3 Big problems you generally face in your MUTUALFUND INVESTMENTS
Each of the above has the potential to cut down the returns, increase your costs and act as an impediment to the wealth creation ability of your investments in mutual funds.
Mutual Funds by nature are long term investments(though the opposite has been preached about them). Frequently changing mutual funds only add to your costs through taxes and exit loads. Once you identify a solid mutual fund it can be a part of your portfolio for years to come.
Take for example a fund like HDFC Top 200. The fund has been in existence for more than 10 years and has delivered a fabulous performance. Hence, it continues to deserve a place in most portfolios.
Having said that, it is important to assess the risk appetite and time horizon to determine which mutual fund really fits in your portfolio.
In our quest to diversify our portfolio, we end up holding too many mutual funds. In terms of diversification, you just have to ensure that you have the relevant exposure to market capitalization that is, large caps, mid caps, small caps and the investment styles, that is, value, growth or a mix of both.
In our view, 5 to 8 solid mutual fund schemes should be sufficient to help you achieve this diversification. Anything above 12 is diversity not diversification.
Finally, you have no idea what you invested in. "My Friend told me to do so". "It has got the highest star rating". This is FREE advice at work from friends, family, relatives, financial magazines, television, etc... Are they into PUBLIC service or CHARITY? What is for FREE? Think hard. Do not let your hard earned money go down the drain for FREE advice or tips.
Get an expert investment advisor who can understand your profile and needs and accordingly help you create and manage your mutual fund investments.
Our Financial Planning Process
You may be confused about how to distinguish Financial Planning from other kinds of financial advice. To help you understand what to expect from the Financial Planning process, FP practitioners follow certain standards - called Financial Planning Practice Standards - when providing Financial Planning advice. Practice Standards describe the process you should reasonably expect a Financial Planner to use during a Financial Planning engagement. These standards are based on a six-step Financial Planning process as prescribed by the Financial Planning Standards setting authorities around the world.
1. Establishing and defining the client-Planner relationship
The Financial Planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The Planner should explain fully how he will be paid and by whom. The Planner should also disclose any restrictions on his ability to give unbiased advice and disclose any conflicts of interests. You and the Planner should agree on how long the professional relationship should last and how decisions will be made.
2. Gathering client data, including goals.
The Financial Planner should ask for information about your financial situation. You and the Planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The Financial Planner should gather all the necessary documents before giving you the advice you need.
3. Analyzing and evaluating your financial status.
The Financial Planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you may have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
4. Developing and presenting Financial Planning recommendations and/or alternatives.
The Financial Planner should offer Financial Planning recommendations that address your goals, based on the information provided by you. The Planner should go over the recommendations with you to help you understand them so that you make informed decisions. The Planner should also listen to your concerns and revise the recommendations as appropriate.
5. Implementing the Financial Planning recommendations.
You and the Planner should agree on how the recommendations will be carried out. The Planner may carry out the recommendations or serve as your 'coach', coordinating the whole process with you and other professionals such as solicitors or stockbrokers.
6. Monitoring the Financial Planning recommendations.
You and the Planner should agree on who will monitor your progress towards your goals. If the Planner is in charge of the process, she should report to you personally to review your situation and adjust the recommendations, if needed, as your life changes.
So, what are you thinking now, contact us now, and put the first step ahead for being a crorepati
1. You have been changing funds in less than 2 years
2. You hold too many mutual funds, 40, 50 or may be 60 mutual fund schemes
3. You have no idea as to what you are invested in
Each of the above has the potential to cut down the returns, increase your costs and act as an impediment to the wealth creation ability of your investments in mutual funds.
Mutual Funds by nature are long term investments(though the opposite has been preached about them). Frequently changing mutual funds only add to your costs through taxes and exit loads. Once you identify a solid mutual fund it can be a part of your portfolio for years to come.
Take for example a fund like HDFC Top 200. The fund has been in existence for more than 10 years and has delivered a fabulous performance. Hence, it continues to deserve a place in most portfolios.
Having said that, it is important to assess the risk appetite and time horizon to determine which mutual fund really fits in your portfolio.
In our quest to diversify our portfolio, we end up holding too many mutual funds. In terms of diversification, you just have to ensure that you have the relevant exposure to market capitalization that is, large caps, mid caps, small caps and the investment styles, that is, value, growth or a mix of both.
In our view, 5 to 8 solid mutual fund schemes should be sufficient to help you achieve this diversification. Anything above 12 is diversity not diversification.
Finally, you have no idea what you invested in. "My Friend told me to do so". "It has got the highest star rating". This is FREE advice at work from friends, family, relatives, financial magazines, television, etc... Are they into PUBLIC service or CHARITY? What is for FREE? Think hard. Do not let your hard earned money go down the drain for FREE advice or tips.
Get an expert investment advisor who can understand your profile and needs and accordingly help you create and manage your mutual fund investments.
Our Financial Planning Process
You may be confused about how to distinguish Financial Planning from other kinds of financial advice. To help you understand what to expect from the Financial Planning process, FP practitioners follow certain standards - called Financial Planning Practice Standards - when providing Financial Planning advice. Practice Standards describe the process you should reasonably expect a Financial Planner to use during a Financial Planning engagement. These standards are based on a six-step Financial Planning process as prescribed by the Financial Planning Standards setting authorities around the world.
The Financial Planning process consists of the following basic six steps:
1. Establishing and defining the client-Planner relationship
The Financial Planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The Planner should explain fully how he will be paid and by whom. The Planner should also disclose any restrictions on his ability to give unbiased advice and disclose any conflicts of interests. You and the Planner should agree on how long the professional relationship should last and how decisions will be made.
2. Gathering client data, including goals.
The Financial Planner should ask for information about your financial situation. You and the Planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The Financial Planner should gather all the necessary documents before giving you the advice you need.
3. Analyzing and evaluating your financial status.
The Financial Planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you may have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
4. Developing and presenting Financial Planning recommendations and/or alternatives.
The Financial Planner should offer Financial Planning recommendations that address your goals, based on the information provided by you. The Planner should go over the recommendations with you to help you understand them so that you make informed decisions. The Planner should also listen to your concerns and revise the recommendations as appropriate.
5. Implementing the Financial Planning recommendations.
You and the Planner should agree on how the recommendations will be carried out. The Planner may carry out the recommendations or serve as your 'coach', coordinating the whole process with you and other professionals such as solicitors or stockbrokers.
6. Monitoring the Financial Planning recommendations.
You and the Planner should agree on who will monitor your progress towards your goals. If the Planner is in charge of the process, she should report to you personally to review your situation and adjust the recommendations, if needed, as your life changes.
So, what are you thinking now, contact us now, and put the first step ahead for being a crorepati
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