Many people write in or ask – what should my relationship manager tell me about my portfolio / new investments. Here I am trying to make a partial list.

1. I need to profile your risk – and your risk profile depends on your current net worth, gender, age, your income, dependents, past investment experience, your projected income, your needs and goals, etc.

2. Investments are subject to market risks – markets can go up or go down. Be mentally prepared for a vertical fall…remember from 21000 it went to 9000. We were lucky that the fall and rise were just as sharp…but it took a long long time to reach 21000 AGAIN.

3. Your investments, technically, can go down to zero.

4. If there is a lock-in, you may not be able to withdraw exactly when you need it!

5. Leverage hurts, leverage hurts and leverage hurts. There are 2 types of leverage –

a) when you borrow and invest and

b) when you buy things on ‘installment”. If you have COMMITTED to a Rs. 50 Lakhs fund but paid only Rs. 5 lakhs, rest assured the call can come EXACTLY when you do not want it to! Committing to a PMS is perhaps the stupidest thing to do, but it is routinely done in a bull market.

6. ULIP makes more money for the manufacturer, Term makes more sense for you.

7. A risk free, highest earning instrument is IMPOSSIBLE to find. It is a fictional character like Santa Claus…

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