“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson
” I just joined an online investing club last year, I made 20% gain last year,” said Mr. K**, ” but I lost 15% this year based on recommendations by the club.” This is the common scenario faced by many investors in Malaysia and Singapore.
Since the outbreak of Covid 19 pandemic in 2020, every time I switch on my computer, I see all kinds of people on social media self-promoting themselves as financial gurus. You get access to the exclusive advice/insider’s news if you are ready to pay yearly premium to these clubs.
All kinds of financial advice are available, ways to become a property , stock market or even Amazon millionaire. The question rattling in most investors’ brains, “ Is my money worthwhile to be spent on this kind of financial advice?”
Performance of ETFs
In 2020, FTSE All-World UCITS ETF (USD) Distributing (VWRD) made an impressive return of 16.1% despite a big drop in March 2020. For the same period, S&P 500 UCITS ETF (USD) Distributing (VUSD) appreciated 17.63%. For the first two quarters in 2021,VWRD has appreciated 12 % and VUSD recorded an impressive 15.19% return.
If I were Mr. K**, I would be worried to know that my portfolio performance is far worse than ETFS. Actually I wanted to tell Mr. K** that it is very common to see actively managed funds or portfolio/funds recommended by financial gurus underperform broad index funds/’ETFs such as VWRD and VUSD.
The strategy might sound easy, pick funds that have good historical returns. That’s the reason why investors were flocking to buy ARKK funds 1-2 years ago. Unfortunately, it doesn’t work like that. As proven by the SPIVA Persistence Scorecard, actively managed funds that perform well during one measured time period seldom hold the record for a long period of time.
That’s why Mr. K** special tailored portfolio by financial guru sucks! Most of the time, the premium you pay to join the club or financial planners will never pay off!
Don’t Listen to Financial Gurus
For you to be a successful investor, don’t listen to advice of financial experts or gurus because most of the time what they say is crap.
According to Sturgeon’s law (or Sturgeon’s revelation)-“Ninety percent of everything in this world is crap.” Theodore Sturgeon was an American fiction author of primarily fantasy, science fiction and horror, as well as a critic.
In 1951, Sturgeon coined what is now known as Sturgeon’s Law: “Ninety percent of [science fiction] is crud, but then, ninety percent of everything is crud.”
Yes, 90% of what you see or hear in everyday life is crap. 90% of what you read on Twitter, Facebook ,Instagram or even newspaper especially financial news is crap. The same goes to what Malaysian politicians say in the parliament, 90% of of their speeches is non-sense.
And of course, the information you get from financial experts falls to the same category.
Burton Malkiel once said:” There are three kinds of people who make market predictions: those who don’t know, those who don’t know that they don’t know, and those who know darn well they don’t know but get big bucks for pretending to know.”
So my advice to you, don’t waste money to join investment club or get tips from financial gurus. You are likely to outperform more than 80-90% so called ‘financial experts’ if you invest in broad index funds/ETFs.
Do It Yourself
Instead of spending money to be spoon fed by experts and gurus, you can easily set up your own investing machine in less than 30 minutes. Open a brokerage account, fund your account, choose your desired ETFs and invest monthly.
And trust me, you could fire your financial planner, stop reading financial news , ignore what is happening in the financial world and still emerge as a winner in terms of return by investing in index funds and ETFs.
You can do it yourself. The process is very straightforward if you have the will power and consistency. Consistency and perseverance are the two important ingredients in any success in life.
“As I look back on my life, I realize that every time I thought I was being rejected from something good, I was actually being redirected to something better.”
Dr. Steve Maraboli, speaker and author
Conclusion
Don’t fall prey to investment scam and pay less attention to expert’s financial advice. What you need to be a successful investor is easy- invest in a broad index fund/ETFs, do it regularly, ignore the noise/news and wait patiently.
And remember, 90% of everything in this world is crap. What you see, what you hear and what you argue about every day at the end of the day, 90% of the time does not make any impact in your life!
You just need to focus on that remaining 10% to make a change – to be a better doctor, to be a better investor and of course to be a better father and husband!
