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Why you may need a financial adviser

Why does our money idle away?BCCL
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Why does our money idle away?
The large unused balance piling up in our bank a/c makes us browse investment options. We seek advice but are unconvinced. We talk but are unimpressed.
​​We don’t make money decisions easilyThinkStock Photos
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​​We don’t make money decisions easily
Since there is a lot at stake, we like to decide after considerable thought and analysis. We feel no sense of urgency. We are fine with the money lying idle and pacify ourselves thinking that at least it is not losing value in a wrong investment, doing nothing is easier. Research shows that when there are too many choices, we worry about making the wrong choice and regretting it, so we do nothing.
We are unable to simplify the investment selection processThinkStock Photos
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We are unable to simplify the investment selection process
We feel we should evaluate everything, have a robust basis for selection and choose the best of the lot. The problem with investment products is that they work in the dynamic context of the marketplace and there is no prediction of their future performance. We choose based on what our needs are and form expectations about how it would work for us. Product selection is never an accurate science.
We are quite mixed up about timingThinkStock Photos
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We are quite mixed up about timing
Some of us believe that timing is everything and whether we make money or not depends on when we invested and when we took the money out. However, there is little research to support the notion that timing matters so much, nor do we have the desired tools to build a foolproof timing system. We are unable to accept that if our investment decisions are made over a period of time, typically the 20-30 years of our working lives, the timing of our investments will even out.
​We are ill prepared to deal with unexpected eventsThinkStock Photos
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​We are ill prepared to deal with unexpected events
The markets may crash; there may be political events altering our economy significantly; the government may make decisions that modify our systems; there may be global events that affect our investments. Not just the downturns, the very volatility in financial markets can be unnerving, as we have no control over how things play out. We worry if we should act or stay quiet. We are not sure until well after the event about what the right approach should have been. It is tough dealing with panic.
​We forget that our investments can underperformThinkStock Photos
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​We forget that our investments can underperform
Continuing to hold sour investments will bleed the other, well-performing components of the portfolio. Making the decision to sell what is not working tends to be difficult for many. We are so attached to what we bought that we keep hoping it would turn around or refuse to deal with the regret of a wrong choice, living in denial and not coming to terms with the loss. Portfolio review is not an easy task for many of us.

By Uma Shashikant, Chairperson, Centre for Investment Education and Learning

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