LifeSchool : Investment Advice

I’ve been investing for the better part of a decade now. Insurance, stock, mutual funds, structured products, real estate. (The only no-no has been derivatives cause it just sounded too not-me.)

Yet one learns all the time. The most recent learning ? that “portfolio allocation strategy” is more than just a phrase.

Part of my investments are debt heavy, and defensive. Another part was meant to be the aggressive part which was to pull up the overall numbers. The idea was also to not worry about this for a 3-5 year timeframe, since thats a growth story for the Indian economy that I totally believe in.

The mistake ?

I’d had a decent mix of stocks for this part of the investment for a few years, and assumed the PMS product would continue with a similar philosophy when my investment advisors suggested the same. In hindsight (and for the future) I should’ve tried understanding clearly the goals and approach of the PMS before stepping in. Its the same stock, the same kind of research that they’d provided earlier, but very different results. Its not merely the difference between a bull and a bear market (have been through those earlier) but the difference in the goals and aggression levels for the portfolio.

The PMS was trying to be defensive on behalf of a large set of its investors and took large cash positions – and this was at odds with my intent. So it could obviously not cash in on opportunities when the markets recovered.

Lesson learnt : Just because the product says its of asset class X, do NOT assume that as the whole truth. If the goals a product is trying to achieve are not clear to you or are clearly divergent, stay away!


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