I went home with my colleague Nataly yesterday and we discussed how different generations of people behave. We tend to assume that this generation is different, but if we observe carefully, each generation may exhibit quite similar views on things than we think.
As our brains mature, it can affect the way we look at things.
I wonder how many of you remember certain things your mom or dad advised you to do or not do when you were a teenager, and then you hated them, only to realize that your mom and dad were right all along.
These thoughts came to me in a different way, as both my parents are no longer alive.
Good advice feels very valuable, only in areas that you think are of great importance to you.
I think good advice must cost a lot, just that it is difficult for you to determine a value.
Sometimes I get really irritated when I see a chat, an article, or a prospect saying, “We have so much financial information at our disposal these days that we don’t have to pay for advice!”
I’m getting irritated, it’s probably our business at work.
But I get more irritated because it’s a bad recording.
I agree with you that it is difficult to put a price on advice. I agree that valuable advice that you can trust and that will positively impact your life is difficult to find given our current advice landscape.
If I notice that some people have a poor view of the value of financial advice, it may in some sense mean that the mental model that forms that view is flawed.
Indirectly, you may end up losing money or incurring costs because you think you have the right view of things. I attribute a lot to people who don’t intend to correctly determine the true cost/return of advice.
Maybe I can give an example:
Some people can never invest one.
They can never gain confidence in it. Of their $2 million net worth, they most likely put $40,000 into something. They never put in anymore because they were never judged again, never pressured and life was too busy. It should be that their $2 million could grow 5% per year over fifteen years. By then, the $2 million should grow to $4.1 million. Their $40,000 did well with 10% growth per year, ending at $167,000. But it’s so much different than $4.1 million. And we’re not talking about aggressively pushing the money.
So how do you price that?
If the difference in returns is 0.8% per year and 5% per year, should I charge you 2% per year? Fifteen years later you will still have more money left over, even though you will find 2% per year ‘expensive’.
Then there are those who think everything has to be pushed.
Need to consume more information. More investment knowledge equates to better asset decisions and greater growth. And so they did that and fifteen years later they were doing well in terms of numbers and comparable performance against a certain benchmark index.
They may have felt happy, they were having fun because they were interested in it.
But deep down they thought and realized that they had wasted so much time.
Not just time, but a sleepless night wondering if they should get in today because the market is down, or if they should miss it because the market is up.
They just didn’t feel present in life because they HAD to do that kind of thing at that moment or it would be poorly managed.
How would the older you charge the youngster, if no matter how older you were to tell him, it might not matter that much?
Then there are the really questionable shots that you couldn’t process properly.
I’ll list a few:
- I don’t really process the idea of supplementing CPF, in all forms, especially for your own life situations.
- Mentally too focused on something very very safe, like the CPF OA, SA, CPF LIFE, and never developed a better understanding and appreciation of how to manage volatility and uncertainty to achieve higher returns.
- If someone tells you not to invest in small caps, if the USD depreciates, or to invest in biotech, or to own gold, you’re already worried enough (especially because you think this could be vital and personally financially costly).
- I’m terrified that investment policy is rat poison because the fees are 2.5% per year and the funds have an expensive expense ratio. So much so that they surrendered early, got nothing in return and started buying the same precious funds in a wrap structure. Mainly because they hear a very poor view of ILP costs (of which the person probably understands 20% of it).
- Listening to influencers who only buy during a crash, you imagine buying only during a crash. You don’t realize that there are a whole host of emotional and mental struggles you will still have to deal with.
They will all materially result in a difference in your mental state as well as the amount of net worth and income you will ultimately have.
I would generally explain it because you or someone else has formed a flawed mental model of how to build wealth, far beyond the actual model, and you are paying dearly for it over time.
It’s just that most struggle with trusted wealth advice with good execution.
If you have been searching for it all your life, and appreciate the state you are in now, then you must recognize that there will be times when you will receive knowledge and conviction from someone.
And you may not end up paying a cent. But that doesn’t mean advice isn’t valuable.
If Kyith spends time answering a very nuanced question about investing, income or wealth accumulation for free via email or in Telegram chats, if that helps you add A + B + C better, and you avoid future costs and achieve higher returns, isn’t that valuable?
Maybe what irritates me more is that people can’t explain their real thoughts properly.
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Kyith worked as an IT Operations Engineer from 2004 to 2019. He currently works as a Senior Solutions Specialist at Insurance Start-up Havend. All opinions expressed on Investment Moats are his own and do not represent the views of Providend.
You can view Kyith’s current portfolio herewho uses his Free Google Stock Portfolio Tracker.
His favorite investment broker is Interactive real estate agentsallowing him to invest in securities from various stock exchanges around the world, at very low commission rates, without custody fees, near spot currency rates.
You can read more about Kyith here.
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