As an investment analyst, I get a lot of email from people who want investment advice. Much of it is not comprehensive advice but rather answers to single questions that are bothering people.
Over the last few months, I have noticed that an increasing number of people are worried about whether they are 'managing' their investments properly.
Clearly, the idea is afoot that investments need to be managed. And the genesis of this idea is also clear from some of the email.
Sometimes, people ask specifically whether the X investment management plan from Y Bank is better than the A plan from B Financial Services Company.
Mind you, most of these are not what are normally called Portfolio Management Schemes. Instead, this is plain old fund sales, dressed up in a brand to look like customised investment management.
Earlier, someone from a fund distribution outfit would contact you, ask a few questions and sell you a bunch of funds, good or bad. Now, his actual actions will be the same but he'll claim that your fund investments are being managed as part of his bank's SuperMahaSaver plan, which he claims better than the other bank's MahaSuperSaver plan.
This branding does not do investors any real harm because it's just a routine sales stunt of the kind that infests practically every product or service nowadays.
However, I get the clear feeling that the kind of sales pitch that is given with these plans is leaving many investors with a certain anxiety. To sell funds dressed up as management plans, investors are told that managing investing is a very complicated activity. Most investors swallow this line and then start worrying about whether they are managing their investments correctly.
In reality, investment management is as simple as you want it to be. At a pinch, the investment needs of most of us would be served by choosing two or three mutual funds, investing regularly in them and just taking an annual look at them. And how does an investor need to learn enough to do this much? There is plenty of information available on the Internet and in books and magazines.
The key to getting quality information is not to rely on those who are selling you the funds. Just as while buying anything from TVs to cars, you must seek out independent, uninterested sources of information, rather than swallow the salesmen's hype disguised as advice, so too must you do with investments.
Can one not trust the salesmen at all? My experience has been that while there are many sincere individuals who are running small, honest fund sales businesses, it is wise to be sceptical of the hype that emanates from larger branded players.
And as for management of investments it is even easier. Twice a year, try and get an idea of whether the mutual funds you own are doing roughly as well as most of their peers (the same kind of funds). You don't have to have funds whose past performance is absolutely the best (in fact it is dangerous to do so).
As long as they are better than perhaps two thirds of other funds (that is, they are in the top third), it's fine. Funds that don't make this grade for a year or two should be sold off and replaced with similar funds. The information that you need to make these decisions is easily available in many newspapers, magazines and websites.