You need to Build and Manage a Multi-asset Portfolio
Investing in stocks of fundamentally sound companies, when they are available at a discount from their fair price and selling when market has priced them so high that future returns are likely to be low assures you of very good returns. See How
Investing in the 'right' Mutual Funds enables you to reduce risk through diversifying and earn high returns . You need to select funds that complement your Direct Stocks portfolio , have a healthy upside potential (not just good past returns) and preferably beat their benchmark index without exposing you to high risk. See How
Index Fund is a Mutual Fund (hence similar benefits), whose portfolio mimics a particular index (e.g. SENSEX 30, Nifty 50). They are much cheaper than MFs which are run by a Fund Manager. Index Funds become attractive when actively managed funds find it difficult to give higher returns to justify their high costs.
Equity always comes with risk. By allocating a portion to low-risk fixed-income assets you diversify your portfolio to better manage risk.
Debt Funds: Proportion of allocation depends on your risk profile and the market levels
Gold ETF: Gold is a hedge against inflation, currency risk and country risk. It is also an essential avenue for diversification.
Equity & Debt Asset Classes
Stocks/Shares ownership in a company
A portfolio of stocks (Some have debt instrument too)
A portfolio of stocks that is based on a particular index (e.g. Nifty 50)
Very low-risk fixed-income assets that invests in very short-term debts and Govt. securities
Long term debt, Govt. securities that give better than FD- returns
When to invest?
When fundamentally sound stocks are available at a discount from its fair value
When available with a good Potential Upside i.e. future returns
When there's no better opportunity in Direct Stocks & Mutual Funds
When market gets expensive
Always a fixed portion to be invested
To earn high returns on a long term basis. No cost investment in Stocks (except the Demat brokerage)
To complement Direct stock investment. Different investment styles work under different market conditions
Low cost diversification. More predictable returns. Easy-exit when a better opportunity in equity is available
To temporarily park funds and earn close to after tax FD-returns.When the markets move lower, then use it to buy more equity
To provide for Security need
Short-term drawdown at stock-level
High cost, Risks that a Fund Manager takes, Not as easy to exit as stocks
No customisation, Not many options available in India
Medium to High
Medium to Long-term
Medium to Long-term
Split your Investable Surplus between equity and debt based on your risk-profile and market levels. When market moves well above the fair value, reduce exposure to equity; and when market is at an attractive discount, increase investment in equity. This enhances your risk-adjusted returns!
Within Equity select Stocks , Mutual and Index funds in a manner that ensures a diversified portfolio. Choose a set of funds that follow different investing strategies and complements your direct stocks portfolio. This ensures that you are not buying more of the same and increasing your risk.
When asset prices change significantly, there is a need to reshuffle your portfolio. Sell the asset that now offer a lower risk-adjusted return based on fundamentals, and buy into new opportunities.
Answer 3 questions before investing in Stocks or Mutual Funds
How to invest in Stocks?
Knowing which stocks are investment-worthy and tracking them is the most crucial first step. Select stocks that you can own for a long time, benefit from compounded growth and create wealth.
Knowing the right price to buy or sell a stock based on its fundamentals gives investors the edge to act confidently when the market swings provide attractive opportunities.
Ensuring you buy the right quantity when the upside potential is attractive and likely to rise and selling when the upside potential is low and likely to worsen has a strong positive impact on your returns.
How to invest in Mutual Fund?
Selecting Mutual Funds based on the past performance is like driving a car looking at the rear view mirror.
To choose the right Mutual Funds look at the quality of underlying assets, consistency of returns and investing style and of the Fund Manager.
Out of the investment-worthy Mutual Funds, you need to select those that are likely to deliver attractive returns in the future – much higher than FD.
If a fund has a large holding of highly overpriced stocks it is unlikely to deliver good returns in the future and thus it is not the right time to buy it.
Your portfolio of funds must ensure you are rightly diversified. This requires selecting funds with different investment processes and hence different holding. When you buy funds which are currently out-performing you are likely to end up having more of the same, defeating the very purpose of investing in funds.
What will be valuable for you @ Moneyworks4me!
Free on Registration
1. Sahi Stocks?
Know which stocks are investment-worthy based on our detailed analysis of their 10-Years Performance and assessment of their long-term future prospects
2. Sahi Mutual Fund?
Choosing a MF based on the past performance is like driving by looking at the rear-view mirror. Know which Mutual Funds are right based on our assessment of their underlying assets and the consistency of performance
3. Mere liye kya Sahi hai?
For an investment to be Sahi for you, it has to be aligned to your risk-profile and make sense at the portfolio-level .
Check what's sahi for you with our Portfolio Manager. Be aware of risks in your portfolio real-time & know actions to reduce them, so that you don't lose money.
4. Sahi Principles?
Shastra in Sanskrit means - knowledge based on principles that are held to be timeless.
Through Investment Shastra, we share with you the timeless principles of investing and empower you to be a Sensible Investor
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