11 Nov 2022, 15:00 — 3 min read
Business is all about ideas, people and possibilities. Business growth requires understanding the dynamics of the overall situation and to plan accordingly. One of the ways to reach the mountain top is to plan investments and the investing process in an orderly fashion.
It is essential to make financial planning a structured process. You may need a financial adviser who helps you understand the risk of permanent loss of capital. Also, the need to look at goal-based investing is crucial. This helps to ensure discipline in structuring your personal capital. We recommend investing in the top quartile (top 25%) of the investment universe. You can consider making it the cornerstone of your investment thought. The benefit is a 3 - 4% likely outperformance over the index as per our experience over the last 5 years.
This involves looking at risks comprehensively and deciding the amount of risk that does not impact your day-to-day business functioning and peace of mind. If you are uncomfortable beyond a point, then it is time to keep it simple.
Risk depends upon your unique circumstances and understanding how things pan out in the overall scheme of things. That said a good way to mitigate risk is to keep abreast of trends by reading financial journals and blogs. If you are not fond of reading, your accounts team can analyse your balance sheet and give a snapshot assessment from time to time.
A prudent way to grow is to create different kinds of incomes. It means the right mix of liquid and illiquid assets which fosters your growth as an investor. This cashflow helps to enhance your liquidity situation. They can be classified primarily as long-term and short-term investments. Long-term includes pooled investments like Mutual Funds, Portfolio Management Services, Dividend from Stocks and short-term includes opportunities like Trading in Equities, and Fixed Income.
It is important to review your downside risks such as need for enhanced life cover, more coverage for the office, small things which keep the state of your personal universe stable and orderly. A good period for review is annual as business and personal circumstances may change at a moment’s notice and at times without any notice.
If we are prudent, we are likely to create assets personally as well on the business front.
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Posted byAnirudh Anand Gupta
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