Robin Williams, an American actor, and comedian, was best known for performing improvisational or unscripted roles on television and stage. The versatile characters he played in movies like Dead Poet’s Society, Jumanji, Good Will Hunting, Night at the Museum, etc. are few of the well known comic acts to the millions of movie buffs and his fans.
A comedy career, that spanned many decades, witnessed his superb performances in a wide range of genres such as Observational Comedy, Improv Comedy, Dark Humor, and Alternate Comedy. And these unforgettable performances made him won Emmy, Golden Globe, Academy, and Grammy Awards many times.
A man, who cared about making people laugh, never bothered about paying attention to his own mental problems. Through his mask of humor, he used to hide the invisible ingredient that took his life in 2014 – Depression. Evidently, comedy was a vital part of his life. So was the depression. It’s an invisible factor that no one thinks about. No one had ever imagined that someone who was amazingly funny could be sad inside and take his own life.
Same goes for celebrity chef Anthony Bourdain who inspired millions of people to follow cooking exotic food as a profession. But he couldn’t help himself with depression, succumbed to it and committed suicide.
Same goes for WWE Superstar Chris Benoit who suffered from various invisible mental ailments, turned out to be a victim of depression and took lives of his own family including himself.
Same goes for Chester Bennington, lead vocalist of renowned music band Linkin Park. According to his death report, he was suffering from acute depression that made him commit suicide.
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When we talk about our monthly expenses, the list is usually comprised of Monthly EMIs, Grocery Bills, Electricity Bills, Phone Bills, Child’s School Fees, Tuition Fees, Petrol Expenses and much more. We either pay them manually or get an invoice bundled with the amount to be paid. In some way or another, all these expenses are visible to us as we can take a note of them in our bank account statements as and when the amount gets deducted.
But there is one hidden expense that we fail to acknowledge, which is…
…the annual fees we pay to the Asset Management Companies to manage our money through MFs. The reason it skips our attention 99.9% of the time is that we don’t get a monthly bill for the amount charged by the AMCs. Every year, it gets automatically deducted from the corpus. A few days ago, I stumbled upon a tweet by the financial blogger Morgan Housel. He had written:
“Investment management fees might be one of your household’s top budget line items, but you don’t realize it because you pay in auto-deducted basis points instead of an invoice”
To validate Morgan’s belief, I quickly made a rough estimation of this microscopic expense. Considering a worth of Rs. 1 Crore in the MFs, you are destined to pay an average annual expense of 2% of your worth which turns out to be Rs. 2 Lakh per annum. When you arrive at the monthly figure, you’ll discover that fund management fee is one of your biggest household expenses. But you don’t recognize it as your monthly household expense because it gets auto-debited from your fund holdings without an invoice.
For an average investor, who thinks of creating wealth through MFs, it forms a substantial part of his/her monthly earnings. The irony is – we can’t even think of eradicating it. In fact, the longer we stay invested, higher is the fee (invisible element in your monthly budget) we need to pay. Whether you make money or not, it’s a mandatory stipend that an AMC charges all of its clients every year. Like Diamonds, fund management charges are forever.
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Many times, we happen to overrule the existence of hidden elements. They might not be clearly visible to us but turn out to be a topic to ponder at some point in time.
Whenever I get to interact with MF investors, I ask them about the charges they pay to get their money managed. They always reveal – “Not even a penny”. And when I tell them about the invisible factor, they get blown by the facts they don’t even think about.
But this doesn’t mean that MF is not an excellent investment vehicle. It is and will always be. For an individual investor, who doesn’t have the stock-picking skills, MF is the best way to build long-term wealth. Don’t get disheartened by the costs associated with the funds. As more and more investors start adopting the MF route, the expenses will considerably go down going forward.
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The cover image has been taken from Deviant Art
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