Apr 23 2009
Financial Crisis- Can Wealth Management solve it?
When talked about wealth management as a concept, people tend to reckon of it being created for high net worth individuals (HNIs) or niche segment.
Wealth management is unanimous for every single person living in this world. It plays a pivotal role in multiplying the nest eggs through optimum utilization of investment opportunities.
Investments are broadly classified as long term, short term, high risk and low risk. Traditionally it was meant to save and invest in certificate of deposits. Stocks came with an image of high risk and high return. But to match with the leap taken by our standard of living, one has to think out of the box. One has to base their portfolios predominantly according to their age, risk appetite and financial goals.
After one decides upon the investment vehicle that comprises of diversification of funds into stocks, mutual funds, bonds, gold, real estate, certificate of deposits and money markets they have to stick to a continuous financial discipline. In other words, strategies to invest and strategies to regularly invest have to go hand in hand.
Systematic investment planning (SIP) is the doctrine followed by many for financial discipline. Under this method one allocates certain portion of funds regularly on a particular date of every month or of few months or may be a year. Usually investors tend to allocate their funds into their portfolio the day next to their receiving of paychecks, so that they do not go overboard in spending. Systematic investment planning (SIP) also has an advantage of cost averaging. This is mainly expedient for investments that have high volatility. For example, if stock A is brought at one shot there is a risk of purchasing it at higher stock price. But under an SIP method it averages out the cost as it is invested at regular intervals. Thus, it is rightly said that wealth management is a journey and not a destination. It is a tool that if used appropriately certainly brings out magical results for each one of us.
-Sophia S Antonysamy
