“Portfolio is a true representation of your Strength, Weakness, Vision, Hardwork, and Future.”
As a wealth manager, I often face the challenge of creating an investment portfolio within the first 15 min of meeting an investor.
Penning the names of funds and stocks, I often give the impression of a magician pulling out a rabbit from the hat. It is not as simple as eyeballing salt and pepper into a sauteed dish.
Can a newly bought car run without services, replacement of worn-out parts over a long period of time?
The answer is “NO”.
Likewise, your investment vehicle cannot be left out without periodical services, repairs, and replacements.
Broadly, there are only 3 kinds of portfolios in the world. Then there is that 4th category, about which I shall pen at the end.
Investment Risk Allocations are based on Conservative, Moderate, and Aggressive placement of your money in the available vehicles for a better forward movement.
Unfortunately, none fits an individual if selected one with a singular mindset.
Who does not like Growth and Profit?
Who does not like Protection and Profit?
Who should take the risk, the Investor or the Financial Advisor?
All the 3 very important questions are often not discussed or believed to be understood without any deliberations.
Without elaborate discussions, goal setting, earning status, liabilities, and aspirations most of the time investors end up in a dilapidated structure compromising everything at hand.
Always remember, the day you “start saving” from your earnings, you are at war with many enemies such as the Economy, Govt and Federal Banks, the Act of God, World Affairs, and Business Models.
Art of Wealth is a painting you wish to create by commissioning an Officer of merit for it, known as a Financial Advisor.
Case-1, Retired Commissioner of Police.
Rs. 40 Lakhs was given to an advisor for investing without discussion but with a warning. My money should be safe at all times.
Result: Conservative Portfolio with 6% taxable CAGR.
Case-2, Business Owner
Rs. 10 Lakhs was given to a broker without discussion but with a statement. I want very good profit from this.
Result: Lost 70% to shady trading and mismanagement.
The birth of a child takes nine months and plenty of beautiful discussions by partners. The result is a healthy and smiling baby. Every portfolio is supposed to be like that. Like I often say, “Investment has to be a joyful affair”.
“Colours of an Investment Portfolio” is a collage of many permutations and combinations. It is not a “One Size Fits All” product. Customisation of your wealth-building process leads to the highest levels of comfort. It has the ability to shut out noise from others. Your focus will become more a need-oriented one than a want based.
Why do you need wealth management? If this question is answered without ambiguity, your financial consultant becomes a friend for life.
People who have the superpower to manage office workload, family commitments, social obligations, and personal wealth management do not require an advisor.
When you start your “I Want to Be a Millionaire” journey, keep these topics at the bottom of your questionnaires.
- Taxation on profit
- Brokerages and Commissions
- Expense Ratio
- Annual Charges
Instead of them, you may talk about these while creating your portfolio.
- Balancing and Restructuring
- Asset Allocation
- Time Horizon
- Your Likes and Dislikes
- Damage Control Mechanism
- Exit Strategy
- Communication and Record-Keeping
- Responsibility and Liability
- Plans to make the advisor a passive family member.
Now let me pen about the 4th category of people. Fence Sitters – who know everything. They always feel like “I got this”. They have impeccable ability to Buy High and Sell Low. They sell in panic and buy at the time of euphoria. These investors hand over Mutual Funds and Stocks to their rightful owners.
Be an investor with absolute clarity. Your planning and my execution are the keys to becoming a Millionaire. A well-designed portfolio will have shock absorbers to counter any unfortunate events.
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