Who do you think is a super investor?
As you apply your mind to the question, I would like you to know that one of our ‘respected’ marketing research companies Nielsen has come out with a report titled “Super Investors: India’s new Wealth Generators“.
When I read the title of this report, I felt excited to know something of value. In fact, I stretched my imagination too hard. The instant correlation was with an icon “the Superman”.
“If superman is what he is, what would a super investor be like?”
Unfortunately, my imagination and my excitement were both short-lived. 🙁
I read the report. I felt the research company was confused about what they were trying to define. Or did they have the correct data based on which they drew the findings?
Their definition of a super investor and the characteristics of this investor are no where close to who I would consider to be a super investor.
The idea of a super investor (as per the Nielsen report)
The Nielsen report lists out many characteristics of this ‘super investor’. Let’s look at some of them.
It says that Super Investor has a higher financial literacy than a regular investor. I don’t know how they define a regular investor. Probably, everyone who is not a super investor is a regular investor.
So, high financial literacy is definitely a good thing.
Next, Super Investors also tend to have diversified portfolios comprising of risky investments like stocks as well as traditional ones like fixed deposits as well as gold. This is good too.
But that is where all goodness ends and the funny part starts. The report starts listing things that made my mind spin.
It says that “Super Investors invest heavily and are more engaged with their portfolios than average investors. They also tend to invest more than they save.”
Is this really serious? Invest more than they save? I always thought that you need to save first to invest.
It goes further to mention that “these investors own more than one life insurance policy” and they use these policies for investment only.
Now, I know for sure and you would vouch too, that any right minded investor who boasts of high financial literacy would know that life insurance has only one purpose and that is definitely NOT investments.
On insurance, it further says that these super investors own on an average 3 insurance policies with an average insurance cover of INR 9.8 lacs.
Super investors who are high salaried individuals have an average insurance cover of just INR 9.8 lacs? My heart just skipped a beat.
The report indirectly states that these super investors have no idea about term insurance. One more heartbeat skipped.
Here comes more.
This super investor is salaried but does not invest systematically but relies on lump sum investments. Beats me, totally!
Unfortunately, as the report points out, most of these super investors bank with private banks, where ‘high commission paying‘ products are pushed heavily.
Now, finally, the one that takes the cake:
“They have a much higher risk appetite than the regular consumer. Equity linked savings scheme (ELSS) are not likely to be successful with these investors. Instead, they have a strong preference for equity and debt based mutual funds“.
It appears that the report writers need some lessons on financial literacy themselves.
As I had mentioned right in the beginning, I disagree with this categorisation of super investor. A lot of them are signs of dumbness created by over confidence. The real super investor is a different breed, one that probably doesn’t exist.
The real super investor
The real super investor knows that the sole purpose of insurance is to protect against financial loss or emergency. All investment based insurance products are bad for financial health.
She knows that a planned, checklist driven approach is the best way to secure wealth, prepare for emergencies and build wealth for the long term.
She understands the basics of money and investing.
She understands the difference between investment, speculation and gambling; she keeps greed and fear miles away from her.
She does not let financial porn affect her financial decisions.
She prepares herself to avoid making wrong decisions and mistakes.
She understands that discipline and patience are the key to make the ultimate formula of wealth creation work.
Isn’t that too much to expect from one person?
Probably that is the reason the investor needs an adviser. 🙂
Between you and me: Are you a super investor? Do you know a real one? What would you say about being a super investor? As always, looking forward to read your comments and feedback.
I am the dumbest investor, ever.
Hahaha. We all would be better off that way. 🙂
“super investors own on an average 3 insurance policies with an average insurance cover of INR 9.8 lacs.”
Ha ha ha, are they talking about the 1990’s ?
Looks like, Gagan 🙂 but you know it is a fact. I know several.
awareness is quite low, lot of my friends are not saving enough and then there are lot of fears also. For eg if i talk to my father or that generation they are always skeptical. they knwo for a fact that they loot people and at the time of claim you get nothing. And that is getting better now but still far from perfect.
We have a long way to go. Let’s do our bit. Thanks again for the comment.
Hi Vipin Sir,
The point here is not being aware of financial products, you name it as “Super Investor”, I call them as “Investors who know little and think they know everything”…
In India, we have LIC agents who are successful in selling their products (still successful in rural areas), ULIPs got sold like hot cakes over a decade ago…
Real Estate and Gold are emotionally bonded to our Indians and how much percentage of Indians are investing in Direct Equities and Mutual funds? … any Idea…
I even know some people in India invest in a particular product just because his/her friend suggested instead of thinking whether particular product suit their needs or not!
Hiring an advisor is recommended only if you are having sufficient financial literacy.
Not all financial advisors are transparent, so advisors recommendations may also be biased.
My advice to investors is to self learn and self educate about financial products they are planning to invest and only invest in those products if they completely understand concept of that product, risks involved etc., as after all at the end of the day, it is our money and we should know how to handle it efficiently!
Your narration was very interesting indeed!!!
Thanks
Spot on Bhaskar. I love this part “advice to investors is to self learn and self educate about financial products they are planning to invest and only invest in those products if they completely understand concept of that product, risks involved etc., as after all at the end of the day, it is our money and we should know how to handle it efficiently!”
Thanks.