A 30-minute guide to managing your investments

Nov 27 2012, 12:55 IST
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SummaryWhile most investors would like to make a quick buck, they must realise the risks involved. Risk of losing capital because of unscrupulous promoters is a risk-reward parameter one must look at before investing.

While most investors would like to make a quick buck, they must realise the risks involved. Risk of losing capital because of unscrupulous promoters is a risk-reward parameter one must look at before investing.

In fact, at a recent conference organised by Morningstar on investment management, Krishnamurthy Subramanian, professor at Indian Business School, underlined how one's behaviour drives to make or destroy wealth. How the brain needs to be tempered to think and act on what could be long-term gain for the investor.

Investing is a process and, once it becomes a part of your behaviour, possibilities of wealth getting destroyed are reduced. This is where basic hygiene in your investment portfolio comes into play.

With multiple asset classes, multiple intermediaries hawking products and the intention and desire to make quick money, one is driven into investing in a haphazard manner. How many of us would have the details of all the investments at one single point?

Your Public Provident Fund account could be maintained in Bangalore and you could be working in Mumbai and the Kisan Vikas Patrika and the NSC certificates could be with your parents in Delhi. It is possible that a few of the certificates would have long matured and are lying in your locker. But you aren’t alone in this.

Inculcating discipline is easier said than done. You need to rewire your brain and modulate your investment and investment management behaviour.

Many a times, you get confused between investment and investment management. Investment is setting aside your money across asset classes with the aim to create wealth. Investment management includes investment and the process to ensure that it is as per the predetermined asset allocation, in line with the goals, and that the investment documents are filed in easily retrievable location.

The process : Is investment management difficult? Yes and no. Is there a method to ensure that investment management can be carried out seamlessly? Yes. And it will not take more than 30 minutes in a month.

At the time of investment, you would have decided on the financial product and the allocation of your money and, then, you would monitor the same. Here, it is recommended that the investments are carried out based on the framework decided in the Investment Policy Statement (IPS) you have made. If not, it is recommended that you have an IPS.

Every month, say the first Saturday or Sunday, allocate 30 minutes of your time to look at your finances. It could start with checking your bank statements of the previous month and verifying the transactions. Check if any unknown debits or credits have taken place. If so, contact your relationship manager at the bank.

Managing portfolio: Look at your portfolio statements across mutual funds and direct equity. If any fresh purchases have taken place, do ensure the documents and papers are in place.

Also, plot the actual expenses incurred for the household with the budget and check the expense. This will help you to keep tab on the unwarranted expenditure.

Record in your excel sheet (start one, if you don’t have already) and record all important contacts, and update them for any change during the month.

Many a times, due to improper document management, an investor has to spend an inordinate amount of time to retrieve documents in an emergency. Also, inheritors may have to have face legal hurdles.

Investment management is today’s wired world is much easier. All you need is discipline to ensure that your hard-earned money is not wasted.

The author is founder and managing partner of Zeus

WealthWays LLP

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