A fund manager's job is difficult and it is subjected criticism.Be it the fund of self or others, fund management relies on facts of today and assumptions of tomorrow! One can be sure of facts today but not so sure of one's assumptions of tomorrow..!! So critical that is..over the years the fund owner keeps doing.. what if ..analysis!! So does the fund manager..!! After all no one wants one's work resulting unfruitful.
As they say not to put all the eggs in one basket, the diversification is the fundamental factor in investment dynamics. That holds good universally at all times. How do we select our baskets, right? i.e .. right number of eggs in right basket..?
In a developing economy with vast demographics, the earning graph of any normal small investor should be 15%-25% nett after taxes, cumulative from all baskets, in the long term. These are most realistic figures, given the time frame of earning life (25 years). The normal 30% on risk (equities), 20% on assured (debentures, govt security bonds),10% short term deposits (bank FDs), 30% on real estate and 10% ventures (business, movable assets, high risk factors) for a normal risk - return balance.
As my observation goes, the commitment to various smaller set of regular investment options is better than building one big corpus. It is a forcible saving option as well. It can avoid the risk of unwanted spending (uncalculated investment) out of excess liquidity.
Fund management needs to be a desciplined activity. The regular review of investments and being self critical about the earlier decisions do help to improve. The personal overdraft facilities like credit cards or instant loans are lucrative but drain out the valuable hard earned money in a short while. The credit cards should not be used for purchases with payout as installment option. That proves costly. The credit card is a best way of payment which requires larger liquid cash at one go which can be settled with the 100% payment instantly by diverting liquid cash from other sources, ideally interest free 24days!!
The loan contributes to the good return and it is good means of exploiting an assured opportunity. The loan enhances the returns when it is availed to invest in revenue earning opportunity, to invest in appreciating asset, long term benefit (monetory or otherwise) where the estimated assurance of returns is more than interest payout within the estimated time. Real estate, Gold, business, education etc. The loan availed for wedding/parties, holidays, automobiles (for luxury purpose), luxuries are do not result in appreciation. They are expenditures that fulfil personal desires without monetory gain. The loan on expenditures should be restricted to 20% of the entire debt and should have a clearence cycle of 2-3 years (short term) or less (as per the life on what ever that is spent). It shouldn't be the case where an overseas vacation expenses are paid by EMI beyond 2 years where the exciting memories of holiday get fresh only with those pictures..!
I find that it is very important for each person to have a finacial dream..!! I.e to dream of having certain sum of money/networth, to dream of acquirigng an immovable asset, to have a good number of valuables and so on...! A repeated thought of such desire passively brings a descipline to attain that dream over a period of time!!
Lastly, try to go in detail with your assets to find if there is any idle asset and utilize that to bring some revenue, either big or small.! If nothing at all...check if you have some idle time with you that could add some numbers into your bank balance or increase a worth into the capitals over years..!! I bet everyone has this one.. for sure..!
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