Do I need a PMS?

If people think (or know) that you have some connection to the stock markets, they do turn to you with queries. One of the questions that I am asked – for the past 3-4 years has been “Do I need to hand over my money to a Portfolio Manager?”
Whether an investor would benefit from having a PMS or not is a personal question, really. I’m no money manager. I am only a trainer – a financial domain trainer who dabbles in writing. And, in any capacity, I don’t give personal investment advice. This is not just a disclaimer, but a matter of fact. However some people I speak with think of what I say as some kind of financial advice.
But like a typical teacher, I can tell you that PMS has both advantages and drawbacks.
Usually big and large investors used a money manager to run a portion of the institution’s money and make all the investment decisions. Until recently, individual investors could only get access to these managers if they had millions of rupees to invest.

But in recent years, the minimum investment requirements – and, just as importantly costs – have come way down. Or so it seems.

When you open a PMS, it means you have signed a limited (if things go wrong you wonder how unlimited it was!)  power of attorney to let an investment professional run your portfolio or some portion of it. Generally speaking, the manager should (will) begin by determining your investment goals, time horizon and risk tolerance.
So, typically, the portfolio of a 70 year old school teacher without children will look very different from that of a 25 year old son of a millionaire who plays tennis.

We will see what are the advantages and disadvantages of a PMS – including the risks of broking, demat and PMS….

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