Portfolio Management

It is quite important for each one of us to have a portfolio of investment for ourself and our families future security. The portfolio should have a mix of various instruments available in the market, for e.g. equity, fixed deposit, provident fund, commodities (gold/silver), insurance, etc., the proportion may differ from individual to individual based on their risk appetite. Now, the question is how does one decide what is a better investment option currently for him/her and what proportion of their saving should go in each of the instruments.

There are various things one need to think before making the choice of the instrument.

• Firstly, the purpose of the investment, for e.g. if you are looking to invest so that you could have enough for you little princess marriage, one instrument for sure should be Gold ETFs.
• Secondly, time frame, when do you require the money back? Instruments like provident funds would offer a better return as compare to other fixed return instruments, but the investment period out here is 15yrs, that's too long.
• Thirdly, flavour of the market, one need to understand what is doing good and what not, in the current scenario, for e.g., if one looks at the equity market in India, there are stocks that are undervalued and this gives us an opportunity to make the most for ourself. With interest rate going down an undervalued stock would always give a better return for let say a period of 1yr.

One need to understand that there could be an immediate requirement of cash for an unforeseen event. I would therefore advice to keep 10% of their saving in bank account, this is not a standard requirement and hence one can tweak it according to once requirement.

Wealth creation is not an difficult task, but it is something that can be achieved by applying common sense and basic understanding of various markets. Lastly, for your benefit, if you don't understand the world of investment or don't have enough time to study the market, don't hesitate, take help of people with expertise knowledge, look for CFPs, it's their business they will do it better.