The importance of money can hardly be over-emphasized. Just like each phase of life demands a different version of you, your money should also evolve and match up to your financial needs at every step. While most knowledge about investing is easily available, it is highly under-utilized due to lack of discipline and oversight. At FinFix®, we understand the common issues that investors face, behavioral biases which influence them, and the mistakes they tend to make. Therefore, we strive to ensure that investors are made aware of such fallacies before making any investment decisions.
When it comes to investing, more often than not, the discussions revolve around choosing the best schemes, products, or the ‘right’ timing in the markets. Investors tend to hunt for the top performers in the market with questions such as ‘which is the best performing mid-cap fund?’ The questions change in bear markets—‘Oh, my scheme is down 30%. Should I redeem and invest in gold instead?’ and so on. Then there are questions related to the timing of investing—‘Is it a good time to invest in equities or should I wait for the markets to correct?’ Such questions clearly reflect that we spend a lot of time in deciding the ‘perfect’ product and entry point in the markets.
While product selection and time are important variables, they can get us too involved, leading us to miss out on the bigger picture. Over the years, it has been observed that various products, across varied asset classes, have different attributes and thus tend to perform differently during market cycles and time periods. This phenomenon forms the basis of asset allocation, which involves dividing an investment portfolio among different asset categories, such as equities, bonds, real estate, and gold. Thus, instead of chasing winners, it is important to ensure the right asset allocation, as it insulates investment portfolios from drastic volatility, resulting in a smoother investment journey. Several studies clearly indicate that it is not the product or time, but the right asset allocation that determines 85–90% of the portfolio performance over a long run.
At FinFix®, we take a top-down approach and follow the principle of asset allocation to build a robust portfolio that can withstand different market cycles. Based on asset allocation, we work towards identifying the best-in-class investment products across asset classes (such as equity, fixed income, gold) that are aptly compatible with your risk tolerance and financial goals. The right asset allocation is a steppingstone to a successful investment strategy. We use this approach to make well-informed, effective decisions to create wealth.