WHY
EQUITIES?
The aim of investment should be wealth creation and, therefore, it should beat the inflation by a wide margin to create real returns. Predominantly, different types of asset classes available for an investor are
a) Fixed income
b) Gold
c) Real estate
d) Equity
DECODING REAL RETURNS FROM FIXED INCOME ASSETS
Traditional forms of investment such as fixed deposits and gold have limited upside of 6% to 9% average annual return, which fail to beat inflation by a margin barely creating any real return. Fixed income instrument gives returns that more or less mirror inflation. Effectively, these returns in ‘real’ terms from fixed income are paltry (2-3% over the inflation) or even negative at times. The average inflation over the last couple of years is 5%. So the net pre-tax return for a debt instrument with 7% annual yield is effectively 2% (7%-5%). This is what you get on an investment of 7% per annum on five-year fixed deposits.
POTENTIAL OF EQUITY
If your goal is to build wealth in future, a bond that pays a real return of low single digit isn’t going to help, while equity investment as an asset class have actually consistently created wealth over the long term.
Equities is an ideal investment vehicle if one needs to beat the inflation by a wide margin, equity investment as an asset class have potential to give an average annual return in the range between 13% to 25% or even more, only condition, the investment has to be for long term, say 3 to 5 years or maybe more. Equities have been consistently proven to beat the inflation despite the volatility due to different factors.
Equities offer what is called the magic of compounding, which enables the growth of investment multiply over a long period of investment. Now compared with terms of risk involved, equities shine over the long term. If you consider, the risk of the short-term market fluctuations, the equity would be riskier than the fixed income. However, as the holding period grows, the risk decreases while the compounded real return increases significantly.
Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception
"George Soros"
WHY PMS?
(PORTFOLIO/INVESTMENT MANAGEMENT SERVICE)
WHY DOES CONVICTION MATTER WHEN INVESTING IN EQUITY?
Successful investing takes hard work and effort. Knowing something is generally better than nothing. But in the equity market it is crucial that individual investors have a clear understanding of what they are doing with their money. Retail investor usually does not know or does not have the where-with-all to understand the complexities of the market. Equity investment requires high conviction and investors who do their homework are the ones that succeed. If you don’t have the time to fully understand what to do with your money, then having someone to manage your investments is not a bad idea. The cost of investing in something that you do not fully understand far outweighs the cost of using an Investment expert. Think of a partially informed investor as a partially informed surgeon; the mistakes could be severely injurious to your financial health.
Direct equity investors are often seen disappointed with the performance of their portfolios, as human emotions of greed and fear makes them commit errors. Also, all equity investments require regular monitoring for cleaning up holdings that become junk with time, hence it is a time-consuming activity. All these reasons and more, make ‘Portfolio Management Services’ more suitable for the ones wanting to participate in equity market particularly HNIs (high net worth individuals). Portfolio management services minimizes the risks involved in investing and also increases the chances of making profits.
SOME BASICS OF PMS
The Portfolio Manager independently invests and manages client’s funds exclusively in listed Indian equities of companies with combination of high growth and value; with the objective of long term appreciation.
Portfolio Management Service is a tailor made professional service offered to cater the investments objective of different investor classes, the clients can be individual or institutions. If you are a conservative investor, your portfolio should have large cap/blue chip companies. Moderate investors should have multi cap companies and so on(refer 'Portfolio types' section for more details).
Investment is most intelligent when it is most businesslike
"Benjamin Graham"
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WHY 'THE SMART INVEST'?
WHAT ARE OUR INVESTING PRINCIPLES?
The foundation of successful investments is undoubtedly laid by a reliable and sustainable system. It is certainly important to develop, review, restructure a foolproof system on a regular basis in order to manage the investments and consistently achieve high returns in the longer run leading to capital appreciation. Some of the most important elements of our system are
The core investment philosophy revolves around two key aspects: first achieve capital protection (over time) and then follow it with capital appreciation.
Seek to invest in Indian equities that run quality businesses, enjoying sustained long-term growth prospects at fair and reasonable prices, operated by quality management and furthermore validating with technical analysis.
Embracing emotional discipline with diversified investment strategy does not merely provide for great cocktail party conversation, but also recognize that it work.
Indulging our investments and trades in excess quantity(more than we can handle) when the market is volatile will lead to a host of negative emotions that will cloud decision making and virtually guarantee failure. So every action of ours is in line with the risk appetite rejecting excess quantity in order to make informed decisions.
Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can't produce a baby in one month by getting nine women pregnant
"Warren Buffet"
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