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Almost all investment advisors, portfolio management
companies, wealth management setups, Mutual Funds or
anybody in the business of fund management, promises a
“better” return. As an investor how do you evaluate the
best manager for your money? Should it be the one who
charges the least, the one who promises the highest
return, the one who has the maximum money under
management or the one who will take a share of profit as
his or her fees?
In our
Articles and Resources we explain in detail how
genuinely each one of these parameters could reflect a
positive and at the same time a negative of the
investment advisor.
What we discovered was that while
the best fund manager is an expert at understanding
specific instruments such as equity, government
security, gold, art, etc., it would be counterproductive
for such a specialist to focus on each investor’s
personal goals, resources and time horizon. However
these are the most important parameters for your
personal financial success.
An investment may be very successful
but for the investor to be successful he needs to have
invested the right amount in that investment and at the
right time! A successful investment and a successful
investor are not one and the same thing. Which is why a
personal financial advisor brings tremendous value to
planning your investments, choosing the right investment
managers and evaluating them correctly.
The key to managing a portfolio of investments is
understanding the relation of ‘how the investments are
selected’
to
‘what the outcome is likely to be’ in specific
situations. For example, investing in a company clearing
garbage
is not likely to see as many ups and downs compared to
an investment in a company making car parts.
Another portfolio of investments in two
Companies, one an ice-cream manufacturer and another
making sun-tan lotion might see more ups and
downs than a portfolio of investments
in an ice-cream company and a tea manufacturer. Can you
see why?
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