4 Choices that Smart Investors Make

Posted On Wednesday, Apr 01, 2015


It’s April Fools’ Day, the day people play pranks on others, taking them on a ride for fun. Unfortunately in the Indian financial context plenty of investors have been taken for a ride in the past, because of ignorance on their part and mis-selling by others.

Through the articles, views and news in our newsletters we have attempted to raise the awareness of investors and contribute to their knowledge. Helping you become smarter with managing investments, to be discerning with what is good and right.

A couple of scenarios addressed in our past newsletters are presented below; pick your choice about what you would do in each of those situations from the two options provided. Getting them right would indicate that you cannot be taken for a ride in the financial world!

1. You're at the bank and have been told about an interesting fund advertisement. It’s been around since a few years but its performance in the last one year in particular is just mind-boggling. You -
    a. Don't want to miss the golden opportunity to invest in such a great fund and so fill
       the forms right away
    b. Know that performance over such short terms may not reflect the fund’s true quality and
       want to look at more details before deciding to invest

2. The investments you made 3 years ago in the markets have done very well as the markets have risen much. Which of these describe your tendency -
    a. This is the time to redeem the investments and keep it safe in FDs. What if the markets
        collapse and I forfeit what was earned?
    b. Your investments are linked to specific goals years away. The investments must not be
        touched yet; they must be allowed to compound

3. Come across two ELSS funds, both performing decently over the past many years. One is from a big, popular fund house, the other from a smaller one. You choose -
    a. The one from the bigger fund house, of course. Bigger brands obviously mean more
        reliability and performance.
    b. The one that has lower expense ratio and portfolio turnover. Brands matter, but not
        necessarily their size.

4. The stock markets are soaring to new highs week after week with occasional dips. Just about everybody is optimistic about investments, even the old uncle next door. Now you have landed a jackpot as bonus and want to invest in the markets for the long term. What would you do -
    a. Invest it lumpsum in equities because the markets are on the way up. No way I’m missing
       the bus!
    b. Choose an SIP and invest the amount over several months because the markets are
       experiencing volatility

If you chose option (b) for all the scenarios, kudos!! You are a discerning investor and are prepared to take responsibility, spending time and efforts to understand facts before making investment decisions. If your options were different, you could still be on the path to becoming a smart investor in time.

Stay informed on investments through our articles and be confident that while your friends or family might play a prank on you for April Fools’ Day, no financial pranks would succeed!

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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