Investments is an integral part of any savings. Every rupee that is earned and not spent, automatically is saved. And, until and unless the money is locked in the form of currency in a locker it is definitely invested somewhere.
This definitely means that investments is an integral part of every persons life. Money, just like water is very fluid and will flow from higher terrain to lower terrain until it levels the terrain. This means that if you are not optimizing the return on the money invested by you there is someone somewhere who is leveraging on your money to make himself richer. So it is essential for every person to ensure that he is getting the most out of his savings by working upon a definite investment strategy.
But as it always said that where there is no pain there is no gain. In investments the pain comes in the form of one’s risk taking apetite.
There is a very old Investment Maxim “ Higher the Risk, Higher the Return”. So when you are expecting more return from your investment you should be prepared to assume more risk too. This is a very tricky trade-off.
Risks in investments come from many angles and need to be analysed closely against a complex matrix consisting of parameters such as volatility risk, default risk, liquidity risk, credit risk, time & inflation risk and many more.
Every asset class has a specific risk return profile and the same is dynamic in nature.
It is necessary to strike a balance among the various asset classes to ensure a proper asset allocation to mitigate all the risks associated with various investment vehicles as mentioned earlier. Not only is it essential to strike the right balance but the same also needs to be monitored constantly to ensure rebalancing of risk as an ongoing process.
We at Deontic work closely with your investments to understand your risk assuming capacity and ensure the right level of risk-return trade-off thereby optimizing the overall return on your portfolio of assets.