January 18, 2011 8:31 pm
With SIP marketed as panecea of virtually all ills, why the retail investor shy away from it. Lack of awareness, Psychology, Devil may care attitude, beng too lazy, fear and what else?
There are number of reasons for that.
First of all, retail investor lacks the knowledge of financial planning. Many of them have burnt their fingers by investing in wrong funds. Thanks to so called relationship manager of banks.
Many of them invest on highs and exit quickly on seeing dips in market. They don’t want to see negative returns even in short term period.
After abolishing commission in mutual funds for AMFI certified distributors, there are very less active distributors to give guidance to investors. In last 1 year, there is a fall of 63% new distributors YoY.
Then, there is a class of people, who want “guaranteed’ returns. They generally invest in FD and never look beyond that.
All the investors want profit, but lack of knowledge and guidance is a key factor.
Hope it will help you.
SIPs are good only if they are practised during bear turns and have a long horizon.
Well, we have a big field of behavioral finance which deals with the irrationalities of investors, whether they are small-retail people or huge institutional investors.
In markets, there are only 2 problems – greed and fear.
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