Understanding the ‘WEALTH MANAGEMENT CYCLE’

Whether in a Bull Run or in a Bear Run, every Mutual Fund Investor has the right to be educated, aware and comfortable regarding his investments. To get such knowledge & comfort factor, the below mentioned information needs to be thoroughly understood once and for all:

There are 47 Mutual Fund Companies and around 2500 Mutual Fund Schemes. We have filtered the Top 25 – 30 MF Schemes for you.

Let us start from the beginning.

Your New / Existing Mutual Funds portfolio is very carefully designed or redesigned (by switching into more profitable funds) after we understand your:

1 Age.

2 Time Horizon of your Investments.

3 The Objective of your Investments.

With the slightest change in any of these 3 parameters, at any stage of your life, the advisory, from our end, of the recommended fund, will immediately change.

It is crucially important to understand that the term used to evaluate your percentage  returns is not ‘returns’ but ‘Average Returns’, also known as CAGR (compounded average growth rate), which goes to show that any investment in a Mutual Fund is a minimum 3 -4 year investment which will give you an average return between 10% –  20%.

It is extremely vital to understand that the Mutual Funds industry like any other Asset Class is Cyclical. Which means that there will be long periods of ‘Bull Runs’ followed by Corrections, also known as ‘Bear Runs’, which then again will be followed by ‘Bull Runs’ and so it goes on. The mental attitude of an Intelligent Investor is that he neither panics in a bear run when the returns are low nor does he rejoice in a bull run where he gets to see good returns in his portfolio. An Intelligent and informed Investor with the guidance of his Wealth Manager understands WHAT EXACTLY TO DO in a Bear / Bull Run.

Let us start with the Bear Run phase. Here your MF Portfolio will show lower returns for a period ranging from few months to up to a year or two. In this phase the Intelligent Investor does either of two things. Firstly he will never ever panic and BOOK his ‘notional loss’. He will never make his notional loss (because the Units of his portfolio are still intact) Real Loss. Secondly and most importantly, if he has even a single penny spare with him, he will take the greatest joy in investing in such a bear run because he knows that ‘Real Money’ is made by investing when the markets are at a low. For example, in 2008 when the great correction happened, when the sensex fell from 21000 to 8000 levels, the majority got busy booking their notional losses to real losses. And that was exactly when many intelligent investors also made their fortunes by making huge investments whose portfolios today are showing over 400% profits. Thus every correction in the markets provides you an excellent OPPORTUNITY to make money.

Now let us analyse the Bull Run phase. Here your MF Portfolio will be showing high returns. Again the Bull Run too just like the Bear Run can last from a few months to up to a year or more. Should you invest in this phase? Yes, but only if your time horizon of investment is more than 3 – 4 years. But what about your existing portfolio which is showing profits in excess of let us say 20%- 25% returns or maybe more? This is where our special software feature of ‘Automatic Profit Booking’ comes in wherein in every bull run, we ‘Switch’ the principal plus profit to Liquid Funds which are a temporary parking space of your investment. When the correction bottoms out, the amount is ‘switched’ back to the same equity fund. Thus we ‘Sell at a High’ and ‘Enter at a Low’. This activity of switching is done only once in a year or two. Our ‘Automatic Profit Booking’ Feature which none of our competition anywhere in India have on offer, is one of our main USPs which enables us to do ‘Active Portfolio Management’ vis-a-vis the normally practiced  ‘Passive Portfolio Management’.

Correction of your Mutual Funds Portfolio : We are mostly contacted by investors who already have a Mutual Funds Portfolio which is either not performing as well as it should or is not being managed from the Advisory and Technology point of view, as well as it should be. Portfolio Correction, being one of our main specialisations, entails at times redemption of some funds and ‘switching’ of funds into better funds. Switching can sometime lead to an exit load of 1%, which eventually very soon proves to be very insignificant just by the virtue of being in a more profitable fund. The better fund immediately starts giving good returns as you can track on our portal http://www.RisingInvestment.com . Switching into different funds are also done based on the parameters of Age, Time Horizon of Investment and the Objective of Investments. For example, if we come across a portfolio of a senior citizen whose current investments are in micro cap, small cap, multi cap categories, which are high risk-high return categories (excellent for our younger investors), we will immediately switch such funds into Balanced Funds which have govt. securities in it and are far safer for him and will give him a monthly tax free return of around 1%. And he is very happy with that.

External Influences: An Investor is constantly bombarded with different views and opinions of people regarding his portfolio and its performance. These influences should be educative but not misleading, distractive or confusing. You can safely read an article somewhere and discuss the same with us, as wealth management for us is a two-way interactive process.  We are always happy to learn anything useful from you which can in turn benefit your portfolio. But be aware and wary of the jack-of-all-trades who are not specialists in their work and are trying to influence you to make decisions regarding your portfolio. Also beware of Bank Relationship / Sales Managers, as their advice is purely target / revenue based and not at all ethical advisory based.  It is your portfolio and at the end of the day it is your right to make the final call, but discussing with us, before you decide to take any step will keep your money safe. After all Wealth Management is a lifelong relationship.

The Relaxing Times: Your Mutual Funds Portfolio is steadily built over the years sailing through the above mentioned bull/bear runs. The primary instruments used to build this wealth are the equity funds categorised as micro cap, small cap, mid cap, large cap, sectoral funds etc. These funds are deployed while you are in your youth and middle age group. Then comes a day when you have reached the age of 50. Your entire portfolio should now be shifted to ‘Secured Growth’ funds viz. Balanced Funds. Balanced Funds comprise of Bluechip Stocks & Govt. Securities, hence giving your portfolio an element of security as well as growth. Thus most of our clientele who are above the age of 50 are in Balanced Funds. The beauty of these funds are that they give a monthly tax free dividend of around 1%. So for e.g. if you have invested Rs. 10 Lacs or Rs. 1 crore, you safely expect an average tax free return of 1% per month. On an annualised basis their returns are ranging between 10% to 15%. This does not mean that the younger strata are not investing in Balanced Funds. Since they are the most popular choice of funds in India, they attract massive inflows from NRIs, FIIs and resident Indians. Balanced Funds are also known as Asset Funds or Feeder Funds as they support you literally on a monthly basis for life.

Mr. Humshad Charna has a rich work experience of previously working with Citibank & ICICI Prudential in New Delhi, post which he started his own Wealth Management firm: Rising Investment Financials wherein for the past 16 years he is managing over Rs. 260 crores of Investments in India’s Top Mutual Funds across over 800 families (NRI’s & Resident Indians)..

For Professional Investment advisory he can be contacted at: +91 9810375004.

E-mail: RisingInvestmentFinancials@gmail.com

Website: http://www.RisingInvestment.com

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