The story of Six Blind Men and The Elephant which we used to hear in our childhood is a classic example of how DIY investors make mistakes due to their limited understanding and perception of financial planning. Let us first see the story of Six Blind men and then understanding how it is connected with DIY financial planning.
Once, there were 6 blind men, they were taken to the elephant and made them touch him and further asked them to describe an elephant. The first one touches the side and describes the elephant like a wall. The second one touches the tusk and calls it a spear. The third one touches the trunk and describes it as a snake. The fourth one touches the knee and calls it a tree. The fifth one touches the ear and says it’s a fan. Finally, the last one touches the tail and describes the Elephant as a Rope.
None of them called an Elephant an Elephant. Do you know why? Because their perceptions lead to the misinterpretation. They all describe the elephant differently, just on the basis of the part of the elephant they touched.
The story of the blind men and the elephant can be connected to DIY investors in financial planning in the following way:
This story is also applicable in the world of personal finance, like for some investor financial planning means investing for tax saving, for other set of investors financial planning means getting higher returns in their investment and with this limited understanding investors believe that their understanding of financial planning is complete whereas they miss to integrate all different aspects of financial planning like goal setting, tax saving, succession planning, will writing and liability management and looking at all the aspects in a holistic way.
All these aspects are interconnected but when an individual who is managing his own money is taking his own financial decisions who behaves like above story of blind men where they believed their understanding of elephant was correct but could not understand the whole picture of elephant and based on their limited understanding, they took decisions which were not appropriate. This can be very dangerous.
In such cases investors who are trying to do their own money management end up making severe mistakes and even they don’t know what they don’t know. Here, the role of a professional financial advisor comes who has academically studied the subjects and is practicing it since long. He can take much better decisions which are unbiased.
Whereas an individual investor may have his personal biases also based on limited information and varying perspectives. Just like the blind men in the story, who could only perceive a part of the elephant based on their individual experiences, each individual often has limited knowledge and different viewpoints when it comes to managing their own finances.
To make informed financial decisions, it is essential to consider multiple perspectives and seek advice from professionals who are qualified experts in their field and practicing it as well. Engaging with financial advisors can help individuals gain a more comprehensive understanding of their financial situation and make better-informed decisions.
In conclusion, the story of the blind men and the elephant highlights the importance of professional guidance in every field. By seeking advice from a professional financial advisor, individuals can develop a more comprehensive understanding of their financial situation and make well-informed decisions that align with their long-term goals.