Investor Education

One of the pet peeves of Mutual Fund advisers and Fund managers is that the lay investor needs to be educated about the benefits of equity. If only more people knew the riches that could be obtained by investing long term in equity, much of their problems will be solved.

While its one thing to educate the public on options when it comes to the asset classes available to invest, its quite another to take them for fools who don’t know the difference between a stone and a diamond. The common investor is much more educated and knowledgeable than many are willing to accept.

Investing in Gold  / Real Estate as much as they may be hated asset classes has done a world of good. While there is always the question as to whether the next 20 – 30 – 50 years will be as good as the previous, one really cannot just ignore the stark reality that the bulk of the returns generated by vast majority of folks has been via their investments in real estate.

Recency Bias affects everyone of us and that is the reason why money flows into asset classes which are showing momentum (even when it comes to Mutual funds as I showcased the growth in Mid and Small Cap funds as the market started hotting up). When the tide turns, money flows out to destinations which otherwise would have been over looked.

Investing in Equity (Direct or via Mutual Funds / PMS / Hedge Funds) is not the only solution. Every person has his own reasons which make him invest the way he does. With Interest rates pretty high and being risk free, it will take a long time before investors appreciate the advantages of equity. No point trying to push them when they aren’t mentally or financially ready to take the risks that come associated with investing in the stock markets.