Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Simple that’s why

Posted by Muthu on August 5, 2018

Last month I wrote how failure is the norm, be it investing or business. The success rate is very less.

In an article, New York Times mentions that out of 3481 listed companies in US, 200 companies accounted for all profits. The rest 3281 companies lost money. The success rate is just 6%.

We’ve also seen many times in past, how investors earn less than fund returns, as they chase performance. The average holding period of mutual fund investors is around 18 to 24 months. Once Prashant Jain mentioned, hardly 2% of investors stay invested for more than 10 years in a fund. Only small percentage of investors create wealth through equity, be it mutual funds or direct stocks.

Many of you are now among this tiny group of successful investors. How majority of our clients ended up in this successful tiny minority?

We’ve no special expertise but strongly believe in certain process and discipline. We accept investments only for a minimum tenure of 10 years. We don’t frequently churn portfolio. We rarely make changes that too only when we are convinced it is required. We use all opportunities to educate how ups and downs are very nature of markets and why staying invested for long run matters. By not tinkering, we interfere less in your wealth creation journey. More importantly, we don’t let you become your own enemy, through your behaviour.

When I started as an advisor 12 years ago, I decided to implement these principles in my own investment journey and that of our clients. It was easier to implement for clients from day one. It took few years for me to implement for my own investments.

To make money, one needs to be in right place at the right time. India is in such a sweet spot. Unless we mess things up by our own behaviour, discipline and patience would continue to create good wealth. All I ensure is you do few right things, avoid many wrong things and don’t mess it up by negative behaviour.

Teaching is easy. Following the teaching is very difficult. We did the easy part and you the difficult one. Glad that we are able to attract clients matching our philosophy.

We did not do anything extra ordinary. We’ve very limited expertise. You’re successful because you did ordinary things extra ordinary well. Nothing new in the wisdom we shared. It’s all learning from legends, freely available in the internet.

Charlie Munger once said “More investors don’t copy our model because our model is too simple. Most people believe you can’t be an expert if it’s too simple.”

You did simple things very well ending up in tiny successful minority.

The thing is anyone can copy this and be successful, but most won’t do.

That’s why it is being repeatedly said that investing is simple but not easy.

2 Responses to “Simple that’s why”

  1. I think it is perfectly right. We are our own enemies for success. We chase up many thing, often unwarranted/unwanted and end up having sub-optimal results.

  2. mahesh said

    Most of the times in equity investing,”not taking a decision” is the most important decision

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