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You are different and so are your investment needs and objectives


How many of you want to wear the same clothes as your friends or neighbours? Not only is your size and fit different, but your taste would be different too. More importantly, you may also want to look different and feel different. But when it comes to investments, why is it that you think fixed deposits (FDs) will suit your investment needs and objectives, just because they suited your father, or that the insurance policy your neighbour bought or the mutual fund your colleague bought, is what you also need? Just as your clothes need to be tailored to suit you, your investments should be tailored to your needs. What may suit someone else may not suit you. Nor would they give you the same results. This article is about how your unique needs call for unique investment decisions.

Your financial goals are different

In all aspects of life, what our friends, colleagues, or other people do has an influence on us. More often than not, you hear about a fund that gave enormous returns. Or how investing in a particular fund was a bad decision. Or the claim that FD is the most stress-free investment option. You have a multitude of such opinions coming from various sources. But acting on just these opinions can prove to be detrimental.

You may ask how your investment goal is different and argue that if you are saving for your retirement, so is your friend. Yes, some financial goals are generic. Like retirement, education, or just wealth building. But do you have the same number of dependents? Are you going to send your kids to the same college? Or do you envision a similar kind of lifestyle? There are distinctive characteristics about your life that make each of your investment goals different. How much finances you will need will also depend on when you need it and how much you already have. You may start investing for your retirement by the age of 35 while someone else may start only at 45. With a longer timeframe, you can up your portfolio risk.

Your risk profile is different

More importantly, your appetite for risk is also different from that of others. By that, I don’t just mean the investment risk you are willing to take. There are other factors as well. These include whether or not you have a stable income, loans to tend to or other such commitments; all of these have an effect on how much risk you can take. While someone else may have ancestral assets to fall back on, you may need to build your own assets. Some of you may even be prone to higher medical expenses while some others are not. And these, in turn, will determine how much risk you can actually take.

You deal with your investments differently

Finally, there are behavioural aspects to be taken into consideration as well. Running Systematic Investment Plans (SIP) on different dates spread out throughout the month may help you catch volatility. But let’s say, you are the kind who doesn’t maintain a regular track on your bank balance and a SIP date falls somewhere in the last week of the month. It may so happen that you don’t have enough balance in your account and your monthly SIP payment gets bounced. In that case, you are better off with having your SIP installment dates in the first week of the month. With the return differential between different days being very low, you will lose more by skipping an SIP.

In that way, your attitude towards money and how you manage investments can vary. And you need to figure out what works for you. Spending patterns and how you prioritise needs are unique to you. Systematic plans, be it SIPs, STPs, or SWPs can come in handy. According to your requirements, they can be used for different purposes.

Therefore, making investment choices is simply not limited to going for a fund that a friend told you about or picking from the top performers. For an investment to work for you, all the risks and limitations should be considered. Likewise the investment opportunities and strategies that may give you optimal returns. Talk to your financial advisor today to make sure you are on the right track.

Views are personal: The author, Mr Pratik C. Udani, Founder, Udani Capital Services LLP

Disclaimer: The views expressed are of the author and are personal. TAMPL may or may not subscribe to the same. The views expressed in this article / video are in no way trying to predict the markets or to time them. The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you.


Mutual Fund investments are subject to market risks, read all scheme related documents carefully.



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