“Hi, Doctor. I am not feeling well,” I said as I entered her swanky clinic.
“Long time Rahul. What happened?” she asked with a concern on her face.
“I was not well and was suffering from fever and allergies. Took the same medicines which you prescribed to my sister one month ago. But seems it is not working,” I replied with an irked smile.
“That was for her. Not for you. You are allergic to this composition.” She said after picking up one medicine out of the bundle of four. “So the other three tablets were fine?” I asked.
“The dosage was wrong for you and even though I would have prescribed you the same composition, the brand would have been different.”
Seeing my nervous face, she further continued, “The dosage and frequency for each medicine differ as per the tolerance level of the patient. Also, sometimes different pharmaceutical brands need to be prescribed for the same composition. There are many solutions to the same problem, but would all choose the same? It’s always about taking decisions that fit your situation and goals.” In two minutes, she made me realized the most essential element for making a successful decision.
Many times we forget the importance of personalisation in our lives. We often take medicines which worked for our friends relatives, try reading the books which others enjoyed only to quit it midway and most importantly, invest based on stock market tips and hearsays.
A few days back when I was chatting with my neighbour Ramu uncle, who told me how he committed a blunder by investing in stocks recommended by his friend. He is 65 years old retired citizen, who is primarily looking for low risk and stable returns. Once, his friend suggested him to invest in growth fund. These funds were high in risk and hence, had the potential to deliver high returns as well. On the other hand, Ramu uncle was looking for risk-free investment options in India. The disaster was obvious in his case.
Personalization is the first step while designing a portfolio, yet remains the most overlooked aspect of portfolio advisory services in India.
And it’s not just Ramu uncle or his friend to be blamed for the losses incurred. Even the brokers, stock advisor or wealth managers are aggressively looking out for ways to sell their products to achieve their targets. Now, this is not a wrong practice. The incorrect part is when you sell the same product to investors with distinct financial needs.
Here are three reasons to have a personalized portfolio:
It addresses your goals: You are different, your goals are different and so are your challenges. If your background is different from other investors, is it justified to hold the same portfolio which is designed for him? The answer is a BIG No! Having a personalized portfolio will help you to overcome this challenge by investing in stocks that suit your risk appetite and financial objectives.
You know what to do with them: You already have few stocks in your portfolio. And, you are completely clueless whether the portfolio recommended to your friend family can be designed concurrently with your existing stock portfolio. This gives birth to chaos and confusion. Enter the role of Personalization. If you have a portfolio that doesn’t collide but complements your existing portfolio, then the path to wealth creation becomes easier.
You know what you own and why you own: You have purchased the stock portfolio as per your friend’s advice, but you do not really understand the allocation of the portfolio. You are not cognizant about the stock’s long-term growth potential. Due to this, you may end up:
Selling stocks too early even if the fundamentals are intact, or
Selling too late after the fundamentals have deteriorated
Having a personalized equity portfolio will help you stay in sync with your goals.