Trust me it will always happen!
| Trait | We as a Parent | We as an Investor |
|---|---|---|
| Following others | We teach our kids not to follow others blindly & to use their own mind. | We invest where others are investing. We forget that investments are unique to oneself, as our risk appetite, cash flow, time horizon, goals, family responsibilities are different than others |
| Don’t get time | Kids are continuously told by parents to do time management and take out time for all the important activities like studies, sports etc. | If we don’t take out time for our future today then our Future will not spare time for us. It means we will be so financially unsecured in our old age that we will need to work forever. We need to set our priorities right. |
| Delaying & wasting time Cost of Delay | We teach kids that they will not get another chance in life so they need to study & play seriously | Either we don’t have a smart financial plan & if we do have a one, then we start with an inadequate amount without having trust on that plan. We do this because we want to see if the investment product is alright, this again wastes lot of precious time. Rather than doing that we must try and understand the investment product & concept seriously and start investing optimally without wasting time. |
| Choosing Advisors | We always keep an eye & check over our kid’s close associates. We check what kind of value our kid getting out of that relationship. Their background, behaviour, academics etc. We don’t just choose a school because we know its founder personally. | We choose financial advisors not on the basis of their professional background & qualification, but on the basis of personal relations; a relationship where we can’t say NO or we can’t ask WHY, that’s how we start investments. No questions are asked, but just random investments. |
| Making investments is our own responsibility & not of the Advisor’s | We teach our kids that studies are their own responsibility and only they will be affected due to that in future. However its parent’s duty to make them feel responsible, but ultimately the kid would be the one who will be impacted. Most of the kids need to be persuaded to study while only a few take it on their own. Those few definitely rise in their life, that’s for sure. | We love to be persuaded for investments, it has become a trend as investors don’t take investing as their own responsibility. They get so busy in their Today that they forget taking right steps towards a better Future. They forget that the work for which they are ignoring their future will be no more someday. Make a balance. Advisor’s duty is to suggest you best investment recommendations & review; you have to own the responsibility of following that. Because it’s about you! |
| Merely by investing we will achieve a sound financial future | “Understand what you are studying or doing, don’t just do for the sake of it” we all have said these lines to our kids to make them understand the importance of doing things with a purpose. Only going to school will not solve the purpose of education. | As an investor we just do investments haphazardly for the sake of it. We have many random reasons for bad investments like, tax saving, due to a relative where we couldn’t deny, didn’t get enough time to understand the product, he was my banker and what not. Are the investments in line with your individual financial goals? |
| Keeping many advisors | There is an old saying that one good friend is better than having many friends. I hope you told your kids about that! | Investors must not have multiple advisors for multiple products as they beat the idea of financial planning. Your advisor must advise on whole of your investment portfolio, so that he may assign weightages to each and every kind of asset classes like FDs, Bonds, Equity, Gold etc. according to your risk profile, cash flows & goals. He will also advise you best of the insurance products which will really secure you from any uncertainties in future. He will keep you away from those products which neither give return nor secure you completely. |
| Purana jo chal raha hai wo chalne do, hum naya shuru kar lete hain | Are we ok with our kids to continue bad habits, if they add few good ones or we ask them to completely stay away from bad habits? We tell them to stay away, as we know those bad habits will continue to have a negative impact over child’s growth in the future. | We can’t build a house on a weak foundation. Similarly a solid portfolio can’t be created without realigning our existing investments. We ignore to realign our existing portfolio because we don’t sit with our advisor and look at the long term projection of the difference between good & bad investment. The bad investments will take returns on your overall portfolio southwards drastically. For ex: If we invest Rs 2000000 for 30 years on rate 7% & 12% respectively. The future values will be 1.52 crore & 6 crore respectively. Would you still ignore realigning your existing portfolio? |
| Discipline | Most importantly we teach our kids to be disciplined as this is the only trait in a human that defines his personality & growth | But as an Investor we forget the importance of being disciplined & change our financial plan too frequently to land nowhere. A sound portfolio needs patience & persistency to stick to the plan of action to derive the desired results. |
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“Invest in the future because that is where you are going to spend the rest of your life.”
Habeeb Akande
This contradicting behaviour is due to our inclination to avoid focussing on things that does not yield instant results, or if there is nobody is to question us. We have been conditioned to focus on results rather than effort & not understanding the value of the process. This gives birth to a sense of fear in even taking calculated risks. However we take calculated risks in almost everything in our daily routine. Right from lighting up a stove for the morning tea to driving back home in the evening. But we manage those risks as they give instant benefit in the form of tea & faster commutation. Similarly, kids don’t understand the value of focussing on studies or other activities, as they can’t relate them to their future prosperity. For kids parents are there to question them and keep them on track, but for an investor nobody is there to question. We either don’t have professional financial advisor or we don’t listen to them. I hope this would help you to relate few points with yourself.
Do write in comments if you have something to add to the article.