Goal based Investments v/s Risk profile based investment

Check whether following similar series of events affected or may affect you…

• Uncle-next-door has parked One million into fixed deposit and you follow the suit
• Your brother-in-law has purchased high-risk-high-return shares and coaxed you into going for it.
• Some Life insurance agent uses fear factor, compelling enough for you to subscribe some sound insurance plan

But by then, your ‘ration’ for investments has dried up and you are left with no choice, but to repent alone…

When one invests money, it is important to consider the avenue based on the following two major aspects viz, Goal based and Risk profile based.

Goal based investing: This involves setting aside a certain amount of money in a particular financial product at regular intervals to meet a particular goal. For instance, you may regularly contribute into:

• Diversified equity mutual fund to meet your children’s education expenses
• Set aside you diwali bonus into a liquid fund because you intend to purchase a new car in next six months

Risk Profile based investing: This involves investing a certain proportion of your money in different financial products so that overall product mix suits your risk profile.

For instance if you are risk averse which mean if you are opposed to taking more risk you may go for following mix:

• 25% into equity fund
• 60% into debt based products
• 15% into Gold or other similar liquid asset

Investors do not often realize that both these are two sides of the same coin. They should ensure that while they go for goal-based investments, their mix has to match or rather suit their risk profile and vice-a-versa.

It’s not 'OR'.... it is 'AND'

Conclusion: Both these perspectives go hand-in-hand or in other words are two sides of the same coin.

It’s easy to conclude that as it is obvious that there has to be a balance. But for for the following reasons an investor largely fails to do so.

1. He or she is already too busy making money

2. Knowhow of his/her own profile vis-a-vis affinity of product features that’ll do justice to it.

It thus is necessary to make sincere efforts to talk to experts helping you understand your own risk profile and suitable products. Cedrus Wealth Partners have their own structured approach to help not only to choose the right mix but also to maintain its sanity in line with change in market and with your own dynamics too.