I know a relative of mine who opts for an Insurance policy for every investment need of his. He has a friend who is an Insurance agent, and whenever my relative has surplus to invest, he calls his friend and invests the amount in whatever plan his friend suggests. So, let me ask you a simple question – is this the right approach to manage one’s surplus monies? I am sure most of you will be with me in saying a big NO. It is like visiting a carpenter and asking him to fix your fever. All our investments are to be done with a certain perspective in mind. You cannot choose one asset class for all your investments and vice-versa. For managing your investments the right way, you need to take note of few things.
1. Qualification of your Financial Planner/Advisor: Is your Financial Advisor aptly qualified to guide you on your investments? Or he is simply selling you the products which give him the maximum commission. Your investment is not to be treated as a source of more revenue for your Advisor. You are investing because you want your money to grow and beat inflation. So, you should go to an Advisor who is professionally qualified to do that.
2. Are you taking holistic approach towards your investments: You should not take your investments randomly. Each and every investment of yours ought to have a purpose, there should be a financial goal assigned towards it. Only if you are serious about your money, will your financial planner be serious about you.
3. Don’t do same kind of investments every time: Your investments should be a basket of different financial products and not products from the same basket. That doesn’t mean you should have each and every product available on the face of this earth. It simply means your portfolio should be diversified enough to take care of the market highs and lows. It should not be hugely diversified.
So, make a note of these points and next time you visit your financial advisor, ask yourself a question – Are you visiting a Cobbler to mend your investments?
Charu Hastir, CFPCM is founder of www.theriteplan.com. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/