Managing Money is Hard
For two reasons.
The first : poor investment advice.
The second : how you think about money.
#1: The External Problem
Poor investment advice comes in two flavours.
The first is sometimes easier to spot.
This is “advice” from sales people who pose as investment advisors. They push products that are good for their commission but not for your portfolio.
The second type is well-meaning but much more dangerous.
This is a “Friendly Hit & Run”. A friend may suggest an investment. There is no ulterior motive. They want to help. And you end up invested in something that may not be right for you.
You should not ask questions like:
“What is a good investment right now?”
“Is this a good time to get into the equity markets?”
“I have this amount of money to invest. Where do you think I should invest it?”
These are bad questions that will get your portfolio into trouble.
Asking for sound investment advice
Investment advice should be based on a holistic view of your life.
Good investments choices are determined by your reality: goals, assets, liabilities, etc.
You need to share personal and financial details about your life.
In the absence of these details, investment advice is meaningless and possibly wrong.
Sharing these details is not easy but it is important. Just as with a doctor or lawyer, there can be no secrets between you and your financial advisor.
#2. The Internal Problem
The second challenge to managing your money lies within you. It comes from how you think about money.
There are many facets to this problem. Here are the main ones.
The “Fear” problem: Fear of losing money. Fear of missing out.
The “Greed” problem: We are tempted by investments that promise impossibly high returns. And we ignore the risks they bring.
The “Lack of plan” problem: You have no rules, no framework. This can be for many reasons.
The “Seat-of-the-pants” problem: We don’t like planning. We like living in the moment. Making a plan and implementing it seems hard.
The “Plenty-of-time” problem: We procrastinate planning, savings, investing.
The “Ostrich” problem: We don’t like facing up to our financial situation. We don’t like what we see. Fixing the problems seems hard. We are reminded of our mistakes. It often seems easier to live in an alternate-reality where all will be well in the end.
The AutoFi Approach
We combine the ideas of holistic, long-term advisory into a rules-based method of investing.
We believe that investing should not be based on emotions or hot-tips.
Our investment choices should be based on a well thought out plan.
And the plan must be governed by a set of rules that help us decide what to do when.
These rules should be immune to the vagaries of financial markets.
They should not change just because the stock markets are up or interest rates are down.
This methodical approach helps provide clarity on what we are doing and why.
It helps avoid mistakes that may come from fear and greed. Or from ad-hoc decisions based on tips or gut-instinct.
What to expect from AutoFi
- We will help you make a plan, implement it, track it and revise it when life’s circumstances change.
- Our role is not to beat the markets. Or predict what the market is going to do.
- There is no formula to pick the “best” mutual fund or the “best” portfolio.
- We are conservative in our investing choices.
- We take a patient, long-term view and don’t like to trade in and out of investments.
- We prefer to work with mutual funds. They help to easily build a diversified portfolio.
- Among equity funds, we choose the safer ones that invest in large companies. We avoid aggressive funds that focus on specific economic sectors or invest in small companies.
- We avoid taking risk in the debt part of the portfolio and prefer steady debt funds.
- We believe that risk and return should lie in the equity part of the portfolio.
- We recognise that human psychology is the strongest and weakest part of the portfolio. We help you make choices that let you sleep better at night.
Ready to get started?
We encourage you to think carefully about what you have read here.
It is vitally important that you feel comfortable with how we approach investing.
When we get started, we’ll spend some time understanding your reality.
Based on what you tell us, we will create and present an investment plan to you.
Creating the plan is usually an iterative process. This is not simply a mathematical exercise. You need to be comfortable with the plan.
Once we agree on the plan, we start implementing and tracking it.
AutoFi (Autofitech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor