1. Our investment decisions are also influenced by biases like "over-optimism" or "conservatism" leading to "under-reaction" or "over-reaction" to market realities at different points of time.
2. Our financial plan should, therefore, suit our own risk profile, assessed through questionnaires, and investment products should be chosen accordingly, to take care of our expenses and goals.
3. For instance, debt instruments have interest rate movements and equity instruments have market-related movements, and that's where our individual risk appetite comes in.
4. As a consequence, it's never about the instrument alone, but all about its mismatch with our risk profile, as what is right for one may not be right for someone else.
5. Therefore, our portfolio should be built by ensuring:-
a) product suitability with risk profile,
b) portfolio quality with no compromise,
c) diversification, as even best research isn’t error-free, and
d) appropriate time frame to deliver performance.
2. Our financial plan should, therefore, suit our own risk profile, assessed through questionnaires, and investment products should be chosen accordingly, to take care of our expenses and goals.
3. For instance, debt instruments have interest rate movements and equity instruments have market-related movements, and that's where our individual risk appetite comes in.
4. As a consequence, it's never about the instrument alone, but all about its mismatch with our risk profile, as what is right for one may not be right for someone else.
5. Therefore, our portfolio should be built by ensuring:-
a) product suitability with risk profile,
b) portfolio quality with no compromise,
c) diversification, as even best research isn’t error-free, and
d) appropriate time frame to deliver performance.