There are large no’s of Investors who are not enough to
mature and even don’t understand the basic knowledge of Mathematical calculation of
interest.
Generally, businessmen Seek professionals’ advice
on various elements for their growth in business. The profit and loss depend on
their right advisory action.
They don't take any advice for their business from non-business people or we can say any friends relatives and neighbors.
If someone gets a return of 8% CAGR and another one gets a return of 12% CAGR then there is a huge difference in wealth Creation in the next 20 years.
Just to understand the basic difference between investment
avenues and their returns, the role of the advisor is established.
He will use his superior training and experience
to protect clients’ precious money and to make sure that they obtained the
result in which their money is invested.
Generally, we take advice on investment from various
sources.
1.
Relative or friends
2.
Local Banker, where we have an account.
3.
Brokerage firm
4.
Financial Advisor/ Investment Counselor
5.
Financial Services
Being Innocent customers, we ignore the qualifications of
advisors, which degree and diploma he/she has for investing, and their
experience. We ignore all these things and we just focused on how much profit
we will get from our investment products.
The profit and loss depend upon the knowledge,
experience, and qualification of advisors.
Financial Advisor/ Investment Counselor-:
A truly professional investment advisor that is a
well-established firm that charged annual fees is good for taking investment
advice. They maintain a standard process and have a keen knowledge of
investing world. They have good research and well-known qualifications. Taking
advice from Investment Counselor would be costly but the result is to be
satisfied at an individual level.
Financial Services House-:
Financial services mean that an organization sends
its bulletins like CNBC, Zee business, financial YouTube channels financial Instagram, and telegrams. They provide financial information to their subscribers. All the
financial advice they provide at a very low cost.
Many International organizations like moody's and
standard & poor agencies are providing investment advice. They reach a
mass level of customers. It is very difficult to identify their recommendation
for an individual customer. Each service & financial advice is for the mass
population. Individual customers have to identify which financial advice is
for them or not. The intelligent investor will not be relying
on these financial services. He will not be buying and selling his investment on
their bulk recommendations.
Advice from brokerage house-:
The largest volume of information and advice comes from stock brokers.
The stock exchange like BSE and NSE and other
exchange platforms execute buying and selling of customer’s stock and get a
standard commission.
Probably target customer of these brokerage houses
is speculator and gamblers of stock investment.
Logically stock investments are right to buy and sit
tight. But it is not easy for a brokerage house to make a long-term investment
in stocks for their customers.
The customer comes to the stock exchange for wealth
creation and the stock broker makes them a Speculator.
So before we go for wealth creation for brokerage
houses we should have minimum basic knowledge of investing world rather
than totally rely on brokerage houses.
Investment Bankers-:
A new concept comes in the Era of investing world which
is “investment bankers” generally this is for high net worth clients of the
banks. Banks make segmentation of their customers and identify high
network clients and provide personalized services for them.
Personal bankers are well qualified and have good
knowledge about sales and purchase of investment products to their target
customers.
Sometimes the intention and honesty may be differing
from the customer’s financial goals.
Being an intelligent investor it is good to take
advice and recommendations received from investment banking houses, Specially a
well-reputed investment banker but be judgmental and analyze the suggestion
before taking the investment decision.
Other Advisors-: In our culture, it is very often to take advice from anyone. The other advisors may be friends neighbors,
local bankers, and our relatives.
Generally, this is done by unskilled or new
investors. They always try to get free advice for themselves.
Being new investors we should ask for a good
investment counselor, and good financial services like S&P and Moody’s rather than
directly go for investment advice from these sources.
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