Keep investment papers updated

shall check if all the papers relating to my investments are in order: This is as critical as investing since a loss of an important paper can lead to a lot of inconvenience. For example, if your mutual fund account statement is not updated with the number of units that you hold, you may miss out on the amount of dividend. If your contact address is not updated, you may lose out on important communications from the fund house, the broker, or your insurer. Also make sure to read all the papers, documents and letters sent to you from your mutual fund, broker, insurer and other companies related to your investments. If you dont understand something, seek help from your investment advisor. Over time that should help you evolve as an informed investor.

RESOLUTIONS

NEW YEAR
Seven key things that investors must keep in mind

Long-term players need not worry

Tarun Bhatia

Dont invest on mkt trend

shall not look at the market trend everyday and calculate the value of my portfolio: If you are a long-term investor, do not look at the sensex, the NAVs of mutual fund units you hold or the prices of stocks you have in your portfolio. Such an approach is for the traders and speculators who play in the market on a regular basis, and are used to market's fluctuations. For long-term investors, such acts can make you very concerned about your money. As a longterm player, you have time on your side. Your investment horizon can even out the daily volatilities over the years.

Keep objectives in mind

shall call up my financial planner/advisor and confirm if my portfolio and its objectives are fully in sync: In case the objectives of your portfolio are not in sync with its asset allocation, consult with your advisor to change it accordingly. Make it a habit to speak to your advisor on a regular basis, say 2-3 times a year, and generally try to have some idea about the investment scenario and check if your portfolio is performing in a way that should meet your long-term financial goals. If you don't do it on a regular basis, one fine morning you will find how off track you are from realising your financial dreams.

I I

Illustration: Ram

Never invest on tips

shall never invest based on tips and market rumours: Investing your hard-earned money on tips and rumours is akin to gambling. If you are not a speculator, but a long-term investor, never go for tips or fall for market rumours. Often, it is seen that a group of unscrupulous people, at times in cahoots with a company, spreads unsubstantiated news about the company to jack up stock price. Once gullible investors have fallen for such rumours, they exit and the stock price crashes. In the process these people make some money at the cost of small, unsuspecting investors. Invest only in good companies with a sound track record. If your risk profile allows you to invest in the stock market directly, your financial advisor should be able to guide you to the right stocks to put your money in.

Maintain a record
shall have all my investment information well documented: This is different from keeping your investment related documents in order. Maintain a notebook or a diary for this. When you make the investments, write the rationale for investing in the particular asset, be it mutual fund, stocks, bonds, gold or any other asset class. It should also contain the expected rates of return on the investments that should help you achieve your financial goals. Also write down the information that you believe is important to your investment decisions. Flip through its pages once in a while. This should help you evolve as an alert investor.

Keep it simple
shall keep my investment plan simple: Invest in those asset classes that you understand, at least a little it even if not fully. You may be tempted to invest in exotic products that promise far greater returns, but maybe there are some hidden costs, or ever worse, greater risks hidden in the fine print that can lead to big losses. So remember the adage about investments: "Be simple. Be stupid'. Such an approach may not make you a star investor, but at the same time in all probability you will not be left to count your losses.

Fight for your rights

shall fight for my rights as an investor: As the number of companies offering investment products grows, along with the number of investors, there is bound to be some problem for some investors related to their investments. In case you are one of those at the receiving end, for whatever reason, be sure to address the problem without much delay. The problems could be non-receipt of dividend in mutual funds or from companies, non-payment of interest on FDs or bonds, non-renewal of FD post maturity, or something else. But remember to approach the right forum to resolve it. And if not resolved on time, or to your satisfaction, escalate the problem to the next higher level.

very year, each one of us makes New Year resolutions which generally relate to our health, professional career or friends. We try hard to fulfill these promises some succeed but most fail. However, not many of us make a New Year resolution which talks about our financial health and investments. Given the current uncertain economic environment, this is one area you should not ignore. Financial markets are cyclical in nature and hence timing the market is almost next to impossible. But on an optimistic note, long-term investors dont have to worry about market volatility Here are few ba. sic resolutions that investors should make in sync with their investment objectives, risk taking appetite and time available. These are diversification, a long-term approach, disciplined investment at regular intervals rather than trying to time the market, and regular review of the financial plan. Diversify: Start the New Year by diversifying or allocating money into different asset classes which will meet your goals with respect to liquidity risk and , returns. Diversification makes investments less prone to market volatility as risk gets spread among various assets. Depending upon individual risk profiles and factors like age, income, expenses and earning capacity one's asset , allocation should be spread across equity debt, gold and cash/cash equivalent , Remain a long term investor and invest at regular intervals: A long-term investment perspective and a disciplined approach in terms of saving and investing at regular intervals form an integral part of any successful investment planning. Investors taking expo-

REMEMBER THE BASICS

tStart the New Year by diversifying or allocating money into different asset classes tInvest with long-term investor horizon and at regular intervals tReview your portfolio and stay informed about current events

sure to equity and looking for a disciplined approach towards wealth creation can benefit by investing via systematic investment plans (SIPs) in equity mutual funds.

NEXT WEEK
n the last few issues, we have dealt in detail with mutual fund as an important investment option. Next week we will introduce you to life insurance and try to give you the basic of it. Like mutual funds, insurance is also one of the important part of ones financial planning in which an individual is often required to allocate some funds.

Review regularly: While diversification and long term investments are important, another important clog in the wheel is regular review of portfolio and staying informed with current events. This helps one keep track of the underlying assets and also gives the option to rebalance the portfolio as per the changing financial environment. A regular portfolio tracking can help one to realign the portfolio to make best use of any medium term change in the financial environment. The writer is director , capital markets, Crisil Research