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Understanding Our Recommendation

Home Mutual Fund Understanding Our Recommendation
Updated: 14-10-2024 11:13:41 AM

 

Creating wealth over the long-term depends primarily on 2 factors:

  • The right asset allocation i.e. the amount and proportion of money you invest in each asset class – equity, debt, commodities etc.
  • Investing as per the right asset allocation – with discipline

At Paisabazaar, our advice to build the right asset allocation starts from understanding you, your needs and goals as an investor.

The first step here is to determine your risk appetite. To do this seamlessly and accurately, we have built a set of simple questions. These questions have been crafted based on thorough research and deep consumer insights. We have taken utmost care to ensure these questions bring out the true risk profile of each investor. Potential avenues for bias have been negated with appropriate counter questions. When you answer all of them frankly, we start to gauge your risk profile.

Then we would need to know the duration of your financial goal.

When you are Investing for a financial goal (could be retirement, your child’s education or downpayment to buy a house), your asset allocation should be a function of how far the goal is from today (the goal duration) and the risk you intend to take (your risk profile).

This helps us determine your investment persona, basis which we recommend a customized asset allocation for you.

Our recommendations only include 3 asset classes – equity, debt and others. Currently, we have excluded real estate as an option. This is because ascertaining the value of real estate in certain cases can be tricky. Also, allocation towards such a high-ticket size investment basis the limited information we seek from consumers can lead to misleading advice.

However, we may believe certain portfolios and investors need exposure to the real estate sector. Here, we may recommend investments through REITS in the ‘Others’ category. ‘Others’ as an asset class in our recommendation can include –

  • exposure to commodities asset class, primarily gold and silver, through mutual funds
  • exposure to real estate as an asset class primarily through REITsWe hope this helps you understand the philosophy and reasoning behind the recommendations by our investment advisory.

Happy investing, till we come up with our next article.

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