Full and Actual Question: Why does anyone place his/her funds in the hands of financial services
companies?
Dear Friend!
I presume you ask this
question in the context of entrusting our funds for investing and when you say
‘financial services companies’ you mean mutual funds, and proceed to answer the
question.
Investing requires
requires knowledge and experience. I would not very difficult to acquire both
but requires consistent effort and time. Many cannot afford to study investing
for themselves for various reasons and therefore mutual funds came into
existence. Now over many years the mutual funds have acquired wide acceptance
and today are managing funds to the tune of hundreds of billions of dollars
globally, offering a wide variety products in the equity, debt and hybrid
funds.
The problem with
mutual funds is that they charge very high fees for managing the funds. ‘Exchange
Traded Funds (ETFs)’ are a special type of mutual funds where the
management fees are quite reasonable.
In conclusion since a
majority of the people do not have the investment knowledge and experience, the
entrust the job to specialists. Investment knowledge is not very difficult. If
you want to learn investing, please first read the book ‘The
Intelligent Investor’ by Benjamin Graham. Please also visit my blog ‘Value Investing’ and
slowly and gradually you will become an expert and become rich and wealthy too.
Happy learning!
Thank you,
With Best Regards
Anand
Please Note: This is almost a reproduction of the question I
had answered on the website ‘Quora’, which I thought could be useful to the
visitors to this blog site also.
