Is Your Advisor Following Some Basic Fundamentals While Doing Your Investment Planning?

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Is Your Advisor Following Some Basic Fundamentals While Doing Your Investment Planning?

10 Basic pointers which you as an investor should keep in mind-

1) Does your advisor tell you that asset allocation and proper diversification account for more than 90% of your investing success? Selection of funds and market timing only account for less than 10%? Should you devote more efforts to 90% or to 10%?

2) Does your advisor tell you that trying to catch the best fund may not work? Performance of the recent past is not the best indicator of future performance.

3) Does your advisor tell you to buy low-cost term insurance plans to cover your insurance requirement? Or does he/she insist on buying high cost ULIP and endowment plans?

4) Does your advisor tell you to stay invested or is he/she keep telling you to churn your portfolio in order to show that he/she is an active advisor?

5) Does your advisor understand your financial goals and risk profile before starting giving advice?

6) Is your advisor willing to track your financial discipline of monitoring your income and expenses and to accelerate your savings?

7) Your advisor may only talk about returns but is he/she equipped enough to understand the risk factors of investments?

8) Does your advisor tell you about the expense ratio of the recommended funds transparently?

9) Does your advisor tell you that frequent churning of the portfolio is the surest way of wealth destruction?

10) Does your advisor tell you to be cautious with funds who have delivered disproportionately high returns in the recent past?

If your advisor doesn’t tell you these, don’t hesitate to ask. If he/she gives evasive reply, consider changing your advisor.

It always pays to be suspectful with your every decision. Be it your financial decision or vote to choose the govt. Being suspectful is actually being alert.

Your alertness will help you choose the right advisor and right portfolio.

Manoj Pandey