Motivational Guru Anthony Robbins says “The quality of your questions determines the quality of your life”. In the investment parlance, I would like to say ” The quality of your questions determines the quality of your portfolio”.
In most of the cases, investors ask these questions-
How is the market these days?
What do you see the market behave in the near future?
Should I invest or wait for correction?
Which is the best fund or stock to invest in these days?
The correct answers to these questions may not be possible without faking the answer. No one including Warren Buffet and Peter Lynch knows the answers to these questions. Yes, they have admitted it.
If you keep asking these questions, your advisor may recommend the incorrect remedy and your portfolio will be doomed to mediocrity.
So, what are the right questions to be asked? Here is a list of a few of them-
1) What should be my right asset allocation given my financial goals, risk profile and time horizon of investments?
2) How do you select the right funds? Do you select on the basis of past performance or follow any other criteria?
3) What is the risk management process in your selected list of funds?
4) When do you consider replacing the selected funds?
5) Should I invest the entire amount in one go or is the investment through systematic route preferable?
6) How often would you review my portfolio?
7) What are the fall back options for me if I am not able to achieve my financial goals?
These questions not only determine the quality of your portfolio, they may also help you select the right advisor whom you can make the custodian of your hard-earned money.
Manoj Pandey
CFP
