SYNOPSIS

Abhishek Gade

By

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CHAPTER ONE: WHAT YOUR FINANCIAL ADVISOR CAN DO FOR

YOU, AND WHAT HE CAN’T

This chapter states that, the value of a good Advisor greatly exceeds what it costs and that

is all that matters in the greater scheme of things. Mutual trust and respect are the only

basis for a sustainable, successful advisor/ client relationship.

In this chapter, the Author tells you the things a quality advisor can do for you and what

he cannot do along with the reasons for having a qualified advisor as opposed to doing-it-

yourself. Three things a good advisor can do for you:

1) He might increase your return by more than 1% a year (assuming that’s the cost

of hiring him) by creating a portfolio which is better suited to your long-term

goals,

2) He might save you the equivalent of 1% a year in the time, energy and worry

that go into managing your own investments, and

3) He might actually save you some multiple of one percent a year, by coaching

you out of making the great behavioral mistakes

Also, there are things an advisor cannot do for you because nobody can:

1) An Advisor cannot, with any consistency or precision, forecast the economy,

2) An Advisor cannot, with any consistency or precision, forecast the markets,

much less TIME them, and

3) An Advisor cannot, based on their past relative performance, forecast the future

relative performance of similar mutual funds or other equity portfolios

The great Advisors deal not in prediction and “performance”, but in planning, perspective

and behavioral coaching. Also by knowing what an Advisor cannot do, an investor is in a

better position to separate a quality Advisor from a stupid and/or venal advisor.

CHAPTER TWO: AN OWNER, NOT A LOANER

This chapter states that, the Owner of good businesses makes more money than do his

lenders. As common sense dictates, the owners take more risks compared to their lenders

and hence, earn more returns. Of course, the real question to ask is: What is risk?

When you invest in stocks, you are an owner of businesses. When you invest in bonds,

you are a lender to businesses.

CHAPTER THREE: WHAT THE REAL RISK ISN’T

The subject of this chapter is to differentiate real risk from perception of risk. People

most times, misperceive risk. They overestimate the risk of holding stocks, and

underestimate the risk of not holding them. Volatility is NOT a risk and temporary

decline isn’t a loss. Do not panic, do not sell. Buy equities and hold them. Just remember,

no one can time the market. Stay in to win it.

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CHAPTER FOUR: WHAT THE REAL RISK IS

The real long-term risk of equities is NOT OWNING them. Rest is all commentary.

CHAPTER FIVE: BEHAVING YOUR WAY TO HEALTH

The substance of this chapter is to discuss four critical behavioral tactics essential for

building wealth. Those are:

1) Setting goals in dollar-specific, date-specific terms,

2) Establishing a written plan for achieving those goals, assuming a specific rate

(or rates) of return,

3) Investing the same dollar amount at regular intervals, so as to harness the power

of dollar-cost averaging, and

4) Meeting your retirement income needs via systematic withdrawal from your

equity mutual fund portfolio.

CHAPTER SIX: STEERING CLEAR OF THE BIG MISTAKE

In this final chapter of the book the Author lists the eight great mistakes that an investor

falls prey to. Those are:

1) Overdiversification,

2) Underdiversification,

3) Euphoria,

4) Panic,

5) Speculating when you still think you are investing,

6) Investing for yield instead for total return,

7) Letting your cost basis dictate your investment decision, and

8) Leveraging

In real life, fund “performance” statistics are an abstraction. In order to avoid committing

these mistakes one simple Mantra is: Get Diversified and Stay Diversified. Seek an

Advisor/ coach’s counsel for consistently avoiding these big mistakes while making

considerable progress towards achieving your financial goals and objectives.

EPILOGUE: OPTIMISM IS THE ONLY REALISM

The Author concludes the book with a nice optimistic view about future.