The Financial Literacy campaign has recently emerged as one of the finest ways to handhold Investors. Needless to say, it is getting support from all financial institutions and Regulators on a routine basis.
In this continued pursuit, it is essential to demarcate the need and appropriateness of such campaigns for even Veteran groups of Investors. A class of investor who has had exposure in the capital market across longer length and in all cycles of markets.
Ultra HNI as commonly identified have advantageous characteristics of good cash flow, adequate liquidity and surplus on their income side. The Income saving ratio is not the teething issue for this segment. Ideally their book keeping of investment, valuation and upkeeping of assets are managed by some authorized person of the institution. A veteran group of investors should maintain an investment office to look after this aspect of investment.
There are instances and I should say regular instances where a large portfolio was not documented. Record keeping was irregular and many complexities related to Taxation, realizing benefit of corporate action etc were unwarranted outcomes. Book keeping has a compliance aspect as well, hence every investor should ensure it is adequately attended.
Every Veteran investor should balance his resources and needs among the different aspects of financial planning. Given the financial status, Tax planning and Estate Planning should be given due consideration.
Tax planning is a must at this level of Portfolio. The income arising from Interest, dividend and capital gain from various sources are to be accounted for timely. Tax efficiency at times becomes the major criterion behind selecting or rejecting investment proposals. And it must be considered carefully.
Estate Planning which deals with succession rules and procedure is another important point for all veteran investors. As we know Process of will and succession involves understanding of law and taxation. It is always advised to hire the service of lawyer or estate planner to ensure smooth transfer of estate.
Every veteran investor like any other group of investors is equally concerned about return on their investment. Though the return is the function of the portfolio, portfolio management and cycle of economy we are into. Given the big portfolio size a veteran investor must have an idea about micro and macro parameter movement of Economy. Not that all can forecast the movement and direction of the economic cycle, still an idea about the macro parameter movement and its impact of valuation on different asset classes can certainly be known about.
While building a Portfolio a special mention of PMS and AIF deserves to be considered. PMS and AIF minimum size is Rs 50 lac and Rs 1 Cr and hence only veterans may reap the benefit of this product. These are customized products and specialized products for any investor. Though the expenses and fee of such a product are little higher than the conventional capital market product. Still, it needs a relook.
Nowadays every HNI and veteran investor are given a detailed portfolio with risk and return of the portfolio explained under various categories. While many parameters are used for both risk and return depiction, a Veteran must understand reading quantitative indicators. Indicators like Standard Deviation, Beta, Duration, Sharpe ratio, Treynor Ratio and Sortino ratio are quite often used to indicate the risk and risk adjusted return of a portfolio. A true analysis of a portfolio can emerge only after considering IRR/ XIRR in light of the above-mentioned Risk and risk adjusted return parameter.
In the end, the need for life and Health insurance is imperative for all groups of investors. There are various ways to judge the humane life value for assessing Insurance needs. There are similarly different health insurance schemes that could fit into one requirement. The need of the rider, its cost and valuation are all necessary to be considered in finalizing a life or Health policy need of Investor.
In the end, in pursuit of financial accomplishment into one`s life, a veteran investor needs and wants are no less than any ordinary investor. Infect as the size of the portfolio grows, complexity adds on. Therefore, it is evidently suggested to spend mindful of time in looking after one portfolio or take help of a financial consultant in accomplishing this objective.
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